Vale Indonesia (INCO IJ/Transfer Coverage) - Foundations In Place
Vale Indonesia’s 2Q26 bottom line was booked at USD61m (+39% QoQ, +1,660% YoY) and came in at USD104m (+313% YoY) cumulatively. The quarterly top line was recorded at USD290m (+15% QoQ, +32% YoY), with 1H26 revenue chalked up at USD543m (+27% YoY).
Vale Indonesia’s 2Q26 bottom line was booked at USD61m (+39% QoQ, +1,660% YoY) and came in at USD104m (+313% YoY) cumulatively. The quarterly top line was recorded at USD290m (+15% QoQ, +32% YoY), with 1H26 revenue chalked up at USD543m (+27% YoY).
Nickel matte production improved in the short term (1Q26: 16,153 tonnes; +19% QoQ, -13% YoY) – 1H26: 29,773 tonnes (-16% YoY). A stark contrast was seen in the nickel ore segment, which jumped to 2.3m tonnes (vs 1H25’s 147 tonnes).
The overall bottom line was just slightly below our estimate at 47% (but in line with the Street’s estimate), while interestingly, the top line fell short of both our and consensus (at 39%). The improvement in profit was partly helped by support from ASP (1H26: USD14,491/tonne; +20% YoY), which mitigated the headwinds from fluctuations in energy costs (1H26 cash cost: USD12,598/tonne; 37% YoY), alongside a massive gain from other income (1H26 gain on forex adjustments booked at USD12.7m).
INCO now traded at forward-rolling 6x EV/EBITDA (vs its closest peers at c.8x) – 59% upside to our latest TP at IDR7,400. Outlook remains constructive: volume recovery, operating leverage on a largely fixed cost base, and the ramp at Bahodopi and Pomalaa should compound through 2H26 and into FY27. The main watch-items are LME nickel direction, RKAB volume approvals, and capex intensity as the three hubs build out; none of which, in our view, changes the direction of earnings from here.
