Nickel Mines Limited

This report is an updated version of the report published on 20 July 2022 at 3:17 PM GMT.

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Nickel Mines Limited (ASX: NIC) is a low-cost producer of nickel pig iron (NPI), which is a key ingredient in producing stainless steel. The principal operations include Hengjaya Nickel and Ranger Nickel rotary kiln electric furnace (RKEF).

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~51.53% of the total shareholding. Decent Investment International Pte. Ltd. and PT Karunia Bara Perkasa hold a maximum stake in the company at ~11.28% and ~6.63%, respectively.

1.4 Key Metrics:

During FY21, the company recorded a net margin of 27.2% against the industry median of 11.6%. In addition, the EBITDA margin stood at 35.6% as compared to 29.4% of the industry median. Below captured the trend of current ratio and asset-to-equity ratio. 

Section 2: Financial and Operational Highlights

2.1 Insights of 1QFY22:

2.2 Operational Highlights

During 1QFY22, NIC recorded a production-weighted average cash cost of USD11,969/tonne. The company’s attributable nickel production was 8,933 tonnes of nickel metal, reflecting a rise of 10.7% over 4QFY21. Below outlined the trend of NPI production and NPI grade. 

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is July 20, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.

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