August 10, 2014

NIKL posts 419% YoY hike in 1H14 income

In a disclosure to the Exchange, Nickel Asia Corp (NIKL, Buy) announced a 419% YoY hike in 1H14 net income to P3.3b. Excluding a one-time non-cash gain from the revaluation of its 60% stake in Rio Tuba Nickel Mining Corp, the company’s core income reached P2.88b, up 383% YoY due to higher shipment volume and significantly higher ore prices.

Volume increased 40% as shipments to the Taganito HPAL began. The company also benefited from a surge in average realized ore prices which doubled $41.77 per WMT as the Indonesian ore ban precipitated a shortage of supply.

Our take: Considering the seasonality in earnings, the results are slightly ahead of our estimated 2014E net income estimate of P8.2b. The company typically ships 40% of its total full-year volume in the first half of the year and ships the remaining 60% in the second half. Torrential rains usually hamper site operations in the first half of the year.

As the spike in ore prices only began in April this year, we expect this to further pick up in the second half as the supply situation worsens thus providing further momentum to NIKL’s earnings. – WealthSec