PT Aneka Tambang Tbk - BINAARTHA SEKURITAS€¦ · the completion phase and installed capacity will be 13,500 tons of nickel in Ferronickel per year. ... PT Aneka Tambang Tbk Profit

Equity Research

HOLDInvestment ConsiderationDevelopment projects progressThe construction of the plant in East Halmahera (P3FH), is currently inthe completion phase and installed capacity will be 13,500 tons of nickelin Ferronickel per year. Construction has reached 98% of completion asof 1H20 and P3FH is targeted to operate in 2H21. For the developmentof downstream bauxite, ANTAM continues to focus on building theSmelter Grade Alumina Refinery (SGAR) in Mempawah, WestKalimantan, which is being developed jointly with PT Indonesia AsahanAluminium (Persero). This facility will have a processing capacity of 1million tonnes per year (phase 1). Construction is targeted to becompleted in 2022.

Focus on domestic salesIn 2020, ANTM will focus on the development of domestic market sales,except for Ferronikel which is sold 100% via export. In 1H20, ANTM’sferonickle sales are fully taken up by China, India, and South Korea.Sales and shipping to customers in export markets depends on theexport trade restrictions in each country. For Gold, production comesfrom Pongkor and Cibaliung mines while sales are in the domesticmarket inline with positive demand seen through the Precious MetalProcessing & Refinery Business Unit (UBPP LM). For nickel, ANTM isfocusing on development the domestic market in line with strongdemand as Ferronickel feed for the Pomalaa Plant in southeastSulawesi. In 2Q20 ANTAM has been selling nickel ore to the domesticmarket supported by MESDM regulation No. 11/2020 issued on April2020, which is expected to support the growth of the metal market insidethe country (especially nickel) and ensure competitiveness for domesticmineral prices. Bauxite is used as ore feed for Tayan CGA Plant andsold to 3rd parties. Aluminum, through its subsidiary, IndonesiaChemical Alumina, is also sold to the operations of Tayan CGA. As of1H20, gold sales grew-50% YoY or-45% QoQ (7915 Kg in 1H20/2818kgin 2Q20), Ferronikel grew -1% YoY or + 8% QoQ (13045 in 1H20/6867Tni in 2Q20), Nickle ore grew-96% YoY (167606 Wmt at 1H20 and2Q20), bauxite grew -8% YoY or 822% QoQ (565177 wmt in 1H20/509900 in 2Q20). Alumina sales grew 59% YoY or -31% QoQ (40697 in1H20/ 16635 at 2Q20).

Valuation: 7% upsideBased on EV/EBITDA, we have a one year target price of IDR.900/shareor trading at 12x EV/EBITDA. With only 7% upside, we recommendedHOLD.

7 August 2020Diversified mining and minerals processing, Equity

Price IDR. 840 Target Price IDR. 900JKSE Index 5129,43

Stock CodeBloomberg code ANTM IJMarket cap (IDR.bn) 17,54252-Week High (IDR) 1,17552-Week Low (IDR) 3386-m Avg Daily. Val (IDR) 730Free Float (%) 35

Major Shareholders (%)INALUM 65%Public 35%

USD/IDR-YE2019A 138662020F (Avg) 14600

Key Indicators 2021FDER (x) 0.38Debt ratio (x) 0.40

Analyst: Revita Dhiah [email protected]

PT Aneka Tambang Tbk

Profit and Loss (IDR. in bn)

2018 A 2019 A 2020 F 2021 F 2022 F

Sales 25.241 32.719 19.166 23.008 27.586 COGS (21.765) (28.271) (16.475) (19.542) (23.347)

Gross Profit 3.476 4.447 2.691 3.466 4.239 Operating Expenses (1.624) (3.492) (1.918) (2.401) (2.889)

Operating Income 1.853 956 773 1.065 1.350 Other Income (587) (269) (475) (536) (603)

Tax Expense (391) (493) (171) (276) (332)Minority Interest (0,002) (0,001) (0,001) (0,001) (0,001)

Net Income 874 194 127 253 415 EPS 36 8 5 11 17

EBITDA 2.645 2.010 1.725 2.112 2.501

ANTM

Company ProfilePT Aneka Tambang, a leading Indonesian diversified mining and minerals processing company was established

in July 5, 1968. This company was owned by government 65% and public 35%, currently by Inalum 65% and

public 35%. ANTM was formed by several Indonesian Government projects & mining companies. ANTM offers

various products such as ferronickel, low and high grade nickel ore, gold, silver, bauxite, alumina, coal, and

precious metals processing services. ANTM undertakes all stages of mining and processing, including

exploration, mining, smelting, refining, and marketing in relation to nickle ore, ferronickle, gold, silver, alumina,

other precious metal, and coal.

