Bayon Financial

Graeme Cunningham

Independent Insight Provider

Bayon Financial provides industry and company analysis focusing on mid and small cap equity research coverage across a range of sectors including mining, financials and telecoms.

Equity Bottom-Up

<ul>
<li>INCO's rally could slow as the industry outlook remains weak and its ongoing major operational transformation may not be fully derisked and priced in until well into 2026 </li>
<li>Q2/25 remained challenging with revenue inline but a major net income miss, as weak nickel offset rising volume and strong cost control, with margins and ROE near zero</li>
<li>While the 2025E P/B of 0.9x has priced in a large degree of industry distress, we still see risks of stagnation for the prices of both nickel and INCO</li>
</ul>


INCO's rally could slow as the industry outlook remains weak and its ongoing major operational transformation may not be fully derisked and priced in until well into 2026 
Q2/25 remained challenging with revenue inline but a major net income miss, as weak nickel offset rising volume and strong cost control, with margins and ROE near zero
While the 2025E P/B of 0.9x has priced in a large degree of industry distress, we still see risks of stagnation for the prices of both nickel and INCO


Vale Indonesia: Struggle Against Weak Nickel Continues

<ul>
<li>Vale Indonesia has released the first guidance for its new projects with nickel matte to shift from 100% of revenue to 49% by 2029E, with nickel ore rising to 48%</li>
<li>S&amp;P has upgraded the company’s credit rating to BB+ from BB, placing it ahead of Indonesia’s BB- country rating and below the BBB rating of parent company Vale   </li>
<li>We expect a weak nickel price will weigh on the shares in early 2025, although there could be considerable long-term upside from new projects and multiples remain low </li>
</ul>


Vale Indonesia has released the first guidance for its new projects with nickel matte to shift from 100% of revenue to 49% by 2029E, with nickel ore rising to 48%
S&amp;P has upgraded the company’s credit rating to BB+ from BB, placing it ahead of Indonesia’s BB- country rating and below the BBB rating of parent company Vale   
We expect a weak nickel price will weigh on the shares in early 2025, although there could be considerable long-term upside from new projects and multiples remain low 


Vale Indonesia: First New Project Guidance, Rating Upgrade

<ul>
<li>Vale Indonesia's Q1/25 net profit beat estimates only on non-core items, with a reversal to a gain from Q1/24 on the fair value recognition of a derivative asset </li>
<li>Core earnings declined yoy on an unexpected maintenance shutdown-driven decline in volume and nickel price drop which offset a decline in costs</li>
<li>Trading at a P/B of 0.5x and with peers also well below 1.0x, much of the industry's current distress has been priced in, but immediate catalysts are few </li>
</ul>


Vale Indonesia's Q1/25 net profit beat estimates only on non-core items, with a reversal to a gain from Q1/24 on the fair value recognition of a derivative asset 
Core earnings declined yoy on an unexpected maintenance shutdown-driven decline in volume and nickel price drop which offset a decline in costs
Trading at a P/B of 0.5x and with peers also well below 1.0x, much of the industry's current distress has been priced in, but immediate catalysts are few 


Vale Indonesia: Still Battling Nickel Price Decline in Q1/25

<ul>
<li>Vale Indonesia's Q4/24 results came in -28% below expectations driven mainly by a revenue decline, as core costs fell, and other expenses and net financing income rose</li>
<li>The revenue drop was from by a -7.1% decline in volume and -11.5% drop in the nickel matte price, while fuel efficiency improved and fuel costs dropped overall</li>
<li>The P/B continued to slide in Q4/24 to 0.82, along with an ROE down to 1.0%, but even given the inexpensive multiple, weak nickel could weigh on the stock</li>
</ul>


Vale Indonesia's Q4/24 results came in -28% below expectations driven mainly by a revenue decline, as core costs fell, and other expenses and net financing income rose
The revenue drop was from by a -7.1% decline in volume and -11.5% drop in the nickel matte price, while fuel efficiency improved and fuel costs dropped overall
The P/B continued to slide in Q4/24 to 0.82, along with an ROE down to 1.0%, but even given the inexpensive multiple, weak nickel could weigh on the stock


Vale Indonesia: Q4/24 Earnings Drop on Volume, Nickel Price Decline

Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

<ul>
<li>Company Forecasts extremely conservative at current and expected metal prices</li>
<li>Scarcity Value for a liquid, large-cap gold miner in Japan</li>
<li>Balance Sheet will allow future share buybacks and dividend in the harvesting phase</li>
</ul>


Company Forecasts extremely conservative at current and expected metal prices
Scarcity Value for a liquid, large-cap gold miner in Japan
Balance Sheet will allow future share buybacks and dividend in the harvesting phase


Sumitomo Metal Mining -  A Shiny Mix of Gold, Copper and Nickel

Indonesia

PT Vale Indonesia Tbk produces nickel in matte, an intermediate product, from lateritic ores at its integrated mining and processing facilities near Soroako, Sulawesi

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Vale Indonesia Tbk (INCO IJ)

Vale Indonesia: Struggle Against Weak Nickel Continues

INCO's rally could stall on stagnating nickel, which drove down Q2/25 ROE and margins to near zero, and the while the P/B is low, a full derisking,...

Graeme Cunningham

Vale Indonesia: First New Project Guidance, Rating Upgrade

Vale Indonesia reported first guidance for new projects expected to transform its revenue from 100% nickel matte to a roughly 50/50 matte/nickel...

Graeme Cunningham

Vale Indonesia: Still Battling Nickel Price Decline in Q1/25

Vale Indonesia's Q1/25 net income beat on non-core items but core operations declined on an unexpected maintenance-driven volume decline and lower...

Graeme Cunningham

Vale Indonesia: Q4/24 Earnings Drop on Volume, Nickel Price Decline

Vale Indonesia's Q4/24 missed expectations mainly on a revenue drop, driven by a volume and price decline, as core costs edged down, and while...

Graeme Cunningham

Sumitomo Metal Mining - A Shiny Mix of Gold, Copper and Nickel

This miner has extremely conservative forecasts, some scarcity value, and a strong balance sheet for potential future buybacks and dividends.

Rikki Malik

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52-week Range

Market Cap (USDm)

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