January 13, 2015

NIKL reports surge in 2014 shipments and revenues

In a press statement yesterday, Nickel Asia Corp (NIKL) announced 2014 shipment volume of 17.9m WMT, up 28% YoY. Revenues grew 130% YoY to P23.7b as a result of higher realized prices brought about by the Indonesian ore ban. The company realized an average price of $45.11 per WMT for its saprolite and limonite ore sold to its Japanese and Chinese customers. This represents 112% hke vs the average realized prices of $21.28 per WMT in the previous year. Low grade limonite ore sold to its HPAL plants likewise increased 15% to $7.90 from $6.70 per pound of payable nickel in the previous year.

Our take: While its financial results have yet to be released, the 2014 delivery volume of 17.9m WMT exceeded our estimate of 17.1m WMT. Revenues likewise exceeded our estimates by 8.9%. In this regard, we expect the 2014 net income to be slightly ahead of our estimates. With China port inventories dropping continuously for eight consecutive while NPI producers have been posting diminishing ore stocks, we believe ore prices will continue its rebound and would return to elevated levels by 2Q15 just when NIKL should resume significant shipments.– WealthSec