Asset in operation

Source: company

ANTM

Source: company and Wood Mackenzie,

and Roskill Information Services Ltd

Ferronickle processing

Nickle outlook 2020

Among base metals, nickel prices experienced the sharpest fall in the first quarter, dropping 21 percent from

US$/ton14077 to US$11055 , a stark contrast to the high prices in the second half of 2019. Demand for stainless steel

products—which accounts for three-quarters of the world’s nickel usage—has been hit hard in China (the world’s top

consumer) and Italy (Europe’s largest consumer) due to lockdowns. The slump in nickel demand has more than offset

supply disruptions. Indonesia’s nickel ore export ban came into effect in January 2020, which had buoyed prices last year

following stockpiling efforts ahead of the ban. The Philippines, which supplies 70 percent of China’s nickel ore imports,

has suspended its mining operation due to pandemic. During the first half of 2020, Prices made a comeback in Q2, and

even though they did not reach their highest level of the year, they ended the quarter up by 15 percent from their lowest

mark, reaching US$12,790 on June 30. According to Roskill Information Services Ltd, When looking at nickel’s

fundamentals, the coronavirus has had a major impact on demand globally, and while China is now returning strongly,

the rest of the world will take a few years to get back to 2019 levels. Stainless and superalloy being particularly affected,

but also the electric vehicle (EV) sector. We believe, Nickel demand is likely to remain high as stainless steel production

stays strong and electric vehicles (EVs) continue to rise in importance. By 2030, forecast nickel demand from the

batteries sector to account for a little over 25 percent of the total nickel market. Based on Wood Mckenzie, expecting

nickel prices to decline in the second half of 2020 from current levels, leaving the average for the year at around the

US$12,300 to US$12,500 range.

ANTM

Source: Binaartha and company

Chart: Nickle production vs sales volume (Wmt ‘000)

yoy

Chart: Ferronickle production vs sales volume (Tni)

yoy

Chart: Nickle production vs sales volume (Wmt ‘000)

QoQ

Chart: Ferronickle production vs sales volume (Tni)

QoQ

Chart: Gold sales volume (Kg) YoY Chart: Gold sales volume (Kg) QoQ

0

2.000

4.000

6.000

8.000

10.000

12.000

1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20

ANTM

Source: Binaartha and company

Chart: Bauxite production vs sales volume (Wmt

‘000) yoy

Chart: Bauxite production vs sales volume (Wmt 000)

QoQ

Chart: Ferronickle Average Selling Price (US$/lb) YoY Chart: Gold Average selling price (US$/Toz)

Chart: Debt to Equity ratio (x) YoY

ANTM

Profit and Loss (IDR. in bn) yoy

Balance Sheet (IDR. in bn) yoy

Source: Binaartha and company

Balance Sheet (IDR. in bn) 2017A 2018A 2019 A 2020 F 2021 F 2022 F

Cash and cash equivalent 5.551 4.299 3.636 3.598 3.258 2.318

Trade Account Receivable 971 944 1.002 893 1.135 1.058

inventory 1.258 1.846 1.796 2.573 2.648 2.796

Other current asset 1.222 254 1.230 1.437 1.726 2.069

assset classified as held for

sale 0 0 0 0 0 0

Current Asset 9.002 7.342 7.665 8.501 8.766 8.242

Fixed Asset 14.093 19.490 18.866 18.843 19.576 21.913

other long term asset 6.919 5.364 3.664 2.300 2.761 3.310

Total non current Asset 21.012 24.853 22.530 21.143 22.337 25.224

Total Asset 30.014 32.195 30.195 29.644 31.103 33.465

Trade Account Payable 806 868 740 788 819 907

Short Term bank loans 2.716 1.452 1.408 1.327 1.247 1.210

Other short term liablities 2.030 3.242 3.145 2.875 3.451 4.138

Total current liabilities 5.552 5.562 5.293 4.989 5.518 6.255

bond 2.097 2.098 2.099 2.099 2.099 2.099

investment loans 3.200 5.250 3.466 3.198 3.698 4.698

other long term liabilities 674 837 1.204 882 1.058 1.269

Total long term/ non current

liabilities 5.971 8.185 6.768 6.179 6.856 8.066

Total Liabilities 11.524 13.747 12.061 11.168 12.373 14.321

non controlling interest 0,02 0,02 0,02 0,02 0,02 0,02

Total Equities 18.490 18.448 18.133 18.476 18.729 19.144

Total Liabilities & Equity 30.014 32.195 30.195 29.644 31.103 33.465

Profit and Loss (IDR. in bn) 2017 A 2018 A 2019 A 2020 F 2021 F 2022 F

Sales 12.654 25.241 32.719 19.166 23.008 27.586

COGS (11.010) (21.765) (28.271) (16.475) (19.542) (23.347)

