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Aneka Tambang (ANTM IJ) (Buy) - Strong operational numbers signal earnings beat

Aneka Tambang (ANTM IJ) (Buy) - Strong operational numbers signal earnings beat

Mining MW EP 484 20th Feb, 2025

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Strong operational numbers signal earnings beat

Maintain Buy with higher TP of IDR2,100

Robust 4Q gold operational numbers signal potential consensus upward revisions

ANTM's 4Q operational results indicate a strong FY24 earnings outlook, with projected earnings of >IDR3tn, surpassing the Bloomberg consensus estimates of IDR2.8tn. The company ended FY24 with gold production and sales exceeding expectations at 110% and 124% of our forecasts, respectively. Nickel ore and bauxite production also rebounded. ANTM remains our top pick in the Indonesia metals sector due to its solid fundamentals, driven by: 1) improved gold margins from stronger pricing and sales, 2) higher nickel ore sales following the RKAB approval for 2025, and 3) increased bauxite sales as the Mempawah Alumina smelter (40% owned by ANTM) begins operations. In addition, we expect ANTM’s collaboration to offtake gold from Freeport’s smelter to further enhance margins.

Strong nickel ore price momentum and upgraded earnings estimates by 17-25%

Our channel checks suggest that the nickel ore premium persists, supporting overall NPI prices, with ANTM to continue to book a higher nickel premium of up to USD15/t above the benchmark price in February. Indeed, nickel ore prices have shown signs of recovery, remaining elevated at USD46/t with a 4% rebound in the NPI price to USD11,800/t from USD11,300/t in early January. We expect this situation to persist in the short term.

We expect 18% earnings growth for ANTM in FY25F, driven by the performance of its core business. We raise our earnings estimates for FY25-26F by 17-25%, reflecting higher gold sales expectations of 40 tons in 2025F (up from 37 tons). We also raise our gold assumption to USD2,700/oz (previously USD2,300/oz). We project Nickel ore sales to grow by 65% y-y to 13.8mn wet metric tons (wmt) in 2025F. We expect a significant bauxite sales contribution of 2.7Mt, growing by 270% in 2025F as the Mempawah smelter is scheduled to go online in 2H25F.

Maintain Buy rating with TP raised to IDR2,100, implying 36% upside

We maintain our Buy rating on ANTM with a higher TP of IDR2,100 (from IDR1,900), based on 8x FY25F EV/EBITDA target (previously 9x EV/EBITDA), or around -0.5 SD of its 5Y average, implying 13.1x FY25F P/E. Our valuation does not yet incorporate future projects, i.e., battery plant. We remain constructive on gold and nickel ore producers including ANTM. Downside risks include a decline in the commodity prices, regulatory changes, and setbacks to future projects.

Year-end 31 DecFY23FY24FFY25FFY26F
Currency (IDR)ActualOldNewOldNewOldNew
Revenue (bn)41,04856,13167,14063,55674,23569,21778,078
Reported net profit (bn)3,0782,7973,2623,0923,8513,5444,349
Normalised net profit (bn)3,0782,7973,2623,0923,8513,5444,349
FD normalised EPS128.07116.38135.74128.66160.26147.48180.96
FD norm. EPS growth (%)-19.5-9.16.010.618.114.612.9
FD normalised P/E (x)12.1–11.4–9.7–8.6
EV/EBITDA (x)5.9–5.9–4.7–4.0
Price/book (x)1.2–1.2–1.1–1.1
Dividend yield (%)8.3–4.4–5.2–5.8
ROE (%)11.39.210.79.912.310.713.2
Net debt/equity (%)net cashnet cashnet cashnet cashnet cashnet cashnet cash
Source: Company data, Verdhana estimates

