May 06, 2015

Nickel Asia Corp. (NIKL) announces 1Q15 net income of P675m, +281% YoY

In a press statement, Nickel Asia Corp. (NIKL) announced 1Q15 net income to common of P675m, up 281% YoY. This resulted from a combination of increased shipment volumes and higher ore prices which drove revenues 83% higher YoY to P3.12b. Shipment volume grew 32% as production from its four existing mines increased to 3.49m WMT from only 2.65m WMT in the same period last year. Average realized prices for its ore exports averaged $32.44 per WMT, reflecting a 48% increase versus the $21.98 realized in the same period last year.

Our take: NIKL's strong 1Q15 numbers were coming off a low base last year as nickel prices for both refined nickel and ore prices only took off by 2Q14. While average realized prices for its ore exports improved 48% YoY, this is still 28% lower than the average price the company realized for the full year last year.

Sluggish stainless steel demand has delayed the long-awaited shortage and has depressed prices in the short term. Despite this however, signs of tightness have already manifested in the Chinese nickel market particularly in the NPI industry. NPI production has significantly fallen year on year as ore stockpiles steadily decline. This has caused Chinese stainless steel producers to import more ferronickel to offset the shortage in NPI. We believe this would likely cause prices to once again rebound toward the 2H15. We will be reviewing our numbers to take these into account. – WealthSec