Equity Research Company Update Friday,19 February 2021 BUY Aneka Tambang (ANTM IJ) Maintain Still Upbeat Last price (IDR) 2,780 We held a con-call with Aneka Tambang (ANTM) recently and came away with Target Price (IDR) 3,000 the following takeaways: a) the company will take on the role as an upstream player in the development of the EV industry value chain, b) better nickel ore Upside/Downside +7.9% volume in 2021, c) conservative gold sales volume of 19 tons with a greater Previous Target Price (IDR) 3,000 focus on domestic retail margins (which are superior), and d) expectations the company increases its nickel resources. Maintain BUY. Stock Statistics As an upstream player in Indonesia battery holding. In Indonesia Battery Sector Metal Mining Corporation (IBC) for the development of the electric battery industry value Bloomberg Ticker ANTM IJ chain, ANTM and MIND ID will be upstream players as nickel ore miners and No of Shrs (mn) 24,031 developers of the Nickel Extractive Facility. By 2021, ANTM and MIND-ID seek to complete the feasibility study and establish strategic partners. Thereafter, Mkt. Cap (IDRbn/USDmn) 66,806/4,806 the company will choose the type of technologies with targeted Avg. daily T/O (IDRbn/USDmn) 1,048.5/74.8 commencement in production by 2024 or 2025. Including LG Chem and CATL, ANTM has selected seven names as potential strategic partners. Major shareholders (%) 2021: Higher domestic nickel ore sales volume. In 2021, ANTM is focusing on Inalum 65.0 further increasing its domestic nickel ore sales volume with more nickel Estimated Free Float 35.0 processing facilities to be developed in Indonesia. Positively, there should be greater clarity on the nickel ore price with the introduction of nickel ore benchmarking prices. For 2021, the company targets higher nickel ore sales EPS Consensus (IDR) volume of 6.7mn wmt (2020: 3.3mn wmt) with nickel ore production of 8.4mn 2020F 2021F 2022F wmt. The two largest buyers of ANTM’s domestic nickel ore are Indonesia Danareksa 53.4 75.2 93.7 Morowali Industrial Park (IMIP) and Virtue Dragon. In 2021, the company expects to make more sales to IMIP. Consensus 54.4 83.3 92.7 Conservative gold volume target for 2021. For 2021, the company targets Danareksa/Cons (1.9) (9.7) 1.1 conservative gold sales volume of 19.0 tons (2020: 21.8 tons) with lower gold ANTM relative to JCI Index production of 1.4 tons in 2021 (2020: 1.7 tons). Nonetheless, with the company focusing on the domestic retail market with superior margins vs. export margins, margins from the gold division may be sustained amid lower production. For ferronickel, ANTM targets flattish sales volume of 26,000 tons. Expect higher nickel resources. The company indicated it would book higher nickel resources in the next updated JORC Compliant for 2020 that will be released in the near future. Based on the 2019 JORC report, ANTM has around 354mn wmt of nickel ore reserves and 1,362mn wmt of nickel ore resources, which are about 12% of national nickel resources. Maintain BUY with a TP of IDR3,000 (based on DCF valuation with WACC of 10%). We foresee positive sentiment on EV and better earnings in 2021 (+41% yoy) thanks to higher ore sales volume and solid nickel prices. Our TP implies 40x 2021F PE and EV/EBITDA of 16.8x. The key risk is lower global nickel prices. Source : Bloomberg Key Financials Year to 31 Dec 2018A 2019A 2020F 2021F 2022F Revenue (IDRbn) 25,275 32,719 26,112 27,159 30,264 EBITDA (IDRbn) 2,400 2,233 3,254 4,137 4,655 EBITDA Growth (%) 67.7 (7.0) 45.7 27.2 12.5 Net profit (IDRbn) 1,636 194 1,283 1,807 2,251 EPS (IDR) 68.1 8.1 53.4 75.2 93.7 EPS growth (%) 1,098.5 (88.2) 562.0 40.8 24.5 BVPS (IDR) 767.7 754.6 804.8 858.6 922.2 DPS (IDR) 2.3 27.2 3.2 21.4 30.1 x Stefanus Darmagiri PER (x) 40.8 344.6 52.1 37.0 29.7 PBV (x) 3.6 3.7 3.5 3.2 3.0 (62-21) 5091 4100 ext. 3530 Dividend yield (%) 0.1 1.0 0.1 0.8 1.1 [email protected] EV/EBITDA (x) 26.8 28.8 19.8 15.6 13.8 Source : ANTM, BRI-Danareksa Estimates www.danareksa.com See important disclosure at the back of this report 1 Exhibit 1. Revenues and Growth Exhibit 2. Net Profits and Growth Source: Company, BRI-Danareksa Sekuritas estimates Source: Company, BRI-Danareksa Sekuritas