COMPANY BACKGROUND

Nickel Asia Corporation and its subsidiaries engage in the production and
exportation of industrial metals. Currently, the company runs the 3rd
largest nickel mining facility in the world and dominates the country's
local nickel production. The company also has increasing interests in the
renewable energy sector by holding assets in solar and geothermal
NICKEL ASIA
NICKEL ASIA CORP.
CORP. sources in different parts of the country.

DATA AS OF OCTOBER 19, 2022

BUSINESS SUMMARY RECOMMENDATION AND TARGET PRICE
Company Name: Nickel Asia Corporation
Nickel Processing and Exploration Stock Symbol: NIKL P10,000
Historical Data
Last Traded Price: P5.01 P7,500
60% 65% 100% Volume: 4,249,000
P5,000
Free Cash
Value: P21,349,235.00 Flow
*All values displayed
in Millions
P2,500
Rio Tuba Taganito Mining Hinatuan Mining 52 Week High: P9.77
Nickel Corporation Corporation Corporation P0
52 Week Low: P4.88
Ownership in the company P-2,500
The company is the biggest nickel producer in the Market Capitalization: P68.56B 2017 2018 2019 2020 2021

country. NIKL owns productive mining assets in Earnings per Share (EPS): P0.57 For five years, the company was able to sustain a
Palawan, Surigao del Norte, and Dinagat Islands. P/E Ratio: P7.7x positive cash flow maintaining an Average Free Cash
According to the company's 2021 report they produced flow of 5.5 Billion PHP which means that NIKL has a
Dividend per Share: P0.22 healthy financial health and efficient operations.
a total of 17.9 million wet metric tons of nickel to
Dividened Yield: 4.76%
various clients in China, Japan, and the Philippines. Discounted Cash Flow (DCF)
Renewable Energy Sector FINANCIAL ASSESSMENT Fair Value P7.34 per share
Income Statement Buy at Price P4.41 per share
86.3% 100% 100%
Revenues 2021 2020
Current Price P5.01 per share
Emerging Mindoro Geothermal Biliran Holdings Sale of ore and limestone P 26,099,020 P 20,456,629
Power Inc. Power Corporation Inc. Services and others P 797,163 P 1,026,794 Sell at Price P6.48 per share
Ownership in the company Sale of power P 507,932 P 288,158

The power sector of Nickel Asia is also securing its Total Revenue P 27,404,115 P 21,771,581 As per calculation, the fair value of Nickel Asia
status to make more profits for the company. Total Expenditure P 14,611,111 P 13,854,718 Corporation is valued at P7.34 per share. However, the
Emerging Power Inc. a subsidiary of Nickel Asia Margin market undervalues this stock by 31% in which its
supplies 73,596 MW of green energy in the Subic Bay Gross 67.24% 51.54%
current stock price is only P5.01.
Net 29.64%
Area thus producing P17.06 million of net income for Company P/E Ratio
Growth Rates
the company.
Revenue P 27,404,115 P 21,771,581 Industry Average 11.7x
Mindoro Geothermal Corp. and Biliran Holdings Inc.
Net Profit P 10,638,174 P 5,489,042
also dominate the power distribution and generation Century Peak Holdings 31.3x
EPS 0.57 0.30
in the Provinces of Mindoro Occidental, Oriental and Nickel Asia 7.7x
EPS Growth Rate (vs. 2020) 92.07% 51.95%
the whole island of Mindanao. *All values displayed in Thousands, PHP. Fiscal Year ends in December*
Global Ferronickel Holdings 6.3x
Nickel Asia Corporation has 3 different income streams,
BUSINESS STRENGTH according to their 2021 reports 95% of their income was Philex Mining 5.6x
collected from the sale of ores and limestone in their mining Currently trading at P5.01 it is currently 34.9%
The demand for electric cars is going bullish. In 2018, operations. A 2.9% of their earnings was taken from their undervalued based in its current P/E ratio of P7.7x.
global electric vehicles only accounts for 2.2% market service sector and the remaining 2.1% was produced by their
share in automobiles, however, by 2035 it is estimated holdings in power generation. Total P/E Ratio Total
that 45% of all vehicle sales would be electric. The company has also a healthy gross margin of 67.24% Market P68.56B P8.92B Earnings
Capitalization
P7.7x Per Share
Export ban in Indonesia and Western Embargo of presenting that the company has an edge in operational
Russian nickel would mean that the Philippines would efficiency against the whole mining industry which has an
likely become the largest nickel producer in the world. average margin of 40%. Price to Book
The company is well-positioned in this trend given The company also saw a 29.6% rise in net profit, this signifies Outstanding
Shareholders
that it controls 54% of the total market share of nickel that the company recovered faster amidst the impact of the P36.32B P2.66 P13.63B Shares
Equity
in the Philippines. COVID-19 pandemic. We are confident that this rise in profit
The nickel export ban in Indonesia would mean a would continue, given that the demand for nickel is going
The company has a lower price to book value which
lower supply in the overall market, this would push bullish.
means that this company has to offer a cheaper
nickel prices to go up which means a higher profit Balance Sheet valuation which means the investors are not overpaying
margin for the company. 2021 2020
for the shares that they buy.
The company also has a strong moat against its Current Assets P 24, 011, 065 P 22,011,970
competitor. Nickel Asia has an 83% lead in market
INVESTMENT SUMMARY
Total Assets P 51, 700, 882 P 48,913,290
capitalization, a much higher market share of 54.3%, Current Liabilities P 11, 924, 982 P 10,944,323

