Aug 31, 2010

Antam 1H net profit remains intact

State-owned nickel miner PT Aneka Tambang Tbk (ANTM) today announces strong net profit and robust operating profit despite a slight decrease revenue.
In the financial statement published today, Antam's net profit jumped 237.98% from Rp223.77 billion or Rp23.47 per share in the first half of last year to Rp756.30 billion or Rp79.42 per share, mainly contributed by soaring operating profit and a steep drop in cost of goods sold (COGS).
Antam booked Rp1.09 trillion operating profit in 1H 2010 from Rp198.98 billion a year earlier, reflecting lower COGS of 26.52% from Rp3.96 trillion to Rp2.91 trillion.
The company's net sales slightly decreased from Rp4.41 trillion in 1H 2009 to Rp4.32 trillion in 1H 2010.
In a morning notes distributed by PT Mandiri Sekurita today, due to the switch in revenue contribution from low-margin gold trading last year to higher margin nickel this year as well the improvement in selling prices of the latter, Antam’s 1H 2010 net income improved by 238% yoy to Rp756billion, despite a relatively flat top-line of Rp4.3 trillion(-2.1% yoy), thus running ahead of ours and consensus estimates. 
Additionally on the production side, the divisional production remains within FY10F target with nickel and gold production rates achieving 50% and 54% of FY10F. 
Currently, the stock trades at PER10F 16.7x. Additional upside would come from the appreciation of nickel prices (at US$20,600/t as of 1H 2010) which runs at par with our FY10F price assumption of about US$21,000/ton.

Disclosure: No position at the stock mentioned above.

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