MDKA Announces IPO for Subsidiary, Electric Vehicle Battery Production Plans

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- PT Merdeka Copper Gold Tbk (MDKA) has announced plans to launch an initial public offering (IPO) for its subsidiary, PT Merdeka Battery Materials (MBM) in the first semester of 2023 and plans to begin production of electric vehicle batteries within the next 2-3 years.

According to Jennifer A. Harjono, an analyst at PT Mirae Asset Sekuritas Indonesia, MDKA will also integrate the AIM Project under the umbrella of MBM, which will enhance the value of MBM. 

"We see this move as beneficial for MDKA as the production of EV batteries will create higher-value products, which will result in better profitability for the company," said Harjono in a written statement on Wednesday (25/1).

MDKA recorded revenue of USD284.6 million (+30.4% QoQ, +126.4% YoY) in the third quarter of 2022 as revenue from MBM offset a decline in revenue from the Tambang Tembaga Wetar copper mine (-9.5% QoQ), bringing revenue for January-September 2022 to USD626.0 million (+139.7% YoY). 

Despite the growing top-line, MDKA recorded a net loss in the third quarter of 2022 of USD27.6 million due to significant increases in costs, particularly fuel prices and one-off transactions. However, the company's net income for January-September 2022 still stood at USD69.2 million (+228.5% YoY).

Expectations of a recession in the United States have pushed gold prices higher. According to the World Gold Council, gold is expected to have a stable but positive performance amid volatility in 2023. 

As one of MDKA's main revenue streams, the company's average selling price for gold is expected to follow the projected increase in gold prices in 2023, according to Harjono's analysis. "Meanwhile, we estimate that the amount of gold obtained in 2023 will remain stable at around 110-125k oz," said Harjono.

Currently, Harjono does not have coverage of MDKA. She sees the company as offering an attractive value for investors as the company:

  1. benefits from market preferences for gold;
  2. will complete the RKEF #3 and AIM Project in the second semester of 2023; and
  3. value unlock MBM in the first semester of 2023.

"Although some pressures still exist, we see that the positive prospects are still greater," Harjono concluded.

According to data from Ipotnews, since Friday (30/12/2022) to Wednesday (25/1/2023) at 09:44 AM, MDKA shares have risen from 4,120 to 4,810, an increase of 16.75%.

Grafik harga saham MDKA 1 tahun

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