Credit Suisse upgrades FY20 and FY21 estimates for earnings per share by 20% and 10%, respectively, on the implementation of higher nickel pricing.
Despite Indonesia’s export ban the broker expects no major shortage of nickel in 2020. The nickel supply loss is expected to be covered by a drawdown of 40,000t of nickel ore stocks that are believed to be held by nickel pig iron plants.
Without Indonesian ore in the future, Credit Suisse expects China will need to reduce its nickel pig iron production, and supply of nickel is likely to be replaced with nickel pig iron from Indonesia where output is growing swiftly. Underperform rating and $4.15 target maintained.
Target price is $4.15.Current Price is $6.33. Difference: ($2.18) – (brackets indicate current price is over target). If IGO meets the Credit Suisse target it will return approximately -53% (excluding dividends, fees and charges – negative figures indicate an expected loss).