Bloomberg News

PT Inco, Aneka Tambang Profit Forecasts Raised at UBS

February 01, 2007

PT International Nickel Indonesia (INCO) and PT Aneka Tambang (ANTM), Indonesia's largest nickel miners, had their profit forecasts for 2007 and 2008 raised by PT UBS Securities Indonesia after the brokerage predicted higher nickel prices.

PT Inco's net income this year may reach $897.9 million, or 61 percent more than earlier forecast, while Aneka Tambang may earn 4.26 trillion rupiah ($470 million), 25 percent higher than previously forecast, analyst Erindra Krisnawan said in a report today. Nickel prices will average $14.50 a pound ($31,967 a ton), 32 percent higher than a previous forecast, UBS said yesterday.

Prices of raw materials, which rose to records in 2006 driven by demand from China, remain high this year and have generated record profits for many mining companies. Nickel, used in stainless-steel, has more than doubled during the past year.

``Indonesian nickel companies still rank among the cheapest mining companies globally despite the attractive earnings outlook,'' Krisnawan said in the report.

PT Inco's net income may reach $633.1 million in 2008, or 71 percent more than earlier forecast, while Aneka Tambang may earn 3.31 trillion rupiah next year, or 38 percent higher than earlier estimated, Krisnawan said.

The 12-month price targets were also raised for the stocks, which remained a `buy', he said. Shares of PT Inco, a unit of the world's biggest iron-ore producer Cia. Vale do Rio Doce, may reach 39,200 rupiah in 12 months, from an earlier forecast of 30,500 rupiah, he said.

The stock dropped 500 rupiah, or 1.5 percent, to 32,500 rupiah after gaining as much as 1.5 percent. The stock has advanced 59 percent in six months.

Citigroup Forecasts

Aneka Tambang shares may reach 9,700 rupiah in 12 months, from a previous estimate of 8,100 rupiah, Krisnawan said in an e- mailed report. The shares closed unchanged at 7,800 rupiah, a gain of 50 percent in six months.

Citigroup Global Markets Inc. also initiated coverage of both stocks with a `sell' on Aneka Tambang in favor of a `buy' on PT Inco, which carries 12-month target price of 45,000 rupiah.

Aneka Tambang shares may reach 7,800 rupiah in 12 months, the report by analyst David Fergusson today said.

He based his estimates on Citigroup's nickel forecast at $12.98 a pound ($28,616 a ton) this year, falling to $9.25 in 2008.

Nickel for delivery in three months, which rose to a record $38,950 a ton on Jan. 26, traded at $36,150 a ton, down 2.4 percent, on the London Metal Exchange at 9:35 a.m. local time.

To contact the reporters on this story: Claire Leow in Jakarta at cleow@bloomberg.net;

To contact the editor responsible for this story: Jim Poole at jpoole4@bloomberg.net


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