73.1 y-y into IDR3.9 trillion. - ANTM All Divisions Flourish 20171228 NHKS Company Report (English)

• 6.7%
• 38.1%

• 62 21 797 6202, ext:164
• 13.5% 14.8% 4.6% 6.7%
• 5.7%
• 1.4% 4.6% 4.0%
• 0.8% 2.7% 2.5%
• 0.5% 1.6% 1.4%
• 102.1x 41.8x 44.4x
• 6.7% -26.7%

  EPS growth N/A N/A N/A

  BVPS (IDR) 264 264 264 264 EBITDA margin 6.9% 15.9% 17.8% 17.4% NPM 0.8%

  ROE 0.4%

  ROA 0.2%

  ROIC 0.1% 6.3% 2.6% 3.3% P/E 286.0x

  P/BV 3.4x 2.4x 3.3x 3.3x EV/EBITDA 38.6x 12.6x 13.8x 13.9x DPS (IDR) - - - -

  Dividend yield 0.0% 0.0% 0.0% 0.2% Source: Company Data, Bloomberg, NHKS Research

  1M

  Share Price Performance YTD

  3M

  12M

  Abs. Ret. -28.8% -4.5%

  Rel. Ret. -46.7% -7.0% -11.9% -50.1%

  Lustrous Gold Boosting Sale In 3Q17, ANTM succeeded to post the profit amounting to IDR165 billion (+504,4% y-y) after suffering the loss amounting to IDR503 billion in the prior quarter. The 3Q17’s profit was buttressed by the topping sales of 73.1% y-y into IDR3.9 trillion.

  The gold division posted the surge of 34.7% y-y in sales into IDR2 trillion, the highest sales within the last two years. The jump in sales volume from 2,676 kg in 3Q16 into 3,668 kg in 3Q17 was the potent driver for sales.

  Soaring Demand for Ferronickel Similar to the gold division, the ferronickel division also posted a significant hike in 3Q17. The ferronickel sales volume picked up by 25.5% y-y into 5,025 Tni compared to the sales volume of 4,003 Tni in 3Q16. The upbeat sales volume was accompanied by the high demand for nickel by China, the world biggest nickel consumer.

  EBITDA 629 1,658 1,946 2,033 Net profit 75 (148) 500 471 EPS (IDR) 3 (6) 21 20

  Revenue 9,106 10,450 10,933 11,667

  Revenue growth

  920/605 Free float (%)

  Please consider the rating criteria & important disclaimer Company Report | Dec 28, 2017 Aneka Tambang Tbk (ANTM) All Divisions Flourish Buy Dec 2017 TP (IDR) 870 Consensus Price (IDR)

  815

  TP to Consensus Price

  vs. Last Price

  Shares data

  Last Price (IDR) 630

  Price date as of Dec 22, 2017 52 wk range (Hi/Lo)

  35.0 Outstanding sh.(mn) 24,031

  Aneka Tambang, Tbk | Summary (IDR bn) 2016/12A 2017/12A 2018/12E 2019/12E

  Market Cap (IDR bn) 15,019

  Market Cap (USD mn) 1,109

  Avg. Trd Vol - 3M (mn)

  29.67 Avg. Trd Val - 3M (bn)

  19.83 Foreign Ownership 5.5%

  Mining Metal & Mineral Mining Bloomberg ANTM IJ Reuters ANTM.JK Yuni

  yuni@nhsec.co.id

  Besides, the rally in global nickel price also surged the selling price of ANTM’s ferronickel. In 3Q17, the average selling price (ASP) of its ferronickel hiked by 22.9% y-y into USD12,739 from USD10,362 in 3Q16. It is estimated that in 2018, the global nickel benchmark price will remain higher at the average of USD10,000-USD11,000 per TNi. We estimate that until 2018, the revenue from the ferronickel division will still pick up due to the hike in sales volume and selling price.

  Brand New Day for Nickel Ore and Bauxite Ore Divisions In 2Q17, after obtaining export license from the Ministry of Energy and Mineral Resources, ANTM started to sale low nickel ore. It obtained the export quota of 2.7 million wmt in May 2017. Then, in October 2017, it re- obtained increment of 3.9 million wmt in the export quota.

