March 31, 2015

Nickel Asia Corp. 2014 net income of P8.55b +316% YoY

Nickel Asia Corp. (NIKL) announced in a press release last Friday that its 2014 net income of P8.55b, up 316% YoY. This was primarily due to the surge in ore prices that enabled revenues to more than double to P24.7b from just P11.1b the previous year. EBITDA likewise more than tripled to P15.84b from P4.99b in 2013.

NIKL benefited from the surge in average realized prices for its ore exports which more than doubled to US$45.10 per WMT versus US$21.28 in 2013. Average realized prices for its LME-linked shipments likewise rose 14.7% to US$7.69/lb of payable nickel. Moreover, the full-year operations of Taganito HPAL reversed the P184m in equitized losses into P522m of equitized earnings in 2014.

NIKL’s board also approved the declaration of a cash dividend and 100% stock dividend. The company announced a dividend of P1/sh comprising of a P0.70/sh in regular and P0.30 in special cash dividends. This comes out to a yield of 3.6% based on the previous day’s closing share price.

Our take: NIKL’s earnings came and 4.6% ahead of our estimate. While we remain bullish on our outlook for the company in 2015, we note recent developments in the nickel market may delay our assumptions of a recovery in nickel prices within the year.

While the closure of nickel pig iron (NPI) plants and reduced NPI supply should be bullish for nickel, prices remain depressed due to weak stainless steel demand. We believe these could delay the long-awaited shortage towards the latter part of 2H15. – WealthSec