Chapter 1

Harita Nickel: an integrated producer trading below its listing price

Figures converted from Indonesian Rupiah at historical FX rates — see data/company.json.fx_rates for the rate table. Ratios, margins, and multiples are unitless and unchanged.

Harita Nickel (IDX: NCKL) is a founder-controlled, integrated Indonesian nickel company that mines ore on Obi Island and processes it into ferronickel and battery-grade material. Since its April 2023 listing, revenue and profit have risen every year — through a nickel-price slump that halved the shares. The stock trades near $0.045, roughly a third below its IPO price, on under six times earnings, while the controlling family sits at 81% and Glencore has bought in. This report examines whether that gap is margin of safety or fair value.

What the company does

PT Trimegah Bangun Persada Tbk — trading as Harita Nickel — runs a single-location, vertically integrated nickel operation on Obi Island in North Maluku, part of the family-owned Harita Group. It listed on the Indonesia Stock Exchange on 12 April 2023 under the ticker NCKL, selling 7,997,600,000 shares at $0.081 each and raising roughly $0.65 billion of primary and secondary proceeds [1].

The business splits into two reportable segments that sit on top of each other:

• Mining digs nickel laterite ore — saprolite (higher-grade) and limonite (lower-grade) — from concessions on Obi Island.
• Processing converts that ore into two product streams. An RKEF (rotary-kiln electric-furnace) route turns saprolite into ferronickel and nickel pig iron for the stainless-steel market; an HPAL (high-pressure acid leach) route turns limonite into mixed hydroxide precipitate and nickel sulfate for the electric-vehicle battery supply chain, with cobalt recovered as a by-product.

Most of the mining segment's ore is consumed internally by the smelters rather than sold to third parties, which is why the processing segment carries the great majority of external revenue and why inter-segment eliminations are large. In FY2024 the processing segment booked $1.44 billion of revenue against the mining segment's $0.52 billion, with $0.28 billion eliminated on internal transfers [2].

Source: FY2024 Annual Report, Note 38 Segment Information [3].

The company sits inside an industry Indonesia dominates. Indonesia holds the world's largest nickel reserves — roughly 72 million tons, about 52% of the global total — and the battery transition is the demand story management sells, even though stainless steel still drove around 70% of nickel demand as recently as 2022 [4]. The strength of that tailwind, and how much of it NCKL actually captures, is a question later chapters take up.

Size and how it earns

Harita Nickel is a mid-cap by global mining standards and a large one by Indonesian nickel standards. FY2025 revenue was $1.78 billion, gross profit $0.58 billion (a ~33% gross margin), and operating profit $0.50 billion [5]. Profit attributable to owners was $0.54 billion, or $0.0085 per share.

Sources: FY2025 audited financial statements [6]; market cap and multiples derived from the $0.045 close on 14 July 2026 and reported financials.

The growth has been dramatic and recent. Revenue was only about $0.58 billion in FY2021; it nearly tripled in FY2023 as the downstream smelters came on line, and has kept climbing since. Profit for the year followed the same path, from a near-breakeven $6 million in the FY2020 price trough to $0.66 billion in FY2025.

Source: FY2019–FY2025 consolidated income statements; FY2025 per the audited statements [7]; earlier years from reported financials and the IPO prospectus.

What makes the recent record unusual is that it was built into a falling price. FY2025 growth was volume-led: ore, ferronickel and HPAL volumes all rose by double digits even as the average LME nickel price fell to about US$15,160 per tonne, down 10% year on year, in what management itself calls a "structural imbalance" between Asian supply and softer demand [8].

One feature of the FY2025 result deserves an early flag, because a later chapter returns to it: $0.25 billion of the $0.73 billion pre-tax profit — about a third — came not from Harita's own operations but from its share in the profit of associates, equity-method income from smelter ventures it does not fully consolidate. That line nearly doubled year on year and is doing more of the heavy lifting than the operating trend alone would suggest [9].

Earnings rose; the price fell

The disconnect that frames this report is between the operating record above and the share price. Earnings per share climbed from $0.0004 in the FY2020 trough to $0.0085 in FY2025 — and grew 40% in FY2025 alone. The stock did the opposite.

Source: reported basic EPS, FY2019–FY2025; FY2025 ($0.0085) per the audited statements [10].

Against $0.0085 of earnings, the shares closed at $0.045 on 14 July 2026 — about 34% below the $0.081 IPO price of April 2023 [11], and roughly 48% below the top of a 52-week range that ran from $0.040 to $0.088. That leaves the stock on a trailing price/earnings multiple of about 5.8 and a price/book of about 1.3. Sell-side coverage points the other way: the consensus is a Strong Buy across roughly 13 analysts, with a mean 12-month target near $0.086 — some 90% above the current price.

Source: IPO price per the FY2023 Annual Report [12]; current price, 52-week range and consensus target from market data as reported.

A cheap multiple and a bullish sell-side are not, by themselves, an investment case — a low price can be correct. What it does is locate NCKL squarely in the territory a value or special-situation investor tends to fish: a company the market once prized as a battery-metals growth story, now trading below its listing price and near the bottom of its range, while its reported numbers keep improving.

Who owns it, and can it survive a bad cycle

Two facts anchor the downside case. The first is ownership. The Harita Group's holding vehicle, PT Harita Jayaraya, controlled 81.32% of the shares at the end of 2025, having trimmed from 84.69% a year earlier; the public float is only about 10%. The notable new name on the register is Glencore International Investments, which held 7.19% — a strategic commodity major taking a position while the stock was depressed. The company had also begun buying back a small block of treasury shares [13].

Source: FY2025 audited financial statements, Note 26 Equity [14].

This is a founder-controlled company in the fullest sense: one family holds four-fifths of the equity, so incentives are aligned but minority holders are along for the ride on the family's terms — a governance profile a later chapter examines rather than assumes.

The second fact is the balance sheet, which speaks directly to bankruptcy risk. At the end of 2025 Harita carried $2.81 billion of equity against just $0.90 billion of total liabilities — a ratio near 0.32. Bank borrowings of about $0.56 billion sat against $0.36 billion of cash, for net debt of roughly $0.20 billion [15]. Set against $0.50 billion of operating profit, that leverage is light. And the business throws off cash: operating cash flow was $0.52 billion in FY2025 against capital spending of only about $0.035 billion, as the current build-out phase wound down [16].

Source: FY2025 audited statement of financial position [17] and statement of cash flows [18].

The pressure is not on the balance sheet; it is on price. The nickel market remains in what management calls a phase of adjustment after years of heavy capacity expansion, and Indonesia's move to tighten ore-mining quotas through the RKAB permitting system — which began to influence market expectations in the fourth quarter of 2025 — is the swing factor for whether the surplus, and the price, begins to correct [19].

The central question

The material facts for a cold reader are now on the table: an integrated, single-island nickel producer, 81% owned by its founding family, with rising volumes, a light balance sheet and strong cash generation, trading below its IPO price at under six times earnings while a global nickel glut holds prices down and a third of reported profit flows from associates it does not fully control.

The question this report sets out to answer is whether Harita Nickel's low valuation reflects a genuine margin of safety — a low-cost, family-controlled, lightly-indebted producer whose output and earnings have kept growing through a severe nickel-price downturn — or a fair price for a business whose end-market is structurally oversupplied and whose reported profit leans increasingly on income from associates it does not fully control. Everything that follows tests one side of that question or the other.