Gross Profit 1.644 3.476 4.447 2.691 3.466 4.239

Operating Expenses (1.043) (1.624) (3.492) (1.918) (2.401) (2.889)

Operating Income 601 1.853 956 773 1.065 1.350

Other Income (146) (587) (269) (475) (536) (603)

Profit Before Tax 454 1.266 687 297 529 747

Tax Expense (318) (391) (493) (171) (276) (332)

Minority Interest 0,004 (0,002) (0,001) (0,001) (0,001) (0,001)

Net Income 137 874 194 127 253 415

EPS 6 36 8 5 11 17

EBITDA 1.374 2.645 2.010 1.725 2.112 2.501

ANTM

Cash Flow (IDR. In bn) yoy

Source: Binaartha and company

Ratio Highlights

Cash Flow (IDR. in bn) 2017A 2018A 2019A 2020F 2021F 2022F

+ Net Income 5552 5562 5293 4989 5518 6255

+Depreciation (2101) (2519) (1264) (86) (10) (331)

- Change in WC 1666 2085 (7) (100) 1224 1888

Cash From Operating

Activities 1666 2085 (7) (100) 1224 1888

capex (1907) (6189) (430) (929) (1780) (3489)

other long term asset (527) 1556 1700 1364 (461) (549)cash from investing

activities (2434) (4634) 1270 435 (2241) (4038)

bond (899) 1 1 0 0 0

Investment loans (453) 2049 (1784) (267) 500 1000

other long term liabilities 103 164 367 (322) 177 211

Equity (55) (916) (509) 216 0 0

cash from financing

activities (1304) 1297 (1926) (374) 677 1211

Net Changes in Cash (2073) (1252) (663) (38) (340) (940)

Beginning Balance 7623 5551 4299 3636 3598 3258

Ending balance 5551 4299 3636 3598 3258 2318

Growth (% YoY) 2016 A 2017 A 2018 A 2019 A 2020 F 2021 F 2022 F

Sales -13,53% 38,96% 99,48% 29,62% -41,42% 20,05% 19,90%

OP -101,16% 7263,93% 208,48% -48,42% -19,11% 37,79% 26,74%

EBITDA 11517,70% 122,18% 92,55% -24,03% -14,19% 22,46% 18,44%

Net profit -104,50% 110,63% 540,57% -77,83% -34,64% 99,67% 64,10%

EPS -104,50% 110,63% 540,57% -77,83% -34,64% 99,67% 64,10%

Profitability (%)

Operating Margin 0,09% 4,75% 7,34% 2,92% 4,03% 4,63% 4,89%

EBITDA margin 6,79% 10,86% 10,48% 6,14% 9,00% 9,18% 9,07%

NET Profit margin 0,71% 1,08% 3,46% 0,59% 0,66% 1,10% 1,50%

ROA 0,22% 0,45% 2,72% 0,64% 0,49% 0,91% 1,33%

ROE 0,35% 0,74% 4,74% 1,07% 0,69% 1,35% 2,17%

Liquidity

Current Ratio (X) 2,44 1,62 1,32 1,45 1,70 1,59 1,32

Cash Ratio 1,75 1,00 0,77 0,69 0,72 0,59 0,37

Solvability

Debt/Equity (x) 0,51 0,43 0,48 0,38 0,36 0,38 0,42

Int. Coverage (x) 0,74 0,75 1,12 2,94 1,34 2,25 2,79

Debt Ratio 0,39 0,38 0,43 0,40 0,38 0,40 0,43

Per Share data (Rp)

EPS 2,70 5,68 36,39 8,07 5,27 10,53 17,28

BVPS 766,05 769,45 767,70 754,59 768,86 779,38 796,66

ANTM

RESEARCH TEAM(62-21) 520-6678 ext.612

Disclaimer; PT Binaartha Sekuritas has compiled this report in good faith, using information believed to be reliable. PTBinaartha and its analyst take no responsibility for the accuracy of the information contained in this report. This reporthas been produced for distribution to clients of PT Binaartha Sekuritas only. This report is not an invitation to buy or sellany security. PT Binaartha Sekuritas may have used the information in this report prior to publication. The company orits clients may have positions in or may from time to time buy or sell the securities mentioned in this report or otherrelated securities.

Stock Ratings:

Buy: a recommendation to purchase the security with upside potential of 20% or greater

Hold: a recommendation to neither buy nor sell a security with upside potential of 0-20%.

Sell: a recommendation to close out a long position in a security with upside potential below 0% or negative.