regional industry focus nickel

ed: TH/ sa: xx, PY, CS

Emerging as a mainstay of EV

battery sector

• Nickel price surge powered by EV proves our positive

view on nickel prices and raise our price forecasts

• Key battery makers have opted to invest in Indonesia

for its nickel resources

• Nickel and share prices precede fundamental

improvement in the last short period

• Downgrade calls on ANTM and INCO to FULLY VALUED

and HOLD respectively

Stronger-than-expected nickel prices supported by brighter

outlook for EV and concerns on supply growth. LME nickel

prices jumped to US$18,015/ton on 18 Jan 2021, up 63%

from the trough of US$11,055/ton on 23 Mar 2020 and up

8.8% YTD, mainly attributed to (i) positive outlook on

demand from electric vehicle (EV) batteries, (ii) strong nickel

demand in China backed by the stainless steel sector, and

(iii) tight ore supply from disruptions.

Indonesia is emerging as a key EV battery player due to its strong presence in nickel sector. The Indonesian government decided to establish PT Indonesia Battery Holdings through the participation of key SOEs such as MIND ID and ANTM in Oct 2020. Last Dec, it signed MOUs with the two largest EV battery makers, CATL in China and LG Group in Korea, which plan to build battery plants in Indonesia. This was enabled by its ample resources of nickel which is a key raw material for EV batteries.

Raise our nickel price forecasts and maintain our positive outlook on the sector. Factoring in stronger nickel prices, we revised up our nickel price forecasts for 2021 and 2022 by 6% and 4% to US$15,000/ton and US$15,500/ton respectively. We forecast nickel consumption in rechargeable batteries to register a 23.7% CAGR by 2030 which will drive up its contribution to 30% from the current 5%. Specifically, we expect the Class I nickel market to remain in deficit by 2025. Despite our positive view on the sector, the recent nickel price rally appears to be excessive.

Raise the TPs for our coverage but downgrade our calls on

strong share price performance. Based on our higher nickel

price forecasts, we revised up our FY21 and FY22 earnings

forecasts under our coverage. After factoring in their higher

growth potential, we increase our TPs on ANTM and INCO to

Rp2,700 and Rp6,600 respectively. However, we downgrade

our calls on ANTM to FULLY VALUED and INCO to HOLD for

potential downside and limited upside respectively.

JCI : 6,389.83

Analyst

LEE Eun Young +65 6682 3708

[email protected]

LME Nickel prices & ANTM share prices

LME Nickel prices & INCO share prices

Source: DBS Bank

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DBS Group Research. Equity

19 Jan 2021

Regional Industry Focus

Nickel

Refer to important disclosures at the end of this report

STOCKS

12-mth

Price Mkt Cap Target Price Performance (%)

Rp US$m Rp 3 mth 12 mth Rating

Vale Indonesia 6,625 4,695 6,600 67.3 94.3 HOLD

Aneka Tambang 3,120 5,348 2,700 231.9 273.7 FULLY

VALUED

Source: DBS Bank, Bloomberg Finance L.P.

Closing price as of 15 Jan 2021

Industry Focus

Nickel

Indonesia to grow as a hub for nickel and EV batteries

Establishment of PT Indonesia Battery Holding. In Oct 2020,

the Indonesian government announced that PT Indonesia

Battery Holdings will be formed by state miners MIND ID

and Aneka Tambang (ANTAM), state utility Perusahan Listrik

Negara (PLN) and state oil company PT Pertamina.

Indonesia is also in talks with China’s CATL and South

Korea’s LG Chem, the world’s top two EV battery makers by

output, to invest between US$12bn and US$20bn to

develop its dream supply chain. PT Indonesia Battery

Holdings aims to produce between eight and 10 gigawatt

hours (GWh) worth of batteries each year, kicking off

operations around 2-3 years from now.

Mining Industry Indonesia (MIND ID) is Indonesia's mining

industry holding company comprising PT ANTAM Tbk, PT

Bukit Asam, PT Freeport Indonesia, PT Indonesia Asahan

Aluminium (Persero), and PT Timah Tbk.

MOU with CATL. On 16 Dec 2020, Contemporary Amperex

Technology (CATL) announced plans to build a US$5bn

lithium battery factory in Indonesia, ramping up its capacity

amid growing demand for electric vehicles. The

government official said that a deal between China-based

CATL and Indonesian state miner PT Aneka Tambang has

been inked to ensure that 60% of its mined nickel goes into

batteries in Indonesia

EV battery MOU agreed with LG Energy Solution. On 30

Dec 2020, Indonesia and LG Energy Solution signed an

MOU for an EV battery investment deal worth US$9.8bn. At

least 70% of the nickel ore needed to produce the EV

batteries should be processed in Indonesia, according to

the MOU (as reported by Reuters).

Indonesia is growing as a hub for EV batteries. These deals

will make Indonesia the first country to vertically integrate

the EV battery supply chain from the mining of nickel to the

manufacturing of batteries. The government’s policy to

grow its nickel downstream industry by banning nickel ore

exports has helped Indonesia to become a key NPI supplier

by attracting investments from Chinese players. And now,

the government’s initiation of its nickel-based battery

project with global battery players will seal Indonesia’s

position as an integrated battery manufacturing country

going forward. According to the government, the strategic

partner selection and feasibility study (FS) will be furnished

within this year. The details on commercial and technical

aspects will be determined after the FS and partner

selection phase are accomplished.

Much stronger nickel price rally driven by optimism on EV

and strong performance of China’s stainless steel sector

Faster-than-expected nickel price rally. LME nickel prices

jumped to US$18,015/ton on 18 Jan 2021, up 63% from the

trough of US$11,055/ton on 23 Mar 2020 and up 8.8%

YTD, mainly attributed to (i) positive outlook on demand

from electric vehicle (EV) batteries, (ii) strong stainless steel

production growth in China, and (iii) tight ore supply from

mine disruptions.

Promising demand outlook supported by strong EV growth.

We expect global EV sales to increase 44% y-o-y to 2.47m

units in 2021 after an 18% decline in 2020, supported by

governments’ various policies and enhanced economics of

EV compared to ICE (Internal Combustion Engine) vehicles.

Falling battery price is a key factor for the economics of EV

and technology development for high nickel battery

bolsters that lower battery manufacturing costs. China and

Europe will likely lead the widespread adoption of EV with

aggressive policies including subsidies and environmental

regulations.

Outstanding EV performance in China. China’s new energy

vehicle (NEV) production and sales increased by 7.5% and

10.9% y-o-y in 2020, to 1,366k and 1,367k units

respectively. This was largely due to a recovery in 2H20

driven by the government’s extension of subsidies to 2022

from 2020, outweighing the serious decline in 1Q20.

Meanwhile, China’s total vehicle production and sales in

2020 fell by 2% and 1.9% y-o-y to 25.23m and 25.31m units

respectively. In 2021, China will reduce its subsidies for

NEVs by 20% y-o-y, but this is expected to have minimal

impact on the NEV market. China’s EV sales are forecast to

jump 40% y-o-y to 1.8m units in 2021, according to China

Association of Automobile Manufacturers (CAAM).

Industry Focus

Nickel

China and Indonesia’s stainless steel production growth,

another positive. After registering an 18% production

decline in Jan 20, China’s stainless steel production has

been recovering swiftly. In 2020, China’s stainless steel

production and 300 series output are estimated to grow

5.2% and 8.7% y-o-y, respectively. Meanwhile, Indonesia

stainless steel output is projected to jump c 22 % in 2020.

As stainless steel account for 70% of nickel consumption,

the positive performance of China’s stainless steel sector

brightened the outlook on nickel demand. Note that

China’s stainless steel output account for 56% of the global

supply.

China’s BEV sales China’s PHEV sales

Source: CEIC, DBS Bank Source: CEIC, DBS Bank

Stainless steel output in China (by series) Stainless steel output in Indonesia

Source: SMM, DBS Bank Source: Bloomberg Finance L.P., DBS Bank

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Industry Focus

Nickel

China’s net import of nickel grew at strong demand. China’s

net import of refined nickel is estimated to increase

substantially by 38% in 2020 at strong demand growth of c

15%, according to SMM. While, the production of refined

nickel in China would decline c 8% due to 12% decline in

NPI production.

China’s nickel supply-demand and net import

Source: SMM, DBS Bank

Concerns on supply fuelled nickel price rallies further

Tightening environmental control in Philippines. The

Philippine government recently ordered a halt on mining

on Tumbagan Island in Tawi-Tawi province due to

environmental impact concerns. While it did not cover the

Philippines’ nickel mining hub in Caraga and the current

impact is minimal, supply can be disrupted if the order

extends beyond the initial area. The Philippines is now the

largest nickel ore exporting country to China following

Indonesia’s ban of ore exports.

Downside risks to mines in New Caledonia. Meanwhile, Vale

has announced plans to place 30k tons p.a. capa Vale New

Caledonia mine on care and maintenance from 2021. Also,

Eramet warned that its nickel subsidiary in New Caledonia

faces the risk of liquidation within weeks if protests persist,

indicating a potential supply disruption.

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(k ton)(k ton) Net imports of primary nickel

Total domestic primary nickel output

Total domestic primary nickel consumption

Industry Focus

Nickel

Global nickel market registered supply surplus for 10M20

Mined nickel output declined but refined nickel output was

flattish in 2020. In 10M20, global mined nickel production

fell 11.2% y-o-y to 1.89m tons, mainly due to declines in (i)

Philippines due to environmental controls and COVID-19-

related lockdowns in 1H20, and (ii) Indonesia due to

implementation of ore export ban. As a result, China, one

of the main importers of nickel ore from Indonesia and the

Philippines, saw a 14.1% y-o-y drop in 10M20 refined nickel

output. However, this was offset by a whopping 41.5% y-o-y

jump in Indonesia’s refined output in 10M20, thanks to

smelting capacity ramp-up. This led to only a marginal

decrease of 0.9% y-o-y in global refined nickel production.

