INCO reported a net profit of US$21.80 million in 1Q25 (+228% QoQ; +252% YoY). This result was driven by gains from a fair value assessment of a call option related to the HPAL project (IGP Pomalaa). A positive contribution also came from the initial sale of nickel ore, which generated revenue of US$2.54 million in 1Q25.

Total revenue declined to US$206.53 million (-14.60% QoQ; -10.18% YoY). The decrease was attributed to a 10.94% QoQ drop in nickel matte sales volume to 17,096 tons (vs. 19,196 tons in 4Q24), along with a lower average selling price (ASP), which fell to US$11,932/ton (-5.28% QoQ from US$12,597/ton in 4Q24).

Cash costs improved in line with lower energy expenses. Despite the weaker nickel prices on the London Metal Exchange (LME) affecting the ASP, INCO
successfully implemented significant cost-control measures in 1Q25, reducing its cash cost by 5.31% QoQ to US$8,501/ton (vs. US$8,978/ton in 4Q24). The reduction was primarily supported by lower HSFO and coal consumption.

Focus on initiating nickel ore sales and diversifying downstream products. INCO is taking strategic steps to start nickel ore sales as part of its efforts to strengthen its commercial strategy. The company has received approval for the revised 2024 Work Plan and Budget (RKAB) and plans to submit the 2025 RKAB.

Using the Sum-of-the-Parts (SOTP) valuation method, with a required rate of return of 8.78% and a terminal growth rate of 1.46%, we estimate the fair value of INCO’s fair value at IDR 3,560 per share (implying 32.67x / 0.82x expected P/E and P/BV). This positive outlook is supported by improved cash cost efficiency and product diversification.