Bloomberg News

PT Inco, Aneka Profit Forecasts Increased at CLSA

March 12, 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 CLSA Ltd. after the brokerage increased the price estimate for the metal.

PT Inco, as International Nickel is known, may earn as much as 53 percent more than previous forecasts in 2007 and 2008, analysts James Gruber and Andrew Driscoll said in a note to clients today. Profit may reach $913 million this year, they said. Brazil's Cia. Vale do Rio Doce, the world's largest nickel producer, owns 60 percent of PT Inco.

PT Inco and Aneka Tambang have benefited from the surging price of nickel amid growing demand, especially from China, and dwindling supplies. Shares of both companies have more than doubled in the past year.

``Nickel prices continue to be well above expectations,'' Gruber and Driscoll said. ``Rising premiums indicate that the market is tighter than we expected,'' they said. The brokerage raised forecasts for the price of nickel by a third to $15.30 a pound for this year, and to $12.05 a pound for 2008.

Nickel, which is used to make steel rust resistant, rose today to as much as $43,650 a metric ton, a record intra-day price, on the London Metal Exchange. Nickel is trading at about $19.80 a pound now and averaged $10.50 a pound in 2006, according to Bloomberg calculations based on LME prices.

CLSA raised the 12-month target for PT Inco's shares to 55,000 rupiah, 22 percent higher than today's price of 45,100 rupiah. The stock gained 0.45 percent at close in Jakarta.

Aneka Tambang Forecasts

CLSA also increased its profit forecasts for Aneka Tambang by as much as 51 percent from previous estimates for 2007 and 2008. Net income may more than double to 3.7 trillion rupiah ($401 million) this year, the brokerage said.

The target price for Aneka Tambang shares was raised to 11,400 rupiah. The stock gained 5.7 percent to 10,150 rupiah at close.

Vale acquired its stake in PT Inco as part of its $17.4 billion purchase of Canada's Inco Ltd., which was completed in January. Vale's Indonesian nickel output from the unit fell 5.3 percent to 70,000 tons in 2006.

Rio de Janeiro-based Vale's preferred shares, the company's most traded class of stock, were little changed at 62.51 in Sao Paulo at 10:48 a.m. New York time.

To contact the reporter on this story: Leony Aurora in Jakarta at laurora@bloomberg.net

To contact the editor responsible for this story: Reinie Booysen at rbooysen@bloomberg.net


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