Sluggish demand due to slump in developed economies.

On the demand side, nickel consumption fell 6.3% y-o-y in

10M20, owing to lower demand from disrupted stainless

steel supply chains. Refined consumption in China, the

largest consumer of refined nickel, declined slightly by 1.5%

y-o-y due to COVID-19-related slowdown in downstream

industries in 1Q20. Also, refined consumption in

EU/Japan/US registered declines of 19%/5%/9%, as affected

by the pandemic.

Supply surplus and nickel prices ahead of fundamentals.

Accordingly, the nickel market was in a surplus of 64k tons

in 10M20, a turnaround from the market deficit of 45k tons

in 10M19. We expect 2020 to have registered a market

surplus for the full year. However, nickel prices rallied to

US$18,015/ton on 18 Jan, the highest since Oct 2019 on

positive market sentiment, ahead of fundamentals.

Nickel demand, supply, imports and price YTD

(k tons) 2017 2018 2019 y o y % 10M19 10M20 y o y %

Nickel mine production 2,162 2,393 2,596 8.5% 2,125 1,886 -11.2%

Indonesia 357 651 918 40.9% 718 536 -25.4%

Philippines 379 390 341 -12.5% 300 254 -15.4%

New Caledonia 215 216 210 -3.1% 172 168 -2.4%

Australia 185 160 159 -0.8% 134 147 9.7%

Refined nickel production 2,056 2,244 2,404 7.1% 1,976 1,959 -0.9%

China 621 733 852 16.3% 696 598 -14.1%

of which: NPI 424 457 584 27.8% 431 389 -9.7%

Indonesia 187 280 361 28.9% 292 413 41.5%

of which: NPI 165 255 335 31.4% 271 392 44.7%

Japan 187 187 183 -2.2% 151 142 -6.0%

Refined nickel consumption 2,095 2,342 2,432 3.8% 2,021 1,895 -6.3%

China 982 1,096 1,304 19.0% 1,074 1,058 -1.5%

EU 322 330 304 -7.8% 261 212 -18.8%

Indonesia 61 176 182 3.0% 151 152 0.7%

Japan 163 175 155 -11.7% 127 121 -4.5%

USA 144 136 106 -22.5% 90 82 -9.3%

Market balance -40 -98 -28 -45 64

China's import

Nickel ore (gross weight) 35,046 46,964 56,158 19.6% 45,841 32,354 -29.4%

Refined nickel (net import) 217 198 156 -21.3% 144 90 -37.8%

LME nickel price (US$/ton) 10,411 13,122 13,936 6.2% 13,788 13,268 -3.8%

Source: WBMS, Bloomberg Finance L.P., DBS Bank

Industry Focus

Nickel

LME nickel prices vs. warehouse stock China’s nickel ore imports (by country of origin)

Source: Bloomberg Finance L.P., DBS Bank Source: Bloomberg Finance L.P., DBS Bank

Market deficit in Class I nickel to buoy prices, raise nickel

price forecasts.

EV battery segment to drive strong demand growth for

nickel. We forecast nickel demand to grow strongly by 6.9%

in 2021 and register a 4.1% CAGR by 2025. The emerging

EV battery sector will drive strong nickel demand growth

and increase its contribution to the sector drastically. We

foresee nickel consumption in rechargeable battery to post

a 23% CAGR by 2025 which will lead its contribution to

increase by 14% in 2025 and 30% in 2030 from the current

5%. This is backed by our forecast for nickel demand from

batteries to grow 24% annually to 1.27m tonnes by 2030.

Nickel demand from EV batteries is expected to register a

higher annual growth of 32% by 2030.

Class I nickel market to tighten; we raise our nickel price

forecasts. We expect the nickel market to experience a

tighter demand-supply situation and remain in deficit from

2021onwards. Specifically, we expect the Class I nickel

market to face a larger supply shortage due to strong

demand growth. This will drive nickel prices higher as

demand and supply of Class I nickel are expected to grow

by 5.9% and 3.3% annually by 2025, respectively.

Meanwhile, the market for Class II nickel is expected to

register a surplus from 2022 onwards due to strong

capacity expansion of NPI in Indonesia. NPI production in

Indonesia is expected to grow at 15.6% CAGR by 2025 and

exceed China’s production level by 2021. Factoring in

stronger nickel prices, we revised up our nickel prices

forecasts for 2021 and 2022 by 6% and 4% to

US$15,000/ton and US$15,500/ton respectively.

Nickel demand forecasts by usage

(k tons) 2019 2020F 2021F 2022F 2023F 2024F 2025F CAGR 19~25

Stainless 1,706 1,643 1,754 1,829 1,903 1,960 2,004 2.7%

Alloy Steel 195 196 198 200 202 204 207 1.0%

NF Alloy 97 98 99 100 101 102 103 1.0%

Plating 195 198 202 206 211 215 219 2.0%

Foundry 122 124 126 129 132 134 137 2.0%

Battery 122 109 152 216 277 347 421 23.0%

Total 2,435 2,369 2,533 2,681 2,825 2,962 3,091 4.1%

y-o-y % 4.0% -2.7% 6.9% 5.9% 5.4% 4.8% 4.4% Source: WBMS, INSG, Bloomberg Finance L.P., DBS Bank

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(m tons)Indonesia New Caledonia Philippines Others

Industry Focus

Nickel

Nickel demand, supply and price forecasts

(k tons) 2018 2019 2020F 2021F 2022F 2023F 2024F 2025F

Nickel mine production 2,393 2,596 2,361 2,705 2,855 3,071 3,120 3,105

y-o-y % 10.7% 8.5% -9.0% 14.6% 5.5% 7.6% 1.6% -0.5%

Refined nickel production 2,244 2,404 2,366 2,512 2,672 2,773 2,903 2,998

y-o-y % 9.2% 7.1% -1.6% 6.2% 6.4% 3.8% 4.7% 3.3%

Refined nickel consumption 2,342 2,435 2,369 2,533 2,681 2,825 2,962 3,091

y-o-y % 11.5% 4.0% -2.7% 6.9% 5.9% 5.4% 4.8% 4.4%

Balance -98 -31 -2 -21 -9 -52 -59 -93

Class I 142 74 -5 -4 -20 -56 -79 -107

Class II -240 -101 2 -17 10 4 20 13

Stock 222 191 235 210 190 180 170 170

Market balance -287 -62 42 -46 -29 -62 -69 -93

LME nickel price (US$/ton) 13,122 13,936 13,789 15,000 15,500 16,300 17,000 17,500

y-o-y % / q-o-q % 26.0% 6.2% -1.1% 8.8% 3.3% 5.2% 4.3% 2.9%

Source: WBMS, INSG, Bloomberg Finance L.P., DBS Bank

Supply: Nickel supply growth supported by Indonesia’s NPI

capacity expansion

Mined supply from the Philippines and Indonesia to

recover. We expect global mined supply to jump 14.6% y-o-

y in 2021, mainly supported by output recovery in the

Philippines and Indonesia, rebounding from a 9% decline in

2020. Mined output from the Philippines is forecast to

rebound by 19% y-o-y in 2021 (vs. -10% in 2020) due to

production ramp-up and mines reopening amid China’s

rising reliability on the import of Philippines’ ore. Also,

mined nickel production in Indonesia is expected to grow

23% y-o-y in 2021 (vs. -25% in 2020) with increased

domestic demand for ore from local processing facilities.

.

Mined nickel: Supply forecast

(k tons) 2018 2019 2020F 2021F 2022F 2023F 2024F 2025F 2019 2020F 2021F

19-25F

CAGR

Europe 289.8 285.0 285.0 292.8 291.8 292.8 295.7 295.7 -1.6% 0.0% 2.7% 0.6%

America 419.1 409.6 399.0 449.8 448.8 455.2 461.6 468.1 -2.3% -2.6% 12.7% 2.3%

Asia 1,171.4 1,388.7 1,129.6 1,342.6 1,463.0 1,666.8 1,700.8 1,686.7 18.6% -18.7% 18.9% 3.3%

Indonesia 651.1 917.5 693.0 852.0 962.0 1,155.0 1,203.0 1,223.3 40.9% -24.5% 22.9% 4.9%

Philippines 390.0 341.3 307.2 365.0 366.9 368.9 346.8 311.0 -12.5% -10.0% 18.8% -1.5%

Other Asia 130.3 129.9 129.4 125.6 134.1 142.9 151.0 152.5 -0.4% -0.3% -2.9% 2.7%

Oceania 411.6 401.0 435.6 507.0 537.0 541.6 547.4 540.5 -2.6% 8.6% 16.4% 5.1%

Others 101.2 111.3 112.2 113.2 114.2 114.2 114.2 114.2 9.9% 0.9% 0.9% 0.4%

Global 2,393 2,596 2,361 2,705 2,855 3,071 3,120 3,105 8.5% -9.0% 14.6% 3.0%

Source: WBMS, DBS Bank

Industry Focus

Nickel

Refined nickel supply growth driven by Indonesia. We expect

refined nickel output to grow 6.2% y-o-y in 2021 from a

1.6% decline in 2020, driven strongly by Indonesia.

Indonesia’s refined output is expected to increase by 13% y-

o-y in 2021 (vs. +51% in 2020) due to the increase in local

refining capacity. Meanwhile, China’s refined nickel

production is forecast to decline by 4% y-o-y in 2021 due to

minimal profitability and tight ore supply. Instead, Chinese

nickel companies are likely to increase refined nickel

production including NPI in Indonesia to meet its demand

for nickel. Note that Chinese NPI production fell 10% y-o-y in

10M20 while Indonesian NPI production jumped 56% y-o-y,

according to SMM’s data.

