Nickel Asia: Good prospect

Industry experts forecast that the global nickel market will remain in surplus next year.

Near-term areas of interest for the global nickel market are: Slowing stainless steel demand most attributable to China's downbeat construction sector, Indonesia's surging production of nickel, and uncertainty regarding Russian metal supply.

All else constant, nickel prices remain under pressure in 2023, but still slightly elevated versus pre-pandemic levels, a Regina Capital Development Corp. market review said.

It issued a "buy when support holds" recommendation on Nickel Asia Corp. shares.

A comparison of Nickel Asia's stock prices against London Metal Exchange nickel futures figures showed it should be trading at around P7.60 per share against the current P6 at the market if global prices continue to hover near $30,000 per metric ton.

Despite the lower ore sales sold in nine months, Nickel Asia's attributable net income still grew by 12 percent from a year ago to P6.9 billion on the back of higher nickel ore prices and a stronger dollar.
Volatile prices in H1

RCDC said its outlook on the Nickel Asia shares has not changed as the impact of volatile prices in the first half mostly normalized during the remainder of the year.

"We continue to see just steady ore sales maximum of high single-digit growth at least until the estimate for 2024. Net effect would be a slightly narrower margin contraction but ultimately the bottomline could decline by the low-single digits or stay flat. Note that this year would be considered a high base."

"Forecast model yielded a higher fair value of P7.30 per share, which reinforces a 'BUY' recommendation. Prevailing share prices continue to provide large upside potential," according to RCDC.