JAKARTA – The additional production capacity from a ferronickel smelter on Obi Island, North Maluku, is expected to drive the business performance of PT Trimegah Bangun Persada Tbk (NCKL), also known as Harita Nickel.

The smelter, operated by PT Karunia Permai Sentosa (KPS), began its first phase of production in January 2025 and reached full capacity by the end of March.

UOB Kay Hian analyst Benyamin Mikael stated that the added capacity could drive NCKL’s profit growth by up to 9.8% this year, reaching IDR 7 trillion.

Mikael added that NCKL also projected the new smelter to be more profitable, as it is more efficient than previous production facilities.

Furthermore, Mikael acknowledged that nickel prices on the LME (London Metal Exchange) are currently lower. However, NCKL’s performance is still considered solid due to strong production volume growth that supports profit expansion.

Mikael also noted that NCKL is facing ESG (Environmental, Social, and Governance) risks, with several reports indicating possible environmental pollution on Obi Island.

However, he believes the reports are yet to be verified. On the other hand, NCKL’s management is currently undergoing an assessment by the Initiative for Responsible Mining Assurance (IRMA) to improve ESG transparency practices.

“We maintain our BUY recommendation with a lower target price of IDR 870 per share, based on a projected 2025 EV/EBITDA ratio of 6.3x,” Mikael wrote in his research note.

Previously, UOB Kay Hian’s research had set a higher target price for NCKL shares at IDR 1,480 per share. (KR/ZH)