  In 3Q17, its nickel ore export soared by 714.0% y-y into 1.7 million wmt compared to the export quota of 213 thousand wmt in 3Q16. Meanwhile, ANTM’s Finished Products the average selling price (ASP) also jumped by 36.8% into IDR143 million per ton compared to the ASP of IDR104 million per ton in 3Q16.

  Minted bar & Batik motif gold Finally, in 3Q17, it secured the sales of nickel ore amounting to IDR803 billion (+797.5% y-y) higher than the sales of nickel ore amounting to IDR89 million in 3Q16.

  Another to the export license of nickel ore, it also obtained the license export of bauxite ore. The sales volume of bauxite ore significantly hiked after obtaining the export license with the quota of 850,000 ton per year.

  Ferronickel Shot In 3Q17, the sales of bauxite ore amounted to IDR198 billion (+433.5% y-y) vs IDR37 billion in 3Q16.

  In 3Q17, the bauxite ore division achieved the sales topping IDR100 billion dramatically higher than the prior average sales of around IDR17 billion. We gauge that the increment in export quota as the brand new day for the nickel ore and bauxite ore divisions because the increment in export quota was capable of dramatically boosting the sales posted by both divisions.

  Nickel Ore In 3Q17, the nickel ore division was capable of contributing by 20.3% to ANTM’s total sales usually at the average of 9%. Meanwhile, the bauxite ore division was capable of contributing by 5.0% to ANTM’s total sales, higher than the contribution of 0.9% in the prior period. In the coming years, we gauge that these two divisions will pick their contributions up along with the increment in the export quota.

  Target Price of IDR870 We use an estimate of forward EV/EBITDA of 12.5x (1SD higher than the last one year average) as the basis of valuation method. The target price implies a 2018/E EV/EBITDA of 13.1x. Now, ANTM is traded at a 2017/E EV

  Washed Bauxite Ore EVITDA of 12.6x.

  Source: Company

  Operational Performance Gold Sales & Production Volume | 3Q15 - 3Q17 Average Selling Price Gold & Ferronickel | 3Q15 - 3Q17

  Source: Company, NHKS research Source: Company, NHKS research

  Gold & Nickel Price | 3Q15 - 3Q17 Nickel Ore: Sales Volume vs Revenue | 4Q15—3Q17

  Source: Company, NHKS research Source: Company, NHKS research

  Sales Composition | 3Q17 COGS Composition | 3Q17

  Source: Company Source: Company

  Multiple Valuation Forward EV/EBITDA band | Last 1 year Dynamic Forward EV/EBITDA band | Last 1 year

  Source: NHKS research Source: NHKS research

  Rating and target price update Target Price Revision Date Rating Target Price Last Price Consensus vs Last Price vs Consensus

  9/8/2017 Buy 960 (Dec 2018) 695 760 +38.1% +26.3% 12/28/2017 Buy 870 (Dec 2018) 630 815 +38.1% +6.7% Source: NHKS research, Bloomberg

  Analyst Coverage Rating Closing and Target Price

  Source: Bloomberg Source: NHKS research

  NH Korindo Sekuritas Indonesia (NHKS) stock ratings

  1. Period: End of year target price

  2. Rating system based on a stock’s absolute return from the date of publication : Greater than +15%

   Buy : -15% to +15%  Hold : Less than -15%  Sell

  Summary of Financials

DISCLAIMER

  

This report and any electronic access hereto are restricted and intended only for the clients and related entity of PT NH Korindo Sekuritas Indonesia. This

report is only for information and recipient use. It is not reproduced, copied, or made available for others. Under no circumstances is it considered as a selling

offer or solicitation of securities buying. Any recommendation contained herein may not suitable for all investors. Although the information here is obtained

from reliable sources, it accuracy and completeness cannot be guaranteed. PT NH Korindo Sekuritas Indonesia, its affiliated companies, respective employees,

and agents disclaim any responsibility and liability for claims, proceedings, action, losses, expenses, damages, or costs filed against or suffered by any person

as a result of acting pursuant to the contents hereof. Neither is PT NH Korindo Sekuritas Indonesia, its affiliated companies, employees, nor agents liable for

errors, omissions, misstatements, negligence, inaccuracy arising herefrom. All rights reserved by PT NH Korindo Securities Indonesia ^{ANTM Summary Last Price (IDR) 630}