High nickel prices crucial for the success of HPAL projects in

Indonesia. Amid extremely positive view on nickel’s outlook

in the EV battery industry, Indonesia’s high-pressure acid

leaching (HPAL) projects which produce intermediates for

batteries in the pipeline are important to the nickel supply-

demand horizon. The successful ramp-up to full capacity

without capex overruns at the Harita-Lygend HPAL project is

crucial for the future landscape of Indonesia’s nickel sector.

This is especially so, as it is Indonesia’s first HPAL project,

and is slated to be commissioned this year. In addition, we

believe nickel prices need to reach and sustain levels that

would significantly incentivise Class I nickel producers using

HPAL technology as the technology is rather complex and

difficult to ramp up to full capacity. In 2021, we expect Class

I nickel supply to grow faster by 7% y-o-y as compared to

Class II supply’s growth of 5% y-o-y, in line with strong

demand for Class I nickel in the booming EV industry.

Refined nickel: Supply forecast

(k tons) 2018 2019 2020F 2021F 2022F 2023F 2024F 2025F 2019 2020F 2021F 19-25F

Europe 391.7 399.4 366.6 399.3 412.3 412.3 412.3 412.3 2.0% -8.2% 8.9% 0.5%

America 294.3 283.4 261.4 289.8 304.3 319.5 335.4 352.2 -3.7% -7.7% 10.8% 3.7%

Asia 1,263.0 1,454.0 1,473.0 1,528.8 1,638.4 1,697.6 1,793.4 1,844.1 15.1% 1.3% 3.8% 4.0%

Indonesia 279.8 360.8 545.0 616.6 740.7 819.1 925.4 989.3 28.9% 51.0% 13.1% 18.3%

China 732.9 852.4 699.2 672.8 655.9 636.2 625.9 612.6 16.3% -18.0% -3.8% -5.4%

Other Asia 250.2 240.8 228.8 239.4 241.8 242.2 242.1 242.2 -3.8% -5.0% 4.6% 0.1%

Oceania 222.4 194.4 199.5 220.1 243.0 259.2 266.8 284.0 -12.6% 2.6% 10.4% 6.5%

Others 72.7 72.9 65.6 74.1 74.1 84.6 95.0 105.4 0.3% -10.0% 13.0% 6.4%

Global 2,244 2,404 2,366 2,512 2,672 2,773 2,903 2,998 7.1% -1.6% 6.2% 3.7%

Source: WBMS, DBS Bank

Industry Focus

Nickel

Raise the TPs for our coverage but downgrade calls due to

strong share price performance. Based on our higher nickel

price forecasts, we revised up our FY21 and FY22 earnings

forecasts under our coverage. With this, factoring in a higher

growth potential, we increased our terminal growth rates for

ANTM and INCO to 5% and 3% respectively as ANTM is

expected to have more opportunities to engage in the

battery sector as it is an SOE. Accordingly, we increased our

TPs for ANTM and INCO to Rp2,700 and Rp6,600

respectively. However, we downgrade our calls on ANTM to

FULLY VALUED and INCO to HOLD due to potential

downside and limited upside respectively.

ANTM: Raise TP to Rp2,700 but downgrade to FULLY

VALUED. We bump up our FY20F/21F EPS by 33%/94% to

factor in higher nickel price forecasts by 4%/6% and higher

nickel ore sales volume assumptions. Taking into account its

potential growth in the EV battery industry, we raise our

terminal growth rate to 5% from 1% previously to derive to

our new TP. The stock has outperformed the market and

sector by rising 814% and 201% from the trough in Mar and

since Nov 2020 respectively. We hold a positive view on its

growth as the key nickel supplier for the rechargeable

battery sector over the long term, backed by its ample nickel

reserves that account for 25% of the total reserves in

Indonesia. However, we downgrade our call to FULLY

VALUED because of the downside potential even after

raising our TP to Rp2,700.

INCO: Raise TP to Rp6,600 but downgrade to HOLD. We

revised up our FY20F/21F EPS by 22%/39% to bake in the

tax benefit for FY20 and 4%/6% higher nickel price

forecasts. The stock has outperformed the market and

sector by rising 362% and 64% from the trough in Mar and

since Nov 2020 respectively. Due to the limited upside even

after raising our TP to Rp6,600, we downgrade our call to

HOLD. However, our long-term outlook on the counter is

still positive given thet (i) nickel matte capacity increase to

90k tons p.a. from 75k tons p.a. by 2021, (ii) JV for HPAL

plant with 40k tons p.a. capacity of battery-grade nickel by

2025, and (iii) JV for NPI plant with 73k tons p.a. capacity of

NPI by 2024 – INCO will produce c.130k tons of Class I nickel

and 73k tons of Class II nickel.

Industry Focus

Nickel

Earnings forecasts for our coverage

Aneka Tambang (Rpbn) FY2018 FY2019 FY2020F FY2021F FY2022F

Total Revenue 25,275 32,719 27,042 30,032 29,325

Operating Profit 1,556 956 2,511 3,836 4,231

EBITDA 3,735 1,919 3,245 4,790 5,276

EBIT 2,883 800 2,225 3,690 4,071

Profit Before Tax (After-EI) 2,013 687 1,790 3,236 3,630

Net Profit (After-EI) 1,636 194 1,163 2,103 2,360

Return on Average Equity (ROAE) 2.2% -10.7% 6.2% 10.4% 10.5%

EPS (After-EI) 17.76 -82.08 48.41 87.53 98.20

EPS (After EI) Growth (y-o-y) -73.7% nm nm 80.8% 12.2%

P/E (X) 131.8 -28.5 64.5 35.6 31.8

Price/ BVPS (X) 2.8 3.3 3.9 3.5 3.2

EV/ EBITDA (X) 15.8 39.9 24.9 16.9 15.4

Vale Indonesia (US$m) FY2018 FY2019 FY2020F FY2021F FY2022F

Total Revenue 777 782 790 791 964

Operating Profit 85 88 113 108 168

EBITDA 214 220 250 249 314

EBIT 85 88 113 108 168

Profit Before Tax (After-EI) 83 89 120 111 173

Net Profit (After-EI) 61 57 94 87 121

Return on Average Equity (ROAE) 3.3% 3.0% 4.7% 4.2% 5.6%

EPS (After-EI) 0.01 0.01 9.44 8.75 12.20

EPS (After EI) Growth (y-o-y) -496.3% -5.1% 63.5% -7.3% 39.4%

P/E (X) 77.6 81.8 50.0 54.0 38.7

Price/ BVPS (X) 2.5 2.4 2.3 2.2 2.1

EV/ EBITDA (X) 20.7 20.2 17.2 16.9 13.8

Source: Bloomberg Finance L.P., DBS Bank

Peer comparison table Mkt cap P/E P/BV EV/EBITDA ROE

Company Share price US$m 2020F 2021F 2022F 2020F 2021F 2022F 2020F 2021F 2022F 2020F 2021F 2022F

Aneka Tambang Rp 2,910 5,326 69.5 48.2 42.5 3.8 3.6 3.4 24.0 20.4 18.3 5.8 7.6 8.5

Vale Indonesia Rp 6,200 4,676 39.9 31.3 25.8 2.1 2.0 1.9 15.5 12.8 12.0 5.2 6.2 7.2

Nickel Asia Corp PHP 5.6 1,646 24.4 24.4 nm 1.2 1.2 nm 8.5 10.0 nm 10.3 nm nm

Norilsk Nickel RUB 25,588 55,305 12.5 8.0 9.0 10.4 8.7 8.1 8.2 6.1 6.5 93.3 125.2 100.0

Independence

Group AU$ 7.1 4,125 32.3 26.7 24.4 2.0 2.0 1.9 11.1 9.9 9.6 8.0 7.2 7.5

Eramet EUR 42.3 1,385 nm nm 20.2 1.1 1.0 0.9 8.4 5.0 3.4 (29.0) 5.3 9.4

Average 35.7 27.7 24.4 3.5 3.1 3.3 12.6 10.7 10.0 15.6 30.3 26.5

Median 32.3 26.7 24.4 2.1 2.0 1.9 9.8 9.9 9.6 6.9 7.2 8.5


Forecasts based on market consensus

ed: CK/ sa: MA, PY, CS

HOLD (Downgrade from BUY)

Last Traded Price (15 Jan 2021): Rp6,625 (JCI : 6,373.40) Price Target 12-mth: Rp6,600 (0% downside) (Prev Rp4,700)

Analyst

LEE Eun Young +65 6682 3708 [email protected]

What’s New • Raise TP to Rp6,600, but downgrade call to HOLD

• 2021 earnings to decline due to tax effect and lower

sales volume

• To register strong results in 4Q20 and 1Q21, not

affected by reconstruction works

• Promising long-term growth outlook backed by

capacity expansion and new projects

Source of all data on this page: Company, DBS Bank, Bloomberg

Finance L.P.

Limited upside post share price rally

Investment Thesis:

Raise TP to Rp6,600 but downgrade to HOLD. We bump up

our FY20F/21F EPS by 22%/39% to bake in the tax benefit for

FY20 and our higher nickel price forecasts by 4%/6%. The

stock has outperformed the market and sector by rising

362% and 64% from the trough in Mar and since Nov 2020

respectively. Due to the limited upside even after raising our

TP to Rp6,600, we downgrade our call to HOLD.

2021 earnings to decline due to tax effect and lower sales

volume. We expect Vale Indonesia’s (INCO) earnings in 2021

to decline 7% despite our assumption of 8.7% growth in

nickel prices. This is due to (i) normalising effective tax rates,

and (ii) 8% y-o-y production volume decline due to #4 EAF

reconstruction during May to Nov 2021. But we expect INCO

to continue to register strong results in 4Q20 and 1Q21, as

the impact of reconstruction works has yet to kick in.

