J.P.Morgan is constructive on selected ASEAN metals names, but warns that Indonesia's nickel industry policy may be good for the country without necessarily being good for investor returns.
AI summary card
J.P.Morgan is constructive on selected ASEAN metals names, but warns that Indonesia's nickel industry policy may be good for the country without necessarily being good for investor returns.
The report centers on tightening nickel ore supply and demand, an aluminum supply shortfall, energy-transition demand, and company project progress, and assigns overweight views to ANTM, PMAH, INCO, and MDKA.
- ANTM is one of the top picks, benefiting from rising nickel ore prices and its gold refining brand, with a Jun-27 target price of IDR6,000.
- PMAH's bullish case comes from aluminum prices and regional premiums; the global commodities team expects the 2026 aluminum market could face a 1.9mtpa deficit.
- INCO benefits from high-grade nickel reserves, mine expansion, and a joint venture HPAL project of up to 240kt; ore sales are expected to rise from 2.2mn wmt in 2025 to about 40mn wmt in 2028.
- MDKA has exposure to nickel, copper, and gold, and the report believes the liquidity issues of the past have improved through subsidiary IPOs and project execution.
Report interpretation
Overview
This is a J.P.Morgan research report on ASEAN metals and Indonesian resource stocks, themed "Boon for country, bane for investors?". The report discusses Indonesia's strategic goals in the nickel supply chain, nickel ore supply and demand, global battery demand, aluminum and alumina prices, and the investment case and valuation for the four main covered names ANTM, PMAH, INCO, and MDKA.
Core views
The core view is that metals demand remains supported by the energy transition, but opportunities need to distinguish between those benefiting from industrial policy and those benefiting from shareholder returns. The report is most positive on ANTM's nickel ore and gold refining businesses, believing tight nickel ore markets will lift ASPs and support earnings; positive on PMAH due to high aluminum prices and regional premiums; positive on INCO's high-grade nickel resources, mine expansion, and HPAL project; and positive on MDKA's multi-metal exposure and SOTP discount recovery.
Analysis framework
The report combines commodity supply-demand analysis, company project progress, earnings forecasts versus market consensus, valuation multiples, DCF, and SOTP frameworks to evaluate the names. For ANTM and PMAH, P/E valuation is used; for INCO, a segmented SOTP framework that includes DCF is used; and for MDKA, project-level SOTP is used, with TB Copper assigned a 50% probability of on-time delivery.
Methodology notes
Price-to-earnings ratio
ANTM's target price is based on 9x 2027E earnings, while PMAH's target price is based on 25x the average of 2026 and 2027 earnings.
Discounted cash flow
INCO's nickel matte smelting and ore businesses use long-term DCF valuation, assuming a long-term LME nickel price of US$17,000/ton and a WACC of 10%.
Sum-of-the-parts valuation
INCO values the nickel matte, ore, and HPAL equity segments separately; MDKA models key projects and then adds net cash or net debt, while applying a 25% SOTP discount.
Supply-demand balance analysis
The report assesses commodity price and earnings direction through nickel ore quotas, HPAL capacity expansion, aluminum supply recovery, increased alumina capacity, and battery demand.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- ANTM.JK（Aneka Tambang）A beneficiary of Indonesia's nickel ore and gold refining businesses, and one of the report's top picks.
- Strengths
- High-grade and sizable nickel reserves, a strong gold refining brand, upside in nickel ore ASP that can lift earnings, and relatively limited capex requirements.
- Weaknesses
- Earnings depend on nickel ore permits, nickel ore prices, and gold supply.
- Comparison
- The report says FY26-28E earnings forecasts are 47%-63% above the market, while the target multiple is below the historical average of 12x P/E.
- Risks
- Failure or delay in obtaining nickel ore mining permits, gold supply issues, and nickel ore regulatory risk.
- PMET.KL（Press Metal）A beneficiary of high aluminum prices and regional premiums.
- Strengths
- Benefits from the aluminum market deficit, rising LME aluminum prices, and higher regional premiums, with strong earnings leverage.
- Weaknesses
- Sensitive to spot alumina costs and the USD/MYR exchange rate.
- Comparison
- A 25x P/E is slightly above the historical average of 24x, reflecting a stronger earnings growth phase.
- Risks
- Weakness in aluminum prices or regional premiums, unhedged alumina cost increases, or a stronger-than-expected MYR.
