Efficiency Over Scale: Merdeka Battery Materials Posts 34% Profit Jump Amid Strategic Pivot

JAKARTA, Investortrust.id — In the volatile world of nickel, where price swings often dictate the fate of miners, PT Merdeka Battery Materials Tbk (MBMA) has found a more reliable lever: operational efficiency. On Tuesday, March 31, 2026, the Indonesian battery materials giant reported a 34% increase in net profit for the 2025 fiscal year, reaching $100.51 million—a sharp rise from the $79.50 million recorded in the previous period.

The profit surge is particularly striking given that top-line revenue actually contracted, falling to $1.43 billion from $1.84 billion. The discrepancy highlights a deliberate strategic pivot. Management successfully slashed the company's cost of goods sold from $1.72 billion to $1.26 billion, effectively bolstering gross profit even as the total volume of some lower-margin products ebbed.

This performance matters because it serves as a bellwether for the broader Indonesian nickel industry. As the world’s largest producer of the metal, Indonesia is transitioning from being a provider of raw stainless-steel ingredients to a high-tech hub for the electric vehicle (EV) battery supply chain. MBMA’s ability to defend margins through cost containment rather than pure volume growth suggests a maturing industrial strategy in the face of fluctuating global commodity prices.

The Shift to High-Margin Assets

The $453 million revenue decline was largely attributed to a temporary scale-back in High-Grade Nickel Matte (HGNM) sales as the company redirected its focus toward high-margin Nickel Pig Iron (NPI) operations. By October 2025, however, HGNM production resumed following the secures of more economically favorable contracts.

Operational headwinds were also a factor. The company saw a $110 million dip in NPI sales due to scheduled maintenance turnarounds at two of its three Rotary Kiln-Electric Furnace (RKEF) smelters. These losses were partially mitigated by a $75 million increase in limonite ore sales from the SCM mine—a massive nickel deposit that is increasingly becoming the center of MBMA’s integrated ecosystem.

Despite the strong bottom-line growth, net profit attributable to the parent entity remained more modest at $29.56 million, up from $22.78 million in 2024, reflecting the complex minority interest structures common in large-scale Indonesian mining ventures.

Targeting a 2026 Surge

Looking ahead to the current fiscal year, MBMA has set aggressive production and cost targets. The company aims to produce between 70,000 and 80,000 tons of NPI, with an estimated cash cost below $10,500 per ton and an all-in sustaining cost (AISC) capped at $11,000 per ton.

A key driver of this efficiency will be the SCM mine, as the company works toward 100% ore self-sufficiency. Management also projects HGNM production to reach between 44,000 and 48,000 tons, with costs expected to stay below $13,500 per nickel ton.

The HPAL Frontier

The next chapter for MBMA lies in Mixed Hydroxide Precipitate (MHP), a critical intermediate product for EV batteries. The company’s PT ESG facility, which utilizes High-Pressure Acid Leaching (HPAL) technology, is targeting an output of 27,000 to 30,000 tons for 2026. This target remains subject to the approval of the government's mandatory Work Program and Budget (RKAB).

Simultaneously, the company is ramping up its AIM (Acid, Iron, and Metals) operations and its Copper Cathode Plant (CCP). Significant progress is also being made at the PT SLNC HPAL project, which was 83% complete as of the fourth quarter of 2025.

In a notable leadership transition accompanying these results, Teddy Nuryanto Oetomo has been appointed as President Director, succeeding Devin Antonio. His mandate appears clear: transform MBMA’s massive resource base into a lean, high-margin engine for the global energy transition.

Market Sentiment: Analyst Targets and Fair Value

The market’s outlook on Merdeka Battery Materials (MBMA) remains cautiously optimistic, reflecting the company’s strategic potential within the electric vehicle supply chain. According to InvestingPro data as of March 31, 2026, the stock currently trades at Rp 695, a position that suggests a significant gap between its market price and intrinsic value. Analyst targets from nine separate researchers provide a mean estimate of Rp 797.54, indicating that Wall Street professionals see roughly 14.7% in remaining growth potential from current levels.

However, a more aggressive upside is signaled by quantitative investing models. The InvestingPro Fair Value—calculated based on 12 distinct financial models—estimates the stock’s true worth at Rp 782.10, representing a potential 12.5% upside. While the stock has faced a volatile five-year trajectory, declining approximately 21.4% since its peak in early 2023, recent price momentum has stabilized. The "Medium" uncertainty rating suggests that while the company's financial health is currently ranked as a "Fair Performance" (2 out of 5), the rapid growth in net profit and EBITDA—which reached Rp 3.18 trillion in the trailing twelve months—could serve as a catalyst for a re-rating in the coming quarters.