Mandiri Sekuritas ANTAM: 1Q10 net profits jumps 125%yoy, still trails expectations (ANTM, Rp2,500, Neutral, TP: Rp2,350)

With the improvement in nickel prices and a shift in revenue mix favoring higher margin nickel over gold trading, the company posted net income of Rp202bn, up by 125%yoy, but only equated to some 19% and 17% of our and consensus FY10F. Understandably, with gold trading having less contribution on top-line, revenues fell by 37%yoy to Rp1.6tn, with nickel contributing about 51% (versus 15% in 1Q09), while gold contributed 46%, the remaining 3% came from other resources such as bauxite, etc. Ferronickel sales amounted to 1,663mt with selling price growing by 99% to US$9.38/lb or US$20,680/t. Ferronickel sales would have been higher as well as earnings as about 4,177 tons remained in transit by end of 1Q. Thus. effectively production of ferronickel should have been about 5,840 tons or some 30% of our FY10F forecast. We maintain neutral on the stock, which now trades at PER10F of 23.6x