Promising long-term growth outlook. INCO will raise its

annual nickel matte capacity to 90k tons p.a. from 75k tons

p.a. currently by upgrading its plant by 2021. Also, upon

completion of its two projects – (i) JV for HPAL plant with 40k

tons p.a. capacity of battery-grade nickel by 2025, and (ii) JV

for NPI plant with 73k tons p.a. capacity of NPI by 2024 –

INCO will produce c.130k tons of Class I nickel and 73k tons

of Class II nickel.

Valuation:

Our TP of Rp6,600 is based on DCF methodology. Our TP of

Rp6,600 is derived from DCF, premised on an 11.4%

weighted average cost of capital (WACC) and 3% terminal

growth.

Where we differ:

Our earnings forecasts are lower than market consensus as

we have factored in output contraction from the replacement

of furnaces and slower production growth from delayed

capacity expansion.

Key Risks to Our View:

Volatile nickel prices and CoW. The Contract of Work (CoW)

with the Indonesian government in 2014 allows INCO to

maintain its concession zones until 2025 upon meeting the

government’s conditions. At A Glance Issued Capital (m shrs) 9,936

Mkt. Cap (Rpm/US$m) 65,828,244 / 4,695 Major Shareholders (%)

VCL 58.7

Sumitomo Metal Mining Co Ltd 20.1

Free Float (%) 21.2

3m Avg. Daily Val (US$m) 11.5

GIC Industry : Materials / Mining

DBS Group Research . Equity

18 Jan 2021

Indonesia Company Update

Vale Indonesia Bloomberg: INCO IJ | Reuters: INCO.JK Refer to important disclosures at the end of this report

Price Relative

Forecasts and Valuation

FY Dec (US$m) 2019A 2020F 2021F 2022F

Revenue 782 790 791 965 EBITDA 221 250 250 314 Pre-tax Profit 89.1 120 112 173 Net Profit 57.4 93.8 87.0 121 Net Pft (Pre Ex.) 57.4 93.8 87.0 121 Net Pft Gth (Pre-ex) (%) (5.1) 63.5 (7.3) 39.4 EPS (Rp) 81.0 132 123 171 EPS Pre Ex. (Rp) 81.0 132 123 171 EPS Gth Pre Ex (%) (5) 63 (7) 39 Diluted EPS (Rp) 81.0 132 123 171 Net DPS (Rp) 0.0 0.0 0.0 0.0 BV Per Share (Rp) 2,740 2,872 2,995 3,166 PE (X) 81.8 50.0 54.0 38.7 PE Pre Ex. (X) 81.8 50.0 54.0 38.7 P/Cash Flow (X) 34.0 17.1 20.5 18.0 EV/EBITDA (X) 20.2 17.2 16.9 13.8 Net Div Yield (%) 0.0 0.0 0.0 0.0 P/Book Value (X) 2.4 2.3 2.2 2.1 Net Debt/Equity (X) CASH CASH CASH CASH ROAE (%) 3.0 4.7 4.2 5.6 Earnings Rev (%): 22 39 23 Consensus EPS (Rp): 140 168 238 Other Broker Recs: B: 15 S: 3 H: 6

61

81

101

121

141

161

181

201

221

241

1,296.0

2,296.0

3,296.0

4,296.0

5,296.0

6,296.0

7,296.0

Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

Relative IndexRp

Vale Indonesia (LHS) Relative JCI (RHS)

Company Update

Vale Indonesia

WHAT’S NEW

Time to take a break

2021 earnings to decline due to tax effect and lower sales

volume. We expect INCO’s earnings in 2021 to decline 7%

despite our assumption of 8.7% growth in nickel prices.

This is due to (i) normalising effective tax rates, and (ii) 8%

y-o-y production volume decline due to #4 EAF

reconstruction during May to Nov 2021. The production

volume will decline to 67k tons in 2021 from 72k tons in

2020, as the revamping works require temporary

stoppage of the current production line. However, its

nickel matte capacity will increase to 90k tons from the

current 75k tons after the completion of the

reconstruction.

Strong earnings ahead in 4Q20 and 1Q21. However, we

expect INCO to continue to register strong results in 4Q20

and 1Q21 on the back of strong nickel prices and

operations that would be unaffected by the

reconstruction works yet. LME nickel average prices in

4Q20 surged to US$15,930/ton, up 3.1% y-o-y and 12.1%

q-o-q. We expect its operating profit to increase 16% q-o-

q given its cost competitiveness with low cash cost

(US$6,291/ton for 3Q20) and stable fuel and coal prices.

According to our sensitivity analysis, a 1% hike in nickel

price will increase EBITDA and EPS by 3.3% and 8.2%,

respectively, based on FY20F earnings forecast.

Two major projects to serve earnings growth over the long

term. Promising long-term outlook stems from two major

upcoming projects in Pomalaa and Bahodopi – (i) a JV with

Sumitomo Corp for 40k tons p.a. capacity at HPAL plant to

produce battery-grade nickel (MSP: Mixed Sulphide

Precipitate) in Pomalaa by 2025 with US$2.6bn capex, and

(ii) a JV with a Chinese company for 73k tons p.a. capacity

at NPI plant in Bahodopi by 2024 with US$1.6bn capex.

After the completion of these projects, the company is

expected to produce c.130k tons of Class I nickel and 73k

tons of Class II nickel, which is more than double the 72k

tons of production volume in 2020.

Raise our TP to Rp6,600 but downgrade call to HOLD on

limited upside. We revise up our FY20F/21F EPS by

22%/39% to factor in the tax benefit for FY20 and our

higher nickel price forecasts by 4%/6%. Accordingly, we

raise our TP to Rp6,600 which is based on DCF with 11.4%

WACC and 3% terminal growth, which has been raised

from 1% to take account for its potential growth in EV

battery industry. The stock has outperformed the market

and sector by rising 362% and 64% from the trough in

Mar and since Nov 2020 respectively. We downgrade our

call to HOLD in view of the limited upside even after

raising our TP and positive long-term outlook.

Company Background

The largest nickel maker in Indonesia. INCO is the largest

nickel maker in Indonesia with mines and integrated

smelting and processing capability to produce matte with

high nickel content (78%). Its nickel matte output of 71k

tons accounts for c.3% of global nickel supply. INCO has

four concession areas across Indonesia – Sorowako,

Bahodopi, Pomalaa and Suasua. The company was listed

on the Indonesia Stock Exchange in May 1990.

Company Update

Vale Indonesia

Earnings revision

(USD k) Before revision After Revision Change %

2020F 2021F 2022F 2020F 2021F 2022F 2020F 2021F 2022F

LME nickel prices 13,290 14,200 14,900 13,789 15,000 15,500 4% 6% 4%

Revenue 761,759 748,805 927,147 790,379 790,991 964,482 4% 6% 4%

EBITDA 236,736 228,676 292,773 249,695 249,474 314,297 5% 9% 7%

Gross Profit 122,795 113,126 178,855 136,612 135,401 201,685 11% 20% 13%

Operating profit 99,942 86,918 146,405 112,901 107,716 167,929 13% 24% 15%

Pretax profit 102,750 90,435 151,057 119,709 111,479 173,169 17% 23% 15%

Net profit 77,063 62,400 98,187 93,828 86,954 121,218 22% 39% 23%

Source: Company, DBS Bank estimates

Peer comparison table

Mkt cap PE ratio* P/BV ratio* EV/EBITDA* ROE*


Aneka Tambang Rp 3,120 1,728 5,316 79.8 63.7 57.5 4.2 4.1 4.0 27.1 24.5 22.8 5.6 6.5

Vale Indonesia Rp 6,650 2,743 4,685 42.8 33.6 27.7 2.3 2.2 2.1 16.9 14.2 13.0 5.2 5.9

Nickel Asia Corp PHP 5.8 1,063 1,650 24.4 24.4 nm 1.2 1.2 nm 8.5 9.9 nm 10.3 nm

Norilsk Nickel RUB 25,910 39,276 55,638 13.0 8.3 9.4 10.9 9.2 8.5 8.6 6.4 6.9 93.1 123.8

Independence Group AU$ 7.1 1,789 4,115 33.1 27.9 26.0 2.0 2.0 2.0 11.2 10.1 10.0 7.9 6.9

Eramet EUR 44.0 756 1,426 nm nm 21.5 1.2 1.1 1.0 8.6 5.1 3.5 (29.0) 5.3

Average 38.6 31.6 28.4 3.6 3.3 3.5 13.5 11.7 11.2 15.5 29.7

Median 33.1 27.9 26.0 2.2 2.1 2.1 9.9 10.0 10.0 6.7 6.5



Valuation: DCF

Total PV of FCF (USD k ) 608,283

Terminal value (USD k) 6,973,495

PV of Terminal value (USD k) 3,658,552

Net total debt (USD k) (390,938)

Total value (USD k) 4,757,772

Share outstanding (million shares) 9,936

Value per share (USD) 0.47

Value per share (Rp) 6,600

Forex (IDR/USD) 14,100

Valuation assumption

Risk free rate 3.8%

Risk premium 7%

Stock beta 1.50

Cost of equity 14.3%

Cost of debt 7%

Target debt to equity ratio 40%

WACC 11.4%

Terminal growth rate 3%


Company Update

Vale Indonesia

Historical PE and PB band [Pls always check if PE/ PB band is correctly represented]

Forward PE band (x) PB band (x)

Source: Bloomberg Finance L.P., DBS Bank estimates Source: Bloomberg Finance L.P., DBS Bank estimates

Avg: 36.6x

+1sd: 48.9x

+2sd: 61.3x

-1sd: 24.2x

-2sd: 11.8x8.4

18.4

28.4

38.4

48.4

58.4

68.4

Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21

(x)

Avg: 1.19x

+1sd: 1.45x

+2sd: 1.7x

-1sd: 0.94x

-2sd: 0.69x

0.3

0.8

1.3

1.8

2.3

Jan-17 Jan-18 Jan-19 Jan-20

(x)