Key data on Aneka Tambang

Income statement (IDRbn)
Year-end 31 Dec
FY22
FY23
FY24F
FY25F
FY26F
Revenue
45,930
41,048
67,140
74,235
78,078
Cost of goods sold
-37,720
-34,733
-59,980
-65,572
-68,457
Gross profit
8,211
6,315
7,159
8,663
9,621
SG&A
-4,269
-3,698
-4,694
-5,043
-5,329
Employee share expense
0
0
0
0
0
Operating profit
3,942
2,617
2,465
3,619
4,292
EBITDA
4,813
4,289
4,334
5,649
6,445
Depreciation
-871
-1,672
-1,868
-2,029
-2,153
Amortisation
0
0
0
0
0
EBIT
3,942
2,617
2,465
3,619
4,292
Net interest expense
-296
-43
192
159
175
Associates & JCEs
931
947
1,059
1,069
1,069
Other income
638
334
200
0
0
Earnings before tax
5,215
3,854
3,916
4,847
5,536
Income tax
-1,394
-777
-654
-996
-1,187
Net profit after tax
3,821
3,078
3,262
3,851
4,349
Minority interests
0
0
0
0
0
Other items
Preferred dividends
Normalised NPAT
3,821
3,078
3,262
3,851
4,349
Extraordinary items
Reported NPAT
3,821
3,078
3,262
3,851
4,349
Dividends
-1,910
-3,078
-1,631
-1,926
-2,174
Transfer to reserves
1,910
0
1,631
1,926
2,174
Valuations and ratios
Reported P/E (x)
9.7
12.1
11.4
9.7
8.6
Normalised P/E (x)
9.7
12.1
11.4
9.7
8.6
FD normalised P/E (x)
9.7
12.1
11.4
9.7
8.6
Dividend yield (%)
5.1
8.3
4.4
5.2
5.8
Price/cashflow (x)
8.2
11.4
5.7
6.5
5.8
Price/book (x)
1.6
1.2
1.2
1.1
1.1
EV/EBITDA (x)
6.2
5.9
5.9
4.7
4.0
EV/EBIT (x)
7.3
8.7
9.1
6.7
5.6
Gross margin (%)
17.9
15.4
10.7
11.7
12.3
EBITDA margin (%)
10.5
10.4
6.5
7.6
8.3
EBIT margin (%)
8.6
6.4
3.7
4.9
5.5
Net margin (%)
8.3
7.5
4.9
5.2
5.6
Effective tax rate (%)
26.7
20.2
16.7
20.6
21.4
Dividend payout (%)
50.0
100.0
50.0
50.0
50.0
ROE (%)
17.2
11.3
10.7
12.3
13.2
ROA (pretax %)
17.1
11.3
10.0
12.2
13.2
Growth (%)
Revenue
19.5
-10.6
63.6
10.6
5.2
EBITDA
43.9
-10.9
1.0
30.3
14.1
Normalised EPS
95.9
-19.5
6.0
18.1
12.9
Normalised FDEPS
95.9
-19.5
6.0
18.1
12.9
Source: Company data, Verdhana estimates
Cashflow statement (IDRbn)
Year-end 31 Dec
FY22
FY23
FY24F
FY25F
FY26F
EBITDA
4,813
4,289
4,334
5,649
6,445
Change in working capital
1,662
-1,732
1,852
-20
-3
Other operating cashflow
-1,922
705
370
116
-6
Cashflow from operations
4,553
3,261
6,556
5,745
6,435
Capital expenditure
-824
-1,887
-4,179
-3,420
-2,630
Free cashflow
3,729
1,375
2,377
2,324
3,805
Reduction in investments
-938
140
-212
-214
-214
Net acquisitions
Dec in other LT assets
452
106
0
0
0
Inc in other LT liabilities
-61
-1,041
-299
-213
-115
Adjustments
-44
-78
-73
-91
-114
CF after investing acts
3,138
501
1,794
1,807
3,362
Cash dividends
-931
-1,910
-3,078
-1,631
-1,926
Equity issue
0
5,761
0
0
0
Debt issue
-2,863
-501
-1,271
0
0
Convertible debt issue
Others
43
882
377
237
112
CF from financial acts
-3,751
4,231
-3,972
-1,394
-1,814
Net cashflow
-613
4,732
-2,178
413
1,548
Beginning cash
5,089
4,476
9,209
7,031
7,443
Ending cash
4,476
9,209
7,031
7,443
8,992
Ending net debt
1,766
-6,701
-5,794
-6,206
-7,754
Balance sheet (IDRbn)
As at 31 Dec
FY22
FY23
FY24F
FY25F
FY26F
Cash & equivalents
4,476
9,209
7,031
7,443
8,992
Marketable securities
0
0
0
0
0
Accounts receivable
1,833
1,094
2,391
2,644
2,781
Inventories
2,906
3,470
4,930
5,389
5,627
Other current assets