^{Target Price (IDR) Dec 2018 870 2016/12A 2017/12E 2018/12E 2019/12E}

^{Analyst: Yuni Rating: Buy ROE 0.4% -0.8% 2.7% 2.5%}

^{ROA 0.2% -0.5% 1.6% 1.4% ROIC 0.1% 6.3% 2.6% 3.3% EBITDA/Equi ty 3.4% 9.1% 10.6% 10.7%}

^{In IDR bn 2016/12A 2017/12E 2018/12E 2019/12E EBITDA/As s ets 2.1% 5.5% 6.1% 6.2%}

^{Sales 9,106 10,450 10,933 11,667 Ca s h Di vi dend (IDR bn) 0.0% 0.0% 0.0% 100.0%}

^{Growth (% y/y) -13.5% 14.8% 4.6% 6.7% Di vi dend Yi el d (%) 0.0% 0.0% 0.0% 0.0%}

^{COGS (8,254) (8,940) (9,184) (9,800) Pa yout Ra ti o (%) 0.0% 0.0% 0.0% 0.2%}

^{Gross Profit 852 1,510 1,749 1,867 DER 56.6% 61.6% 67.1% 65.4%}

^{Gross Margin 9.4% 14.4% 16.0% 16.0% Net Gea ri ng 65.0% 70.8% 76.8% 74.6%}

^{Opera ti ng Expens es (833) (905) (978) (1,022) LT Debt to Equi ty 104.9% 105.8% 121.5% 123.8%}

^{EBIT 19 605 771 845 Ca pi ta l i za ti on Ra ti o 62.2% 63.9% 66.4% 66.4%}

^{EBIT Margin 0.2% 5.8% 7.1% 7.2% Equi ty Ra ti o 61.4% 59.2% 57.1% 57.6%}

^{Depreci a ti on 610 1,054 1,175 1,187 Debt Ra ti o 34.7% 36.5% 38.3% 37.7%}

^{EBITDA 629 1,658 1,946 2,033 Fi na nci a l Levera ge 164.3% 165.9% 172.1% 174.4%}

^{EBITDA Margin 6.9% 15.9% 17.8% 17.4% Current Ra ti o 244.2% 190.5% 171.2% 184.6%}

^{Interes t Expens es (319) (407) (345) (408) Qui ck Ra ti o 226.2% 171.7% 154.7% 168.0%}

^{EBT 248 126 522 628 Ca s h Ra ti o 175.2% 106.4% 122.0% 96.6%}

^{Income Ta x (172) (274) (23) (157) Ca s h Convers i on Cycl e 66.2 82.1 70.7 73.6 Mi nori ty Interes t (0) (0) (0) (0) Pa r Va l ue (IDR) 100 100 100 100 Net Profit 75 (148) 500 471 Tota l Sha res (mn) 24,031 24,031 24,031 24,032}

^{Growth (% y/y) N/A N/A N/A -5.7% Sha re Pri ce (IDR) 895 630 870 870}

^{Net Profit Margin 0.8% -1.4% 4.6% 4.0% Ma rket Ca p (IDR tn) 21.5 15.1 20.9 20.9 In IDR bn 2016/12A 2017/12E 2018/12E 2019/12E 2016/12A 2017/12E 2018/12E 2019/12E}

^{Ca s h 7,623 5,525 6,673 5,287 Pri ce /Ea rni ngs 286.0x -102.1x 41.8x 44.4x}

^{Recei va bl es 834 1,312 474 1,508 Pri ce /Book Va l ue 3.4x 2.4x 3.3x 3.3x}

^{Inventori es 1,388 2,077 1,315 2,400 Pri ce/Sa l es 2.4x 1.4x 1.9x 1.8x}

^{Total Current Assets 10,630 9,890 9,367 10,103 PE/EPS Growth N/A N/A N/A -7.8x}