estimates Exhibit 3. Margins Exhibit 4. Gearing Level Source: Company, BRI-Danareksa Sekuritas estimates Source: Company, BRI-Danareksa Sekuritas estimates Exhibit 5. SOE’s supply chain in the EV batteries industry Source: MEMR, and MIND-ID (2020) www.danareksa.com See important disclosure at the back of this report 2 Exhibit 6. Flattish ferronickel production and sales volume for 2021 Exhibit 7. Expect better nickel ore volume from the domestic market tons mn wmt Production Sales Production Sales 29.000 10,0 9,0 24.000 8,0 7,0 19.000 6,0 5,0 14.000 4,0 3,0 9.000 2,0 1,0 4.000 0,0 2015 2016 2017 2018 2019 2020 2021F 2015 2016 2017 2018 2019 2020 2021F Source: Company Source: Company Exhibit 8. Conservative gold sales volume for 2021 Exhibit 9 . Bauxite sales and production volume tons '000 wmt Sales (RHS) Production (LHS) tons Production Sales 3.500 40,0 2,4 35,0 2,2 3.000 30,0 2,0 2.500 Thousands 25,0 1,8 2.000 20,0 1,6 1.500 15,0 1,4 1.000 10,0 5,0 1,2 500 0,0 1,0 0 2015 2016 2017 2018 2019 2020 2021F 2015 2016 2017 2018 2019 2020 2021F Source: Company Source: Company www.danareksa.com See important disclosure at the back of this report 3 Exhibit 10. Income Statement Year to 31 Dec (IDRbn) 2018A 2019A 2020F 2021F 2022F Revenue 25,275 32,719 26,112 27,159 30,264 COGS (20,613) (28,271) (21,478) (21,237) (23,500) Gross profit 4,662 4,447 4,634 5,923 6,763 EBITDA 2,400 2,233 3,254 4,137 4,655 Oper. profit 1,556 956 2,211 3,072 3,561 Interest income 261 120 168 173 183 Interest expense (1,130) (233) (580) (553) (537) Forex Gain/(Loss) 276 (236) 90 0 0 Income From Assoc. Co’s (1,260) (88) (305) (283) (206) Other Income (Expenses) 2,311 168 126 0 0 Pre-tax profit 2,013 687 1,711 2,410 3,001 Income tax (377) (493) (428) (602) (750) Minority interest 0 0 0 0 0 Net profit 1,636 194 1,283 1,807 2,251 Core Net Profit (866) 430 1,193 1,807 2,251 Exhibit 11. Balance Sheet Year to 31 Dec (IDRbn) 2018A 2019A 2020F 2021F 2022F Cash & cash equivalent 4,299 3,636 3,366 3,469 3,662 Receivables 995 1,431 1,545 1,607 1,791 Inventory 1,846 1,796 2,205 2,293 2,404 Other Curr. Asset 203 802 713 698 785 Fixed assets - Net 19,490 18,866 20,867 21,802 22,708 Other non-curr.asset 5,364 3,664 3,620 3,335 3,430 Total asset 32,195 30,195 32,316 33,205 34,780 ST Debt 2,599 3,025 3,024 3,023 3,026 Payables 868 740 588 640 773 Other Curr. Liabilities 2,095 1,529 1,705 1,709 1,787 Long Term Debt 7,755 6,156 7,195 6,739 6,525 Other LT. Liabilities 430 612 465 460 509 Total Liabilities 13,747 12,061 12,977 12,572 12,620 Shareholder'sFunds 18,448 18,133 19,339 20,633 22,161 Minority interests 0 0 0 0 0 Total Equity & Liabilities 32,195 30,195 32,316 33,205 34,780 www.danareksa.com See important disclosure at the back of this report 4 Exhibit 12. Cash Flow Year to 31 Dec (IDRbn) 2018A 2019A 2020F 2021F 2022F Net income 1,636 194 1,283 1,807 2,251 Depreciation and Amort. 789 1,683 1,097 1,118 1,145 Change in Working Capital 1,012 (1,633) (410) (79) (172) OtherOper. Cash Flow (168) 739 593 351 268 Operating Cash Flow 3,269 983 2,564 3,196 3,492 Capex (2,411) (893) (2,000) (2,000) (2,000) Others Inv. Cash Flow 283 989 (1,068) 434 123 Investing Cash Flow (2,128) 96 (3,068) (1,566) (1,877) Net change in debt 522 (1,364) 1,103 (444) (270) New Capital (1,702) (79) 0 0 0 Dividend payment (48) (429) (78) (513) (723) Other Fin. Cash Flow (1,166) 130 (792) (570) (430) Financing Cash Flow (2,393) (1,742) 233 (1,527) (1,423) Net Change in Cash (1,252) (663) (270) 103 192 Cash - begin of the year 5,551 4,299 3,636 3,366 3,469 Cash - end of the year 4,299 3,636 3,366 3,469 3,662 Exhibit 13. Key Ratios Year to 31 Dec 2018A 2019A 2020F 2021F 2022F Growth (%) Sales 99.7 29.4 (20.2) 4.0 11.4 EBITDA 67.7 (7.0) 45.7 27.2 12.5 Operating profit 159.1 (38.6) 131.4 38.9 15.9 Net profit 1,098.5 (88.2) 562.0 40.8 24.5 Profitability (%) Gross margin 18.4 13.6 17.7 21.8 22.3 EBITDA margin 9.5 6.8 12.5 15.2 15.4 Operating margin 6.2 2.9 8.5 11.3 11.8 Net margin 6.5 0.6 4.9 6.7 7.4 ROAA 5.4 0.6 4.1 5.5 6.6 ROAE 9.2 1.1 6.8 9.0 10.5 Leverage Net Gearing (x) 0.3 0.3 0.4 0.3 0.3 Interest Coverage (x) 1.4 4.1 3.8 5.6 6.6 Source : ANTM, BRI-Danareksa Estimates www.danareksa.com See important disclosure at the back of this report 5 .