Ord Minnett expects negative sentiment will weigh on Nickel Mines’ near-term stock price given ties to joint venture partner Tsingshan Holding, following allegations that Tsingshan spiked a nickel price rally as it attempted to address a shortfall.
Nickel prices more than doubled on Monday, reaching more than US$100 per kilogram from US$45 per kilogram, before the London Metal Exchange suspended trading, with limited spot inventory driving the rally.
With reports suggesting the company was short 100,000 tonnes of nickel at the beginning of the year Ord Minnett predicts losses of US$2.0-10.0bn, but expects the Chinese state has already moved to bail out Tsingshan.
The rating is downgraded to Hold from Accumulate and the target price of $1.60 is retained.
Sector: Materials.
Target price is $1.60.Current Price is $1.41. Difference: $0.19 – (brackets indicate current price is over target). If NIC meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges – negative figures indicate an expected loss).