- INCO.JK（Vale Indonesia）A nickel resource, ore sales, and HPAL project growth story.
- Strengths
- Large high-grade nickel reserves, mine expansion across multiple blocks, and a long-term growth driver from the up to 240kt HPAL joint venture project.
- Weaknesses
- Long project execution cycle and sensitivity to nickel demand and HPAL progress.
- Comparison
- Uses SOTP valuation, with the nickel matte and ore businesses valued using DCF and HPAL equity valued at 7x FY27E P/E.
- Risks
- Additional nickel supply in Indonesia, a deterioration in long-term nickel demand or a shift in battery chemistries away from nickel, and delays to HPAL projects.
- MDKA.JK（Merdeka Copper Gold）A multi-metal exposure and SOTP discount-recovery name with nickel, copper, and gold exposure.
- Strengths
- Exposure to both base metals and precious metals, easing liquidity concerns through subsidiary IPOs and project progress, and potential value in TB Gold and TB Copper.
- Weaknesses
- Execution and timeline uncertainty in some key projects, and a holding-company structure that creates a discount.
- Comparison
- In the SOTP valuation, TB Copper is treated at a 50% probability of on-time delivery, and a 25% SOTP discount is applied to MDKA.
- Risks
- Metal prices below expectations, higher capex on key projects, slower-than-expected ramp-up at the Pani gold mine, and failure of the TB Copper project to move forward.
Key data
- ANTM target priceIDR6,000Based on 9x 2027E earnings; the report says FY26-28E earnings are 47%-63% above the market.
- PMAH target priceRM10.1/shareBased on 25x the average 2026 and 2027 earnings; supported by high aluminum prices and regional premiums.
- INCO target priceRp9,000Based on SOTP, including the 75kt nickel matte business, ore business, and HPAL equity; HPAL equity is valued at 7x FY27E P/E.
- MDKA target priceIDR4,030/shareBased on SOTP; TB Copper is treated at a 50% probability of on-time delivery, and a 25% SOTP discount is applied.
- Aluminum market deficit1.9mtpa deficit in 2026The report cites the global commodities team, which believes the 2026 aluminum market deficit could be one of the highest in nearly 20 years because of Middle East capacity closures.
- INCO ore sales2.2mn wmt in 2025 to ~40mn wmt in 2028The report expects INCO ore sales to grow significantly.
- PMAH alumina cost sensitivityUS$10 alumina cost movement = 3.5% EPS changeHolding all else equal, every US$10 move in alumina costs changes EPS by about 3.5%.
- PMAH exchange-rate sensitivity1% USDMYR change = 1.5% EPS changePMAH has USD-denominated revenue and MYR costs, so a stronger-than-expected MYR would weigh on earnings.
Impact & implications
For investors, the report suggests that resource nationalism and localization of the industrial chain may benefit national strategy, but do not automatically translate into shareholder returns for listed companies. The most attractive opportunities are concentrated in companies with high-grade resources, direct leverage to nickel or aluminum prices, manageable capex pressure, and valuation discounts that can be repaired through project execution.
Risks
- Changes in Indonesian nickel ore permits, regulation, and supply policy may alter nickel ore pricing and company earnings paths.
- If battery chemistries shift away from nickel-based routes, long-term nickel demand could weaken.
- Delays in HPAL and mine expansion projects would affect the growth delivery of companies such as INCO.
- Fluctuations in aluminum prices, regional premiums, alumina costs, and exchange rates will affect PMAH earnings.
- Metal prices below expectations, rising capex, or slower-than-expected ramp-up will weigh on MDKA's valuation recovery.
- J.P.Morgan discloses that it has market-making, client relationships, potential investment banking compensation, or non-investment banking compensation relationships with multiple covered companies.
What to watch
- The pace of Indonesian nickel ore mining permit and quota issuance.
- Changes in nickel ore ASP, LME nickel prices, and the relative premiums/discounts of NPI and nickel sulfate versus LME.
- HPAL expansion and joint venture project execution progress.
- Whether the 2026 aluminum market deficit materializes as expected, and the pace of Middle East aluminum capacity recovery.
- The impact of new alumina capacity on alumina prices and PMAH's cost base.
- Global battery demand growth and changes in the share of nickel-based batteries within battery chemistries.
- MDKA's Pani gold mine ramp-up, TB Copper progress, and value release from subsidiaries.