2,480
6,291
3,357
3,712
3,904
Total current assets
11,695
20,065
17,709
19,189
21,303
LT investments
3,556
3,531
4,242
4,663
5,053
Fixed assets
17,712
17,541
19,851
21,242
21,720
Goodwill
Other intangible assets
Other LT assets
674
1,715
2,014
2,227
2,342
Total assets
33,637
42,851
43,816
47,321
50,418
Short-term debt
927
1,626
738
738
738
Accounts payable
1,302
1,550
2,136
2,335
2,438
Other current liabilities
3,743
5,401
6,488
7,337
7,797
Total current liabilities
5,972
8,576
9,363
10,410
10,973
Long-term debt
2,082
881
499
499
499
Convertible debt
Other LT liabilities
1,871
2,228
2,642
2,879
2,991
Total liabilities
9,925
11,686
12,504
13,788
14,463
Minority interest
0
522
485
485
485
Preferred stock
Common stock
6,338
12,099
12,099
12,099
12,099
Retained earnings
13,143
14,390
14,574
16,794
19,217
Proposed dividends
Other equity and reserves
4,232
4,154
4,154
4,154
4,154
Total shareholders' equity
23,712
30,643
30,828
33,048
35,471
Total equity & liabilities
33,637
42,851
43,816
47,321
50,418
Liquidity (x)
Current ratio
1.96
2.34
1.89
1.84
1.94
Interest cover
13.3
60.9
–
–
–
Leverage
Net debt/EBITDA (x)
0.37
net cash
net cash
net cash
net cash
Net debt/equity (%)
7.4
net cash
net cash
net cash
net cash
Per share
Reported EPS (IDR)
159.00
128.07
135.74
160.26
180.96
Norm EPS (IDR)
159.00
128.07
135.74
160.26
180.96
FD norm EPS (IDR)
159.00
128.07
135.74
160.26
180.96
BVPS (IDR)
986.74
1,275.17
1,282.84
1,375.23
1,476.05
DPS (IDR)
79.50
128.07
67.87
80.13
90.48
Activity (days)
Days receivable
13.0
9.5
12.4
12.7
Days inventory
33.5
25.6
28.7
29.4
Days payable
15.0
11.2
12.4
12.7
Cash cycle
0.0
31.5
23.9
28.7
29.3
Source: Company data, Verdhana estimates
Company profilePT Antam Tbk (short for Aneka Tambang) was incorporated in 1968 as a result of the merger between several state-owned mining companies to form a state-owned mining industry holding in Indonesia. In 1997, the company made an IPO in Indonesia with the ticker name ANTM IJ, followed by an IPO in Australia in 1999 to raise funds for its ferronickel project expansion. To date, ANTM is owned by PT Indonesia Asahan Aluminium (Indonesia's state-owned mining holding company – also known as Inalum) with a 65% stake, and public ownership with a 35% stake. The company is engaged in mining gold, silver, ferronickel, nickel ore, bauxite, and alumina.
Valuation MethodologyOur target price of IDR2,100 implies 9x FY25F EV/EBITDA, at -0.5 SD of its 5-year average. The benchmark index is JCI index.
Risks that may impede the achievement of the target priceDownside risks include a decline in the LME nickel price, regulatory changes and setbacks to future projects.
ESGANTM is taking various ESG effort by implementing Social & Environmental Responsibility Program (locally: TJSL program). The TJSL program aims to encourage and strengthen local SMEs by digitalization as well as developing local natural resources such as coconut products, local coffee in Halmahera, and various agrobusiness. Other than the program, the company also actively contribute to the local health especially those impacted by Covid.

