Bottom Line: Higher than Consensus but Lower than Our Estimate
In 3Q18, INCO posted the net profit of USD25.8 million growing by 14.5% q-q (vs. USD22.6 million in 2Q18). The figure was higher than the consensus of USD24.9 million, but it was lower than our estimate of USD30.9 million. The net profit margin was kept in check at higher than 10% to 12.6% (vs. 11.0% in 2Q18). On a cumulative basis, in 9M18 it posted the sales of USD579.6 million, surging 29.1% y-y (vs. USD 448.7 million in 9M17). The sales reached 71.4% of the full-year 2018’s estimated sales target, underlined by 3Q18’s ASP increased to USD11,041 per metric tons (mt), akin to the buoyant global nickel prices.
Lower-than-estimate Production
9M18’s sales of 579.6 million were lower than the sales estimate of USD594.9 million. It was attributable to the missed production target due to furnace stoppage in 3Q18. Based on our prior estimate, in 9M18 INCO was likely to produce 56,197 metric tons (vs. 54,227 metric tons actual in 9M18). The shrinking production aligned with the decline of USD4.8 million in fuel expenses. Another to the shrinking production, its sales were at USD205 million in 3Q18, lower than the consensus of USD213 million.
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