Global gold price movements continue to show an increase that has the potential to continue throughout 2020. This condition will be a positive sentiment for PT Aneka Tambang Tbk (ANTM) alias Antam. Last year, Antam managed to record sales reaching Rp 32.81 trillion, an increase of 30%.
"This increase is driven by investor concerns about the economic uncertainty caused by the trade wars of the United States (US) and China, plus the sentiment of US and Iraqi geopolitical conflicts," explained MNC Securities analyst Catherina Vincentia, Wednesday (26/2).
These sentiments encourage investors to divert investments in low-risk assets. In this case, gold is one of the safe-haven assets that investors choose. The price of gold rose.
Despite the increased demand for gold, Antam's gold production did not increase significantly. Antam is still trying to optimize gold production in the three mines that they already have.
Catherina said that Antam also tried to continue to maintain gold reserves and look for new exploration points. "In the future, we assess Antam's performance can be driven by the coronavirus sentiment which is expected to suppress global economic growth," he said.
ANTM's Share Price Is Still Interesting to Buy
Catherina's count, the spread of the coronavirus pushed gold prices up to 7.7% year to date (YTD) and 23.17 year on year (YoY). "We estimate the price of gold to reach the US $ 1,700 per ounce troi in the first half of 2020," he analyzed.
Catherina believes that the movement of gold prices in the future will still increase. This condition will encourage Antam's revenue this year considering that last year the volume has increased.
Therefore, Catherina assessed that ANTM's shares are still interesting to collect. In valuation, ANTM shares are still quite attractive because they are still at the minus 1.21 standard deviation. Catherina is currently recalculating the latest target price of ANTM shares. Before this, he gave the recommendation to buy ANTM shares with a target price of Rp 1,200 per share.
Sucor Sekuritas's analyst Hasan in his research on 7 February 2020 recommended buying ANTM shares with a target price of Rp 1,000 per share. The reason, in the past year, this issuer managed to record a solid performance with revenues growing 30% and sales figures rose in all business lines.
Antam also boosted its gold sales volume by launching innovative gold products. Last November, the issuer launched the Bezel II series. Also, the ferronickel and nickel ore business links will significantly support the issuer's performance.
Optimistic, ANTM has the Potential to Increase Revenue
Antam's management is also optimistic that production volume will increase in 2020 because there is an additional volume of new smelters in Halmahera which will start operating in the second quarter of 2020. At present, the smelter is already in the production trial stage.
However, nickel prices are burdened by higher inventories. "We estimate that the weak nickel price is likely to last until the end of June because production is still high while demand is weak," Hasan said.
This year, ANTM still has to face the volatility of nickel and gold prices, the risk of halting Halmahera production, and the weak demand for nickel ore from the domestic market. NH Korindo Sekuritas analyst Meilki Darmawan also recommended buying ANTM shares with a target price of Rp 1,100 per share. ANTM benefits from rising gold prices.
"In 2020 ANTM will operate the Arinem gold mine in West Java with an estimated production capacity of 700-800 kilograms per year, and has the potential to increase revenue in the future," Meilki explained in the research.
Also, ANTM's continued expansion makes the issuer's business prospects bright in the long run. Also, ANTM's collaboration with PTBA in building a power plant in Halmahera will support the business prospects of the gold mine issuer.