Company Update

Vale Indonesia

Key Assumptions

FY Dec 2018A 2019A 2020F 2021F 2022F

Sales volume (k tons) 74.8 71.0 72.4 66.6 78.6 LME Nickel price

(US$/ton)

13.1 13.9 13.8 15.0 15.5

ASP(US$/ton) 10.3 10.9 10.8 11.7 12.1 Average price of

HSFO(US$/bbl) 0.10 0.10 0.10 0.10 0.10

Segmental Breakdown

FY Dec 2018A 2019A 2020F 2021F 2022F Revenues (US$m)

Nickel Matt 777 782 790 791 965

Total 777 782 790 791 965 (US$m)

Nickel Matt 104 117 137 135 202

Total 104 117 137 135 202 Margins (%)

Nickel Matt 13.4 14.9 17.3 17.1 20.9

Total 13.4 14.9 17.3 17.1 20.9

Income Statement (US$m)

FY Dec 2018A 2019A 2020F 2021F 2022F

Revenue 777 782 790 791 965 Cost of Goods Sold (673) (666) (654) (656) (763)

Gross Profit 104 117 137 135 202 Other Opng (Exp)/Inc (19.1) (28.2) (23.7) (27.7) (33.8)

Operating Profit 84.9 88.3 113 108 168 Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Associates & JV Inc 0.0 0.0 0.0 0.0 0.0 Net Interest (Exp)/Inc (2.2) 0.80 6.80 3.80 5.20 Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0

Pre-tax Profit 82.6 89.1 120 112 173 Tax (22.1) (31.7) (25.9) (24.5) (52.0)

Minority Interest 0.0 0.0 0.0 0.0 0.0 Preference Dividend 0.0 0.0 0.0 0.0 0.0

Net Profit 60.5 57.4 93.8 87.0 121 Net Profit before Except. 60.5 57.4 93.8 87.0 121 EBITDA 214 221 250 250 314 Growth

Revenue Gth (%) 23.4 0.7 1.1 0.1 21.9 EBITDA Gth (%) 96.8 3.1 13.3 (0.1) 26.0 Opg Profit Gth (%) (572.0) 4.0 27.9 (4.6) 55.9 Net Profit Gth (Pre-ex) (%) nm (5.1) 63.5 (7.3) 39.4

Margins & Ratio Gross Margins (%) 13.4 14.9 17.3 17.1 20.9 Opg Profit Margin (%) 10.9 11.3 14.3 13.6 17.4 Net Profit Margin (%) 7.8 7.3 11.9 11.0 12.6 ROAE (%) 3.3 3.0 4.7 4.2 5.6 ROA (%) 2.8 2.6 4.1 3.6 4.8 ROCE (%) 3.0 2.7 4.2 3.8 5.1 Div Payout Ratio (%) 0.0 0.0 0.0 0.0 0.0 Net Interest Cover (x) 37.9 NM NM NM NM

Source: Company, DBS Bank

Company Update

Vale Indonesia

Quarterly Income Statement (US$m)

FY Dec 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020

Revenue 214 276 175 186 211 Cost of Goods Sold (170) (180) (154) (166) (166)

Gross Profit 43.8 95.4 20.5 20.1 44.4 Other Oper. (Exp)/Inc (7.5) (8.0) (2.4) 0.50 (12.3)

Operating Profit 36.3 87.4 18.1 20.6 32.1 Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Associates & JV Inc 0.0 0.0 0.0 0.0 0.0 Net Interest (Exp)/Inc 0.0 0.70 5.00 0.50 0.10 Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0

Pre-tax Profit 36.2 88.1 23.0 21.1 32.2 Tax (9.9) (30.9) 5.90 3.10 (8.7) Minority Interest 0.0 0.0 0.0 0.0 0.0

Net Profit 26.3 57.2 29.0 24.2 23.5 Net profit bef Except. 26.3 57.2 29.0 24.2 23.5 EBITDA 76.0 124 48.7 61.2 70.6

Growth Revenue Gth (%) 29.2 28.6 (36.6) 6.3 13.4 EBITDA Gth (%) 352.8 62.9 (60.7) 25.7 15.4 Opg Profit Gth (%) (556.2) 141.1 (79.3) 14.0 55.7 Net Profit Gth (Pre-ex) (%) (537.8) 117.3 (49.4) (16.5) (2.7)

Margins

Gross Margins (%) 20.4 34.6 11.7 10.8 21.1 Opg Profit Margins (%) 16.9 31.7 10.3 11.1 15.2 Net Profit Margins (%) 12.3 20.8 16.6 13.0 11.2

Balance Sheet (US$m)

FY Dec 2018A 2019A 2020F 2021F 2022F Net Fixed Assets 1,435 1,468 1,461 1,459 1,443 Invts in Associates & JVs 0.0 0.0 0.0 0.0 0.0 Other LT Assets 137 167 167 167 434 Cash & ST Invts 301 249 391 476 351

Inventory 132 148 145 146 170 Debtors 124 107 108 109 132 Other Current Assets 73.8 84.0 84.9 85.0 104

Total Assets 2,203 2,223 2,357 2,441 2,633

ST Debt

36.5 0.0 0.0 0.0 0.0

Creditor 91.2 97.4 115 115 140 Other Current Liab 47.6 39.1 65.5 66.5 100

LT Debt 0.0 0.0 0.0 0.0 0.0 Other LT Liabilities 143 144 141 137 149 Shareholder’s Equity 1,884 1,942 2,036 2,123 2,244 Minority Interests 0.0 0.0 0.0 0.0 0.0

Total Cap. & Liab. 2,203 2,223 2,357 2,441 2,633 Non-Cash Wkg. Capital 191 203 158 158 165 Net Cash/(Debt) 265 249 391 476 351 Debtors Turn (avg days) 65.7 54.0 49.8 50.1 45.6 Creditors Turn (avg days) 51.0 64.5 75.0 81.7 75.6 Inventory Turn (avg days) 83.7 95.7 103.5 103.4 93.4 Asset Turnover (x) 0.4 0.4 0.3 0.3 0.4 Current Ratio (x) 3.6 4.3 4.0 4.5 3.1 Quick Ratio (x) 2.4 2.6 2.8 3.2 2.0 Net Debt/Equity (X) CASH CASH CASH CASH CASH Net Debt/Equity ex MI (X) CASH CASH CASH CASH CASH

Capex to Debt (%) 96.3 N/A N/A N/A N/A Source: Company, DBS Bank

Company Update

Vale Indonesia

Cash Flow Statement (US$m)

FY Dec 2018A 2019A 2020F 2021F 2022F

Pre-Tax Profit 82.6 89.1 120 112 173 Dep. & Amort. 129 132 137 142 146 Tax Paid (22.1) (31.7) (25.9) (24.5) (52.0)

Assoc. & JV Inc/(loss) 0.0 0.0 0.0 0.0 0.0 Chg in Wkg.Cap. 91.5 (27.3) 44.5 0.50 (7.5) Other Operating CF 0.0 0.0 0.0 0.0 0.0

Net Operating CF 204 138 275 229 260 Capital Exp.(net) (35.2) (125) (130) (140) (397) Other Invts.(net) 0.0 0.0 0.0 0.0 0.0

Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0 Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0 Other Investing CF (48.6) (40.8) 0.0 0.0 0.0

Net Investing CF (83.8) (166) (130) (140) (397) Div Paid 0.0 0.0 0.0 0.0 0.0 Chg in Gross Debt (36.5) (36.5) 0.0 0.0 0.0

Capital Issues 0.0 0.0 0.0 0.0 0.0 Other Financing CF (3.9) 12.1 (3.2) (3.8) 11.6

Net Financing CF (40.4) (24.4) (3.2) (3.8) 11.6 Currency Adjustments 0.0 0.0 0.0 0.0 0.0 Chg in Cash 80.1 (52.5) 142 85.4 (125) Opg CFPS (Rp) 159 233 325 323 378

Free CFPS (Rp) 239 17.9 205 126 (193)


Target Price & Ratings History

Source: DBS Bank

Analyst: LEE Eun Young

S.No.Date of

Report

Clos ing

Price

12-mth

Target

Price

Rating

1: 25 Feb 20 3000 3300 HOLD

2: 06 Mar 20 2570 3300 BUY

3: 30 Apr 20 2570 2900 BUY

4: 30 Jul 20 3420 3800 BUY

5: 15 Sep 20 3950 4400 BUY

6: 02 Nov 20 4270 4700 BUY

Note : Share price and Target price are adjusted for corporate actions.

1

2

3

45

6

1368

2368

3368

4368

5368

6368

Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21

Rp

Company Update

Vale Indonesia

DBS Bank recommendations are based on an Absolute Total Return* Rating system, defined as follows:

STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)

BUY (>15% total return over the next 12 months for small caps, >10% for large caps)

HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)

FULLY VALUED (negative total return, i.e., > -10% over the next 12 months)

SELL (negative total return of > -20% over the next 3 months, with identifiable share price catalysts within this time frame)

*Share price appreciation + dividends

Completed Date: 15 Jan 2021 20:48:44 (WIB)

Dissemination Date: 18 Jan 2021 07:25:07 (WIB)

Sources for all charts and tables are DBS Bank unless otherwise specified.

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The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates

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estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary

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described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with

the aforesaid entities), that:

(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and

(b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or

risk assessments stated therein.

Company Update

Vale Indonesia

Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets.

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ANALYST CERTIFICATION

The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the

companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) 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 the report. The

research analyst (s) primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate1 does

not serve as an officer of the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the

management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of

the entity who is responsible for the management of the issuer or the new listing applicant) and the research analyst(s) primarily

responsible for the content of this research report or his associate does not have financial interests2 in relation to an issuer or a new

listing applicant that the analyst reviews. DBS Group has procedures in place to eliminate, avoid and manage any potential conflicts of

interests that may arise in connection with the production of research reports. The research analyst(s) responsible for this report operates

as part of a separate and independent team to the investment banking function of the DBS Group and procedures are in place to ensure

that confidential information held by either the research or investment banking function is handled appropriately. There is no direct link of

DBS Group's compensation to any specific investment banking function of the DBS Group.

