Potential dividends? - Maybank Kim Eng
Maintain BUY as we expect nickel prices will continue to recover, which will benefit INCO as it is a pure nickel player. Our TP remains unchanged at IDR5,000 based on 1.7x FY21E P/BV, in line with +0.5SD above the 10- year mean. Potential surprise on dividends could be a positive catalyst to the stock in our view. Nickel-price decline is the main risk to our call.
Upside to 2020 volume
We think there could be an upside to our 2020 volume assumption of 71,000 tonnes as 1) 1H20 volume of 36,315 tonnes (+18.2% YoY) already accounted for 51% of our assumption and 2) management has decided to delay rebuild of furnace #4 to 2021. Every 1% change in our 2020 volume assumption will change our earnings forecast by 3.5%.
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