Price Target : Rp5,000; INCO IJ
International Nickel Indonesia (INCO) has received shareholders’ approval to distribute US$100m interim dividend or US$0.01/share (around Rp90/share), yielding 3%. This translates into a 42% payout ratio based on 1H11 net profit of US$238m, above our estimate of 35%. However, we expect weaker earnings in 2H as nickel prices have dropped by more than 25% from the peak in March11. We maintain our Hold call and Rp5,000 TP for now but may review our earnings estimate and target price due to the lower nickel prices.