COMPANY-SPECIFIC / REGULATORY DISCLOSURES

1. DBS Bank Ltd, DBS HK, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS'') or their subsidiaries and/or other affiliates do not

have a proprietary position in the securities recommended in this report as of 30 Dec 2020.

2. Neither DBS Bank Ltd nor DBS HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this

Research Report.

Compensation for investment banking services:

3. DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of

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persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a

transaction in any security discussed in this document should contact DBSVUSA exclusively.

Disclosure of previous investment recommendation produced:

4. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have

published other investment recommendations in respect of the same securities / instruments recommended in this research

report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view

previous investment recommendations published by DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their

subsidiaries and/or other affiliates in the preceding 12 months.

1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust

of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another

person accustomed or obliged to act in accordance with the directions or instructions of the analyst.

2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an

issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or

analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme

other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer

or a new listing applicant.

ed: CK/ sa: xx, PY, CS

FULLY VALUED (Downgrade from BUY)

Last Traded Price (14 Jan 2021): Rp3,180 (JCI : 6,428.30) Price Target 12-mth: Rp2,700 (15% downside) (Prev Rp1,450)

Analyst

LEE Eun Young +65 6682 3708 [email protected]

What’s New • Raise TP to Rp2,700, but downgrade call to FULLY

VALUED

• Becoming a key player in EV battery value chain in

Indonesia

• Strong earnings growth in 2021, backed by more

than doubling of nickel ore sales volume

• 201% share price surge since Nov to stimulate desire

to take profit

Source of all data on this page: Company, DBS Bank, Bloomberg Finance

L.P.

Promising outlook but share price went too far

Investment Thesis:

Raise TP to Rp2,700 but downgrade to FULLY VALUED. We

bump up our FY20F/21F EPS by 33%/94% to factor in our

higher nickel price forecasts by 4%/6% and higher nickel ore

sales volume. Taking into account its potential growth in the

EV battery industry, we raise our terminal growth rate to 5%

from 1% previously to derive to our new TP. The stock has

outperformed the market and sector by rising 814% and

201% from the trough in Mar and since Nov 2020

respectively. Due to the downside potential even after raising

our TP to Rp2,700, we downgrade our call to FULLY VALUED.

Becoming a key player in EV battery value chain in Indonesia.

Backed by its ample nickel reserves that account for 25% of

the total reserves in Indonesia, ANTM will be a key participant

in PT Indonesia Battery Holdings – having signed an MOU

with the largest two EV battery makers, CATL in China and LG

Group in Korea to supply nickel to their battery plants to be

built in Indonesia.

Strong earnings growth on higher nickel ore sales and

ferronickel capacity expansion. Its nickel ore sales in 2021

are expected to more than double given (i) the government’s

introduction of benchmark pricing (HPM) to set the floor

price for domestic nickel ore, and (ii) refined nickel output

growth in its clients. In addition, its ferronickel capacity is

expected to grow by 13.5k tonnes to 40.5k tonnes p.a. upon

completion of its ferronickel plant in East Halmahera in 2022.

Valuation:

TP of Rp2,700 based on DCF model. To factor in the growth of long-term free cash flow, our target price (TP) is derived from DCF model, premised on 11.6% weighted average cost of capital (WACC) and 5% terminal growth.

Where we differ:

We are more optimistic than consensus for earnings forecasts due to the expected nickel ore sales growth that the market has yet to factor in.

Key Risks to Our View:

Volatile nickel prices. A sharp contraction in demand for

nickel and downturn in London Metal Exchange (LME) nickel

prices would pose major downside risks as ANTM’s sales

prices are pegged to LME nickel prices. At A Glance Issued Capital (m shrs) 24,031

Mkt. Cap (Rpbn/US$m) 76,418 / 5,436

Major Shareholders (%)

Republic of Indonesia (%) 65%

Free Float (%) 35%

3m Avg. Daily Val (US$m) 74.7

GIC Industry : Materials / Mining

DBS Group Research . Equity

15 Jan 2021

Indonesia Company Update

Aneka Tambang Bloomberg: ANTM IJ | Reuters: ANTM.JK Refer to important disclosures at the end of this report

Price Relative

Forecasts and Valuation

FY Dec (Rpbn) 2019A 2020F 2021F 2022F

Revenue 32,719 27,042 30,032 29,325 EBITDA 1,919 3,245 4,790 5,276 Pre-tax Profit 687 1,790 3,236 3,630 Net Profit 194 1,163 2,104 2,360 Net Pft (Pre Ex.) 194 1,163 2,104 2,360 Net Pft Gth (Pre-ex) (%) (88.2) 500.1 80.8 12.2 EPS (Rp) 8.07 48.4 87.5 98.2 EPS Pre Ex. (Rp) 8.07 48.4 87.5 98.2 EPS Gth Pre Ex (%) (88) 500 81 12 Diluted EPS (Rp) 8.07 48.4 87.5 98.2 Net DPS (Rp) 0.0 0.0 0.0 0.0 BV Per Share (Rp) 755 802 889 986 PE (X) 394.2 65.7 36.3 32.4 PE Pre Ex. (X) 394.2 65.7 36.3 32.4 P/Cash Flow (X) 46.8 26.9 24.5 20.9 EV/EBITDA (X) 42.5 25.3 17.2 15.6 Net Div Yield (%) 0.0 0.0 0.0 0.0 P/Book Value (X) 4.2 4.0 3.6 3.2 Net Debt/Equity (X) 0.3 0.3 0.3 0.3 ROAE (%) 1.1 6.2 10.4 10.5 Earnings Rev (%): 33 94 91 Consensus EPS (Rp): 42.5 52.7 57.6 Other Broker Recs: B: 15 S: 0 H: 3

45

95

145

195

245

295

313.2

813.2

1,313.2

1,813.2

2,313.2

2,813.2

3,313.2

Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

Relative IndexRp

Aneka Tambang (LHS) Relative JCI (RHS)

Company Update

Aneka Tambang

WHAT’S NEW

Stimulating desire to take profit

Becoming a key player in EV battery value chain in

Indonesia. Backed by its ample nickel reserves that

account for 25% of the total reserves in Indonesia, ANTM

will be a key member of PT Indonesia Battery Holdings –

having signed an MOU with the two largest EV battery

makers, CATL in China and LG Group in Korea to supply

nickel to their battery plants to be built in Indonesia.

Oct 2020: PT Indonesia Battery Holding, would be formed

by state miners MIND ID and Aneka Tambang (ANTAM),

state utility Perusahan Listrik Negara (PLN) and state oil

company PT Pertamina. Indonesia is also in talks with

China’s CATL and South Korea’s LG Chem, the world’s top

two EV battery makers by output, to invest between

US$12bn and US$20bn in developing the dream supply

chain. PT Indonesia Battery Holding aims to produce

between eight and 10 gigawatt hours (GWh) worth of

batteries each year, kicking off operations around two to

three years from now (as reported by Jakarta Post).

Mining Industry Indonesia (MIND ID) is Indonesia's mining

industry holding company comprising PT ANTAM Tbk, PT Bukit

Asam, PT Freeport Indonesia, PT Indonesia Asahan Aluminium

(Persero), and PT Timah Tbk.

16 Dec 2020: MOU with CATL. Contemporary Amperex

Technology (CATL) plans to build a US$5bn lithium battery

factory in Indonesia, ramping up its capacity amid growing

demand for electric vehicles. The government official said

that a deal between China-based CATL and Indonesian

state miner PT Aneka Tambang has been inked i to ensure

that 60% of its mined nickel goes into batteries in

Indonesia (as reported by Reuters).

30 Dec 2020: Indonesia says US$9.8bn EV battery MOU

agreed with LG Energy Solution. Indonesia and LG Energy

Solution signed an MOU for an EV battery investment deal

worth US$9.8bn on 18 Dec. At least 70% of the nickel ore

to produce the EV batteries should be processed in

Indonesia, according to the MOU (as reported by Reuters).

Earnings growth on higher nickel ore sales and capacity

expansion of ferronickel. Its nickel ore sales volume in

2021 is expected to be 6m wmt which is c.3 times of that in

2020 given (i) the government’s introduction of benchmark

pricing (HPM) to set the floor price for domestic nickel ore,

and (ii) production growth of refined nickel in its clients

(Tsingshan and PT Virtue Dragon). Tsingshan plans to

increase its capacity by 78k tonnes to 360k tonnes p.a. by

the end of this year by adding eight more rotary kiln–

electric arc furnace (RKEF) lines. PT Virtue Dragon, a

subsidiary of Delong Steel, will increase its capacity by 50k

tonnes to 160k tonnes p.a. in 2020, and by 35k tonnes to

195k tonnes p.a. in 2021. Note that ANTM’s sales volume

of nickel ore in 2020 would be 2m wmt, representing a

decline of 74% y-o-y due to the export ban on ore and

price dumping in the domestic market before the

implementation of HPM.

In addition, its ferronickel capacity is expected to grow by

13.5k tonnes to 40.5k tonnes p.a. upon completion of its

ferronickel plant in East Halmahera in 2022.

Raise TP to Rp2,700 but downgrade to FULLY VALUED. We

revise up our FY20F/21F EPS by 33%/94% to factor in our

higher nickel price forecasts by 4%/6%. Taking into account

its potential growth in the EV battery industry, we raise our

terminal growth rate to 5% from 1% previously to derive to

our new TP of Rp2,700. This implies 3x P/BV and 31x PE,

based on FY21F earnings forecast. The stock has

outperformed the market and sector by rising 814% and

201% from the trough in Mar and since Nov 2020

respectively. Due to the downside potential even after

raising our TP to Rp2,700, we downgrade our call to FULLY

VALUED.