^{Net Fi xed As s ets 14,612 15,405 15,855 16,429 EV/EBITDA 38.6x 12.6x 13.8x 13.9x}

^{Other Non Current As s ets 4,739 5,407 7,495 6,730 EV/EBIT 1309.7x 34.4x 34.7x 33.3x}

^{Total Assets 29,982 30,702 32,717 33,262 EV (IDR bn) 24,300 20,821 26,765 28,153}

^{Pa ya bl es 586 693 642 788 Sa l es CAGR (3-Yr) -6.9% 3.5% 1.3% 8.6%}

^{ST Borrowi ng 3,255 3,609 4,037 3,979 EPS CAGR (3-Yr) -52.9% -42.9% -170.7% 84.4%}

^{Other Current Li a b. 511 891 791 706 Ba s i c EPS (IDR) 3 (6) 21 20 LT Debt 6,649 6,707 7,703 7,847 Di l uted EPS (IDR) 3 (6) 21 20 Other Non Current Li a b. 571 622 864 791 BVPS (IDR) 264 264 264 264}

^{Tota l Li a bi l i ti es 11,573 12,521 14,037 14,111 Sa l es PS (IDR) 379 435 455 485}

^{Shareholders' Equity 6,338 6,338 6,338 6,338 DPS (IDR) - - - -}

^{In IDR bn 2016/12A 2017/12E 2018/12E 2019/12E 2016/12A 2017/12E 2018/12E 2019/12E}

^{Net Income 65 (182) 500 471 DCF (IDR bn) Deprec & Amorti za ti on 734 1,080 1,175 1,187 NOPAT 31 1,923 805 1,056}

^{Chg. In Worki ng Ca pi ta l 304 (1,975) 1,520 (2,061) +Depr./Amor. 734 1,080 1,175 1,187}

^{CFO 1,103 (1,077) 3,195 (402) -CAPEX (1,219) (1,694) (1,626) (1,761)}

^{Ca pex (1,219) (1,694) (1,626) (1,761) -Incr. (Decr.) i n Worki ng Ca p. 304 (1,975) 1,520 (2,061)}

^{CFI (1,469) (1,502) (3,472) (1,069) (Unl evered) FCFF (149) (666) 1,875 (1,578)}

^{Di vi dends Pa i d - - - - WACC Net Borrowi ng (PMT) (27) 475 1,424 86 Cos t of Debt (Ta x Adj.) 5.4% 11.0% 9.6% 9.6% CFF (27) 477 1,424 86 Cos t of Equi ty (COE) 9.4% 9.6% 9.6% 9.6%}

^{Net Changes in Cash (393) (2,102) 1,147 (1,385) WACC (%) 8.1% 10.2% 9.6% 9.6%}

^{RIM Sprea d (FROE-COE) (%) -9.0% -10.4% -7.0% -7.2% Res i dua l Income (IDR) (1,652) (1,899) (1,300) (1,373)}

^{By Geography % Shareholders % Equi ty Cha rge 1,728 1,751 1,799 1,845}

^{Indones i a 94.5 Republ i c of Indones i a 65.0 EVA Uni ted Sta tes 5.0 Di mens i ona l Fund Adv. 1.6 Inves ted Ca pi ta l (IDR bn) 28,825 29,387 31,211 31,683 Irel a nd 0.2 Va ngua rd Group 1.2 ROIC-WACC (%) -8.0% -3.7% -7.0% -6.3% Ja pa n 0.1 Bl a ckrock Fund 0.4 EVA (IDR bn) (2,296) (1,076) (2,199) (1,993)}

  PROFITABILITY & STABILITY

INCOME STATEMENT BALANCE SHEET

  VALUATION INDEX DCF, RIM & EVA OWNERSHIP CASH FLOW STATEMENT

  ^{December 22, 2017}