Fig. 1: ANTM operational results: Strong gold and lumina sales

ANTM operational4Q233Q244Q24QoQ YoY FY23FY24YoY
Gold         
Gold production vol (k oz)9.69.88.9-9%-8%        38.8       32.8-16%
Gold sales vol (k oz)214.4405.0489.021%128%         840    1,40768%
FeNi         
FeNi production vol (k TNi)5.75.14.9-4%-15%        21.5       20.1-6%
FeNi sales vol (k TNi)6.04.97.858%29%        20.1       19.5-3%
Ni ore         
Ni ore production vol (k Wmt)2,7723,1182,631-16%-5%   13,446    9,935-26%
Ni ore sales vol (k Wmt)2,2992,3532,64212%15%   11,712    8,354-29%
Bauxite & Alumina         
Bauxite production (k Wmt)59795694632%16%     2,014    1,331-34%
Bauxite sales (k Wmt)511        97      639556%25%     1,500        736-51%
Alumina production (kt)464342-3%-10%         161        148-8%
Alumina sales (kt)384544-1%16%         146        17721%
Source: Company data, Verdhana research

 

Fig. 2: Nickel ore price (CIF) begin to rebound

Source: Company data, Verdhana research

 

Fig. 3: ANTM operational estimates for FY25F

Commodity Unit 20232024 YoY 2025FYoY
 Gold  Ton           26          4468%          40-8%
 Ferronickel  Ktons        20.1       19.5-3%       19.61%
 Nickel ore  mn wmt        11.7         8.4-29%       13.865%
 CGA Alumina  Ktons      146.2     177.221%     147.8-17%
 Bauxite ore  Mtons          1.5         0.7-51%         2.7270%
Source: Company data, Verdhana research

 

Fig. 4: ANTM assumption changes

Source: Company data, Verdhana research

 

Fig. 5: ANTM 5Y P/E band

Source: Company data,  Verdhana research
Fig. 6: ANTM 5Y EV/EBITDA band

Source: Company data, Verdhana research

INVESTMENT RATINGS
A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of ‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market in general. 

GENERAL DISCLOSURE/DISCLAIMER 
This report is prepared by PT Verdhana Sekuritas Indonesia (“PTVSI”) a securities company registered in Indonesia, supervised by Indonesia Financial Services Authority (OJK) and a member of the Indonesia Stock Exchange (IDX).

This report is intended for client of PTVSI only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of PTVSI.

The research set out in this report is based on information obtained from sources believed to be reliable, but PTVSI do not make any representation or warranty as to its accuracy, completeness or correctness. The information in this report is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. Any information, valuations, opinions, estimates, forecasts, ratings or targets herein constitutes a judgment as of the date of this report is published, and there is no assurance that future results or events will be consistent.


This report is not to be construed as an offer or a solicitation of an offer to buy or sell any securities or financial products. PTVSI and its associates, its directors, and/or its employees may from time to time have interests in the securities mentioned in this report or it may or will engage in any securities transaction or other capital market services for the company (companies) mentioned herein.

ANALYST CERTIFICATION
The research analyst primarily responsible for the content of this report and certifies that the views about the companies including their securities expressed in this report accurately reflect his/her personal views.  The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.


RESTRICTIONS ON DISTRIBUTION

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Rating Table

Rating
Remains
Buy
Target price
Increased from IDR 1,900
IDR 2,100
Closing price
18 February 2025
IDR 1,550
Implied upside+35.5%
Market Cap (USD mn)2,289.3
ADT (USD mn)4.3

Relative performance chart



Source: LSEG, Verdhana
M cap (USDmn)
2,289.3
Free float (%)
35.0
3-mth ADT (USDmn)
4.3
(%)
1M
3M
12M
Absolute (IDR)
2.0
11.1
1.3
Absolute (USD)
2.5
8.2
-2.8
Rel to Jakarta Stock Exchange Composite Index
5.9
14.8
7.6

Research Analysts

Michael Wildon Ng (michael.wildon@verdhana.id)

Edward Prima (edward.prima@verdhana.id)

Tags: METALS AND MINING, ANTM, ANTM JK, ANTM IJ, Michael Wildon Ng, Edward Prima
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