Company Update

Aneka Tambang

Company Background

ANTM was established on 5 July 1968 through a merger of

several state mining entities. It is a vertically integrated

company which performs exploration, excavation,

processing and marketing of nickel ore, ferronickel, gold,

silver, bauxite and coal. PT Inalum owns a 65% stake in the

company while the remaining 35% stake is owned by the

public.

Earnings revision

(Rp bn) Before revision After Revision Change %

2020F 2021F 2022F 2020F 2021F 2022F 2020F 2021F 2022F

LME nickel

prices(US$/ton) 13,290 14,200 14,900 13,789 15,000 15,500 4% 6% 4%

Revenue 26,821 27,617 26,415 27,042 30,032 29,325 1% 9% 11%

EBITDA 3,044 3,406 3,688 3,531 4,936 5,435 16% 45% 47%

Operating profit 2,024 2,306 2,539 2,511 3,836 4,231 24% 66% 67%

Pretax profit 1,343 1,666 1,898 1,790 3,236 3,630 33% 94% 91%

Net profit 873 1,083 1,234 1,163 2,103 2,360 33% 94% 91%


Peer comparison table Mkt cap PE ratio* P/BV ratio* EV/EBITDA* ROE*


Aneka Tambang Rp 3,120 1,728 5,316 79.8 63.7 57.5 4.2 4.1 4.0 27.1 24.5 22.8 5.6 6.5

Vale Indonesia Rp 6,650 2,743 4,685 42.8 33.6 27.7 2.3 2.2 2.1 16.9 14.2 13.0 5.2 5.9

Nickel Asia Corp PHP 5.8 1,063 1,650 24.4 24.4 nm 1.2 1.2 nm 8.5 9.9 nm 10.3 nm

Norilsk Nickel RUB 25,910 39,276 55,638 13.0 8.3 9.4 10.9 9.2 8.5 8.6 6.4 6.9 93.1 123.8

Independence Group AU$ 7.1 1,789 4,115 33.1 27.9 26.0 2.0 2.0 2.0 11.2 10.1 10.0 7.9 6.9

Eramet EUR 44.0 756 1,426 nm nm 21.5 1.2 1.1 1.0 8.6 5.1 3.5 (29.0) 5.3

Average 38.6 31.6 28.4 3.6 3.3 3.5 13.5 11.7 11.2 15.5 29.7

Median 33.1 27.9 26.0 2.2 2.1 2.1 9.9 10.0 10.0 6.7 6.5



Company Update

Aneka Tambang

Valuation: DCF

Total PV of FCF (Rp bn) 9,216

Terminal value (Rp bn) 32,989

PV of Terminal value (Rp bn) 13,750

Net total debt (Rp bn) (2,518)

Total value (Rp billion) 25,483

Share outstanding (million shares) 9,538

Value per share (Rp) 2,700

Valuation assumption

Risk free rate 3.8%

Risk premium 7.0%

Stock beta 1.6

Cost of equity 14.6%

Cost of debt 7.0%

Target debt to equity ratio 40.0%

WACC 11.6%

Terminal growth rate 5.0%


Historical PE and PB band

Forward PE band (x) PB band (x)

Source: Bloomberg Finance L.P., DBS Bank estimates Source: Bloomberg Finance L.P., DBS Bank estimates

Avg: 26.4x

+1sd: 46.1x

+2sd: 65.9x

-1sd: 6.6x

-11.8

8.2

28.2

48.2

68.2

88.2

108.2


(x)

Avg: 1.09x+1sd: 1.41x+2sd: 1.73x

-1sd: 0.76x-2sd: 0.44x

0.3

0.8

1.3

1.8

2.3

2.8

3.3

3.8

4.3


(x)

Company Update

Aneka Tambang

Key Assumptions

FY Dec 2018A 2019A 2020F 2021F 2022F

LME Nickel

prices(US$/ton)

13,122 13,936 13,789 15,000 15,500 Gold prices(US$/oz) 1,269 1,393 1,774 1,810 1,629

LME Aluminium

Prices(US$/ton)

2,110 1,791 1,666 1,799 1,889 Forex(IDR/US$) 14,243 14,141 14,800 14,500 14,200

Segmental Breakdown

FY Dec 2018A 2019A 2020F 2021F 2022F Revenues (Rpbn) Ferronickel 4,668 4,871 5,100 5,538 6,227 Nickel ore 2,934 3,706 1,015 3,247 3,943

Gold 16,706 22,466 20,241 20,227 17,828 Others 967 1,675 686 1,020 1,328

Total 25,275 32,719 27,042 30,032 29,325 Sales volume

Ferronickel (tons) 24,135 26,212 26,500 27,000 30,000 Nickel ore (k wmt) 6,335 7,559 2,000 6,000 7,200

Gold (kg) 27,894 34,016 23,000 23,000 23,000

ASP

Ferronickel (US$/ton) 13,581 13,142 13,004 14,145 14,617 Nickel ore (US$/wmt) 32.5 34.7 34.3 37.3 38.6 Gold (US$/oz) 1,308 1,453 1,849 1,886 1,698

Income Statement (Rpbn)

FY Dec 2018A 2019A 2020F 2021F 2022F

Revenue 25,275 32,719 27,042 30,032 29,325 Cost of Goods Sold (20,613) (28,271) (22,395) (23,583) (22,161)

Gross Profit 4,662 4,447 4,647 6,449 7,164 Other Opng (Exp)/Inc (3,106) (3,492) (2,136) (2,613) (2,933)

Operating Profit 1,556 956 2,511 3,836 4,231 Other Non Opg (Exp)/Inc 2,587 (67.6) (186) (85.8) (100.0) Associates & JV Inc (1,260) (88.1) (100.0) (60.0) (60.0) Net Interest (Exp)/Inc (870) (113) (435) (454) (441)

Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0

Pre-tax Profit 2,013 687 1,790 3,236 3,630 Tax (377) (493) (626) (1,133) (1,271) Minority Interest 0.0 0.0 0.0 0.0 0.0 Preference Dividend 0.0 0.0 0.0 0.0 1.00

Net Profit 1,636 194 1,163 2,104 2,360 Net Profit before Except. 1,636 194 1,163 2,104 2,360 EBITDA 3,735 1,919 3,245 4,790 5,276 Growth Revenue Gth (%) 99.7 29.4 (17.3) 11.1 (2.4) EBITDA Gth (%) 127.0 (48.6) 69.1 47.6 10.1

Opg Profit Gth (%) 159.1 (38.6) 162.7 52.8 10.3

Net Profit Gth (Pre-ex) (%) 1,098.5 (88.2) 500.1 80.8 12.2 Margins & Ratio Gross Margins (%) 18.4 13.6 17.2 21.5 24.4 Opg Profit Margin (%) 6.2 2.9 9.3 12.8 14.4 Net Profit Margin (%) 6.5 0.6 4.3 7.0 8.0 ROAE (%) 9.2 1.1 6.2 10.4 10.5 ROA (%) 5.4 0.6 3.8 6.5 6.8 ROCE (%) 4.4 0.9 5.7 8.2 8.4 Div Payout Ratio (%) 0.0 0.0 0.0 0.0 0.0 Net Interest Cover (x) 1.8 8.5 5.8 8.5 9.6


Company Update

Aneka Tambang

Quarterly Income Statement (Rpbn)

FY Dec 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020

Revenue 10,131 8,161 5,203 4,024 8,811 Cost of Goods Sold (8,900) (7,093) (4,641) (3,276) (7,216)

Gross Profit 1,231 1,069 562 747 1,595 Other Oper. (Exp)/Inc (722) (1,354) (424) (433) (606)

Operating Profit 509 (285) 138 314 989 Other Non Opg (Exp)/Inc (23.3) (41.3) 681 (638) 318 Associates & JV Inc (8.3) (14.5) 6.10 (36.6) 5.50 Net Interest (Exp)/Inc (127) 37.2 (1,161) 830 (327) Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0

Pre-tax Profit 350 (304) (337) 469 985 Tax (137) (144) 54.6 (103) (234)

Minority Interest 0.0 0.0 0.0 0.0 0.0

Net Profit 214 (448) (282) 367 751 Net profit bef Except. 214 (448) (282) 367 751 EBITDA 477 (341) 824 (361) 1,312

Growth Revenue Gth (%) 23.4 (19.4) (36.3) (22.7) 119.0 EBITDA Gth (%) 14.9 nm nm nm nm Opg Profit Gth (%) 13.4 (156.1) (148.2) 128.2 215.1 Net Profit Gth (Pre-ex) (%) (15.2) (309.7) (37.0) (230.1) 104.8

Margins

Gross Margins (%) 12.2 13.1 10.8 18.6 18.1 Opg Profit Margins (%) 5.0 (3.5) 2.6 7.8 11.2 Net Profit Margins (%) 2.1 (5.5) (5.4) 9.1 8.5

Balance Sheet (Rpbn)

FY Dec 2018A 2019A 2020F 2021F 2022F Net Fixed Assets 19,490 18,866 20,345 22,245 24,542 Invts in Associates & JVs 0.0 0.0 0.0 0.0 0.0 Other LT Assets 5,364 3,664 4,619 5,119 5,163 Cash & ST Invts 4,299 3,636 3,002 2,800 3,094

Inventory 1,846 1,796 1,370 1,443 1,356 Debtors 944 1,002 643 715 698 Other Current Assets 254 1,230 1,243 1,255 1,268

Total Assets 32,195 30,195 31,223 33,577 36,120

ST Debt

2,891 3,193 3,193 3,263 3,333

Creditor 868 740 586 617 580 Other Current Liab 1,804 1,361 1,388 1,416 1,444 LT Debt 7,348 5,564 5,564 5,694 5,824 Other LT Liabilities 838 1,204 1,216 1,228 1,242 Shareholder’s Equity 18,448 18,133 19,276 21,359 23,698