enjoys diversity with its holdings in Renewable Energy Total Liabilities P 15, 371, 682 P 14,316,501

and a higher production rate against Global Stockholder’s Equity P 36, 329, 200 P 34,596,789 Shareholder Returns
Ferronickel Holdings Inc. Stockholder’s Equity- Parent P 36, 939, 767 P 31,042,396 NIKL Industry Market
Book Value per Share P 2.42 P 2.28 7-day -0.2% -0.9% 3.5%
The company has also received citations and awards
30-day -11.2% -8.8% -4.6%
for being a safe, reliable, and responsible mining *All values displayed in Thousands, PHP. Fiscal Year ends in December*

company. In 2017, they received the First ASEAN The company saw a 5% increase in its total assets from 2020 to 90-day -7.4% -9.8% -3.3%

Mineral Awards and by 2020 they received the 2021, book value per share is also up by 6.12%. 1 -year
-3.8% -21.4% -13.8%
-10.2% -23.9% -15.8%
Presidential Mineral Industry Environment Award. The company has strong financials. Its accumulated assets are
63.2% 9.3% -14.6%
These recognitions by local and foreign institutions 70% higher than its total liabilities. We can assure that Nickel 3-year
28.5% 0.7% -19.8%

can help the company in maintaining their good Asia Corporation is free from the risk of debt. 89.1% -16.7% -11.9%
5-year
public relations and secure their position in ESG Cash Flow Statement 33.8% -24.2%
including dividend return
-20.6%

ratings. Operating Activities 2021 2020

For the past five years, Nickel Asia has outperformed
Net Cash Flow P 9,778, 000 P 8,960,000
both the mining sector and the overall market. This is a a
Global Ferronickel Net Operating Cash Flow Growth (vs.
Nickel Asia
Holdings Inc. 2020)
9.12% 43.94% great sign to invest in Nickel Asia; the company also
Market Capital P68.5B P11.12B Net Operating Cash Flow/ Sales (vs. 2020) 37.10% 42.80%
enjoyed high levels of returns from dividends alone.
Market Share 54.3% 4.75% Investing Activities
1.Macroeconomic Trends
Renewable Energy, Capital Expenditures P 2,046, 000 P 2,349,000
Industries Mining
Mining 2. Stable Finances
Capital Expenditures (Fixed Assets) P 1,774, 000 P 2,133,000
Dividend Yield 4.39% 7.14% 3. Excellent Valuations
Capital Expenditures (Other Assets) P 272, 000 P 216,000
17.9 million wet 4.88 million wet metric 4. Moat
Total Nickel Production Capital Expenditures Growth 12.90% -52.88%
metric tons tons 5. High Dividend Yield
Cash Flow from Financing
6. Low Potential Risks
Total Cash Dividends Paid P 7,854,000 P 5,732,000

INVESTMENT RISKS
Zero COVID Policy of China
Due to the government's strict lockdown regulations,
the manufacturing sector in China is currently slowing
down. This harsh policy is slowing down the demand
for nickel and may affect the earnings of the company.
However, we are confident that once this policy would
be reversed demand for nickel would be back at high
levels.
Volatility
The volatility of the stock market and the price of
nickel on the global market both have an impact on
NIKL. The performance of the company would reflect
the general health of both the commodity and the
stock market as business cycles go through booms and
busts.
Central Bank's Interest Rates
Investors may choose government bonds over stocks.
As the interest rates increases, it would hurt the whole
stock market itself, lowering the perceived value of the
company.
Free Cash Flow
Free Cash Flow Growth
*All values displayed in Thousands, PHP. Fiscal Year ends in December*
The company’s free cash flow increased by 17.22%. This only
shows that the company has enough cash flow to sustain its
operations and responsibilities.
Increasing amount of free cash flow is also a good sign for
dividend investors, higher cash flows would likely mean higher
dividend yields for the shareholders.
HOLD
As the central bank increase its interest rates, we
are expecting that the bond market would
outperform the stock market. As a result we are
giving a HOLD rating to Nickel Asia Corporation. We
are recommending that investors should wait for
the stock price to fall at P4.41 per share to maximize
potential returns. For investors that already hold
equity in Nickel Asia, we highly recommend to hold
your shares because the upside potential of the
company is highly possible.
P 8,003,000 P 6,827,000
The company is well-positioned in the need of the
17.22% 37.39%
world to decarbonize, as the demand for electric
vehicles and renewable energy is on the rise investing
in Nickel Asia would allow investors to profit in this
trend.
The company has also an excellent profit margin,
enough assets to counter its debt and increasing cash
flow. We project that this trend would continue given
that global demand for nickel is on the rise and the
company’s investments in renewable energy are
starting to become profitable.
The market undervalues this stock by 31% in which its
current stock price is only P 5.01. For long term
investors, this miscalculation of the market is a great
opportunity to buy a great company that has a healthy
cash flow and quite good dividend yield. However, if
investors are looking for a shorter duration of holding
time, we advise to buy the company at P 4.41 and sell it
at P 6.48 to earn a 47% profit from capital appreciation.
We assume that the potential risks that threaten the
company are just temporary and does not give any
existential threat to the company, rather these threats
are just a part of market corrections and regular
business cycles.