Minority Interests 0.0 0.0 0.0 0.0 0.0

Total Cap. & Liab. 32,195 30,195 31,223 33,577 36,121 Non-Cash Wkg. Capital 372 1,928 1,282 1,380 1,297 Net Cash/(Debt) (5,939) (5,120) (5,755) (6,157) (6,063) Debtors Turn (avg days) 13.8 10.9 11.1 8.3 8.8 Creditors Turn (avg days) 11.0 10.8 11.3 9.8 10.4 Inventory Turn (avg days) 27.2 24.5 27.0 22.8 24.4 Asset Turnover (x) 0.8 1.0 0.9 0.9 0.8 Current Ratio (x) 1.3 1.4 1.2 1.2 1.2 Quick Ratio (x) 0.9 0.9 0.7 0.7 0.7 Net Debt/Equity (X) 0.3 0.3 0.3 0.3 0.3 Net Debt/Equity ex MI (X) 0.3 0.3 0.3 0.3 0.3

Capex to Debt (%) 68.8 5.7 28.5 33.5 38.2 Z-Score (X) NA NA NA NA NA


Company Update

Aneka Tambang

Cash Flow Statement (Rpbn)

FY Dec 2018A 2019A 2020F 2021F 2022F

Pre-Tax Profit 2,013 687 1,790 3,236 3,630 Dep. & Amort. 852 1,119 1,020 1,100 1,203 Tax Paid (377) (493) (626) (1,133) (1,271)

Assoc. & JV Inc/(loss) 0.0 0.0 0.0 0.0 1.00 Chg in Wkg.Cap. 0.0 0.0 0.0 0.0 0.0 Other Operating CF (613) 321 658 (85.2) 93.7

Net Operating CF 1,875 1,634 2,842 3,119 3,658 Capital Exp.(net) (7,043) (495) (2,500) (3,000) (3,500) Other Invts.(net) 1,379 401 (956) (500) (44.0)

Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0 Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0

Other Investing CF 3,070 (791) 0.0 0.0 0.0

Net Investing CF (2,594) (885) (3,456) (3,500) (3,544) Div Paid 0.0 0.0 0.0 0.0 0.0 Chg in Gross Debt 724 (1,482) 0.0 200 200

Capital Issues 0.0 0.0 0.0 0.0 0.0 Other Financing CF (1,344) 118 (20.5) (20.5) (20.5)

Net Financing CF (620) (1,363) (20.5) 180 180 Currency Adjustments 87.4 (48.2) 0.0 0.0 0.0 Chg in Cash (1,252) (663) (634) (202) 293 Opg CFPS (Rp) 78.0 68.0 118 130 152

Free CFPS (Rp) (215) 47.4 14.2 4.93 6.56


Target Price & Ratings History

Source: DBS Bank

Analyst: LEE Eun Young

S.No.Date of

Report

Clos ing

Price

12-mth

Target

Price

Rat ing

1: 20 Apr 20 500 730 BUY

2: 21 Apr 20 482 730 BUY

3: 30 Jun 20 605 730 BUY

4: 04 Aug 20 705 800 BUY

5: 16 Sep 20 795 900 BUY

6: 02 Nov 20 1100 1450 BUY

Note : Share price and Target price are adjusted for corporate actions.

1

2

3

45

6

330

830

1330

1830

2330

2830

3330

Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21

Rp

Company Update

Aneka Tambang








Completed Date: 15 Jan 2021 17:30:37 (WIB)

Dissemination Date: 18 Jan 2021 17:05:32 (WIB)




































Company Update

Aneka Tambang














management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of

the entity who is responsible for the management of the issuer or the new listing applicant) and the research analyst(s) primarily

responsible for the content of this research report or his associate does not have financial interests2 in relation to an issuer or a new

listing applicant that the analyst reviews. DBS Group has procedures in place to eliminate, avoid and manage any potential conflicts of

interests that may arise in connection with the production of research reports. The research analyst(s) responsible for this report operates

as part of a separate and independent team to the investment banking function of the DBS Group and procedures are in place to ensure

that confidential information held by either the research or investment banking function is handled appropriately. There is no direct link of

DBS Group's compensation to any specific investment banking function of the DBS Group.



have a proprietary position in the securities recommended in this report as of 30 Dec 2020.


Research Report.




















Industry Focus

Nickel

Page 11








Completed Date: 19 Jan 2021 07:11:03 (SGT)

Dissemination Date: 19 Jan 2021 07:58:16 (SGT)




































Industry Focus

Nickel

Page 12














management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the

entity who is responsible for the management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for

the content of this research report or his associate does not have financial interests2 in relation to an issuer or a new listing applicant that

the analyst reviews. DBS Group has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in

connection with the production of research reports. The research analyst(s) responsible for this report operates as part of a separate and

independent team to the investment banking function of the DBS Group and procedures are in place to ensure that confidential

information held by either the research or investment banking function is handled appropriately. There is no direct link of DBS Group's

compensation to any specific investment banking function of the DBS Group.



have a proprietary position in the securities recommended in this report as of 30 Nov 2020.


Research Report.




















Industry Focus

Nickel

Page 13

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General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or

resident of or located in any locality, state, country or other jurisdiction where such distribution, publication,

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Financial Services Licence no. 475946.

DBSVS and DBSV HK are exempted from the requirement to hold an Australian Financial Services Licence under

the Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. Both DBS Bank Ltd and

DBSVS are regulated by the Monetary Authority of Singapore under the laws of Singapore, and DBSV HK is

regulated by the Hong Kong Securities and Futures Commission under the laws of Hong Kong, which differ from

Australian laws.

Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.

Hong Kong This report is being distributed in Hong Kong by DBS Bank Ltd, DBS Bank (Hong Kong) Limited and DBS Vickers

(Hong Kong) Limited, all of which are registered with or licensed by the Hong Kong Securities and Futures

Commission to carry out the regulated activity of advising on securities. DBS Bank Ltd., Hong Kong Branch is a

limited liability company incorporated in Singapore.

Indonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia.

Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report,

received from ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in

connection with this report. In addition to the General Disclosure/Disclaimer found at the preceding page,

recipients of this report are advised that ADBSR (the preparer of this report), its holding company Alliance

Investment Bank Berhad, their respective connected and associated corporations, affiliates, their directors, officers,

employees, agents and parties related or associated with any of them may have positions in, and may effect

transactions in the securities mentioned herein and may also perform or seek to perform broking, investment

banking/corporate advisory and other services for the subject companies. They may also have received

compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other

services from the subject companies.

Wong Ming Tek, Executive Director, ADBSR

Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company

Regn No. 198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and

regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced

by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under

Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who

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for the contents of the report to such persons only to the extent required by law. Singapore recipients should

contact DBS Bank Ltd at 6327 2288 for matters arising from, or in connection with the report.

Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd.

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Page 14

United

Kingdom

This report is produced by DBS Bank Ltd which is regulated by the Monetary Authority of Singapore.

This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd, ("DBSVUK"). DBSVUK is

authorised and regulated by the Financial Conduct Authority in the United Kingdom.

In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected

and associated corporations and affiliates 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 DBSVUK. This

communication is directed at persons having professional experience in matters relating to investments. Any

investment activity following from this communication will only be engaged in with such persons. Persons who do

not have professional experience in matters relating to investments should not rely on this communication.

Dubai

International

Financial

Centre

This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at units 608 - 610, 6th

Floor, Gate Precinct Building 5, PO Box 506538, DIFC, Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is

regulated by The Dubai Financial Services Authority. This research report is intended only for professional clients

(as defined in the DFSA rulebook) and no other person may act upon it.

United Arab

Emirates

This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as

defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for

information purposes only and should not be relied upon or acted on by the recipient or considered as a

solicitation or inducement to buy or sell any financial product. It does not constitute a personal recommendation

or take into account the particular investment objectives, financial situation, or needs of individual clients. You

should contact your relationship manager or investment adviser if you need advice on the merits of buying, selling

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communications with a subject company, public appearances and trading securities held by a research analyst.

This report is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This

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wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its

affiliate.

Other

jurisdictions

In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for

qualified, professional, institutional or sophisticated investors as defined in the laws and regulations of such

jurisdictions.

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Page 15

DBS Regional Research Offices

HONG KONG

DBS (Hong Kong) Ltd

Contact: Carol Wu

13th Floor One Island East,

18 Westlands Road,

Quarry Bay, Hong Kong

Tel: 852 3668 4181

Fax: 852 2521 1812

e-mail: [email protected]

MALAYSIA

AllianceDBS Research Sdn Bhd

Contact: Wong Ming Tek

19th Floor, Menara Multi-Purpose,

Capital Square,

8 Jalan Munshi Abdullah 50100

Kuala Lumpur, Malaysia.

Tel.: 603 2604 3333

Fax: 603 2604 3921


Co. Regn No. 198401015984

(128540-U)

SINGAPORE

DBS Bank Ltd

Contact: Janice Chua

12 Marina Boulevard,

Marina Bay Financial Centre Tower 3

Singapore 018982

Tel: 65 6878 8888


Company Regn. No. 196800306E

THAILAND

DBS Vickers Securities (Thailand) Co Ltd

Contact: Chanpen Sirithanarattanakul

989 Siam Piwat Tower Building,

9th, 14th-15th Floor

Rama 1 Road, Pathumwan,

Bangkok Thailand 10330

Tel. 66 2 857 7831

Fax: 66 2 658 1269


Company Regn. No 0105539127012

Securities and Exchange Commission,

Thailand

INDONESIA

PT DBS Vickers Sekuritas (Indonesia)

Contact: Maynard Priajaya Arif

DBS Bank Tower

Ciputra World 1, 32/F

Jl. Prof. Dr. Satrio Kav. 3-5

Jakarta 12940, Indonesia

Tel: 62 21 3003 4900

Fax: 6221 3003 4943


regional industry focus nickel

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