MSC (5916): MALAYSIA SMELTING CORP BHD net profit jumps four-fold y-o-y in 4Q; soars to record high in FY21

MSC (5916): MALAYSIA SMELTING CORP BHD net profit jumps four-fold y-o-y in 4Q; soars to record high in FY21

KUALA LUMPUR (Feb 18): Malaysia Smelting Corp Bhd (MSC) saw its net profit for the fourth quarter ended Dec 31, 2021 (4QFY21) rise more than four times to RM64.07 million, from RM14.92 million a year ago.

Revenue rose 9.67% to RM255.06 million from RM232.57 million in 4QFY20, while earnings per share leapt to 15.30 sen from 3.70 sen.

According to MSC's stock filing, its tin mining segment posted a net profit of RM44.1 million for the quarter under review, up almost seven times from RM6.7 million a year ago, mainly due to high tin prices.

"For MSC’s tin smelting division, net profit stood at RM10 million against net profit of RM15.4 million in 4QFY20, primarily due to an absence of a reversal of inventories written down of RM21.1 million, which was recorded in 4QFY20.

"The tin smelting division also benefited from higher profit margins from the sales of refined tin derived from its tin intermediates," it said.

On a quarterly basis, its net profit almost tripled from RM28.94 million in the third quarter ended Sept 30, 2021 (3QFY21), while revenue rose 16.74% from RM218.48 million, mainly due to higher average tin prices.

EPS for the period doubled from 7 sen in 3QFY21.

For the financial year ended Dec 31, 2021 (FY21), net profit swelled almost eight times to hit an all-time high of RM118.06 million from RM15.16 million a year ago, while revenue rose 32.36% to RM1.08 billion from RM813.36 million a year ago.

"The higher earnings were lifted by favourable average tin prices, which grew 82% to RM130,575 per metric tonne in FY21, from RM71,559 per metric tonne in FY20," said MSC.

According to the group, its tin mining division led earnings growth with net profit expanding over five fold to RM109.4 million in FY21, from RM20.6 million in FY20, thanks to higher tin prices and production levels during the year.

While its tin smelting division reported lower production of refined tin in FY21 due to disruptions caused by the Full Movement Control Order (FMCO) and the force majeure from June 7 to Dec 20, this was mitigated by a reversal of inventories written down amounting to RM24 million in the first quarter ended March 31, 2021 and higher margins from the sales of refined tin derived from its tin intermediates.

Thus, its smelting division's FY21 net profit rose to RM12.1 million, from RM3.2 million a year ago.

MSC has proposed a first and final single-tier dividend of seven sen per share, compared with one sen per share in FY20.

"The tin supply deficit is forecasted to continue, which will sustain tin prices in the short- to medium term. At the same time, tin demand remains robust, in line with the global growth of electric vehicles, photovoltaic installations and consumer electronics, among others. This bodes well for the group," said its group chief executive officer Datuk Patrick Yong.

“With the lifting of the force majeure, we are accepting tin ores from customers to be smelted. At the moment, we are smelting the backlog of tin ore accumulated from the pandemic. We are delighted to update that the Pulau Indah smelting facility has reached 75% capacity and expect full production in 2022. The full commissioning of the Pulau Indah plant is expected to improve extractive yields, lower manpower costs, as well as our carbon footprint.”

”Concurrently, we are also running the Butterworth smelter in parallel. We plan to de-commission this plant in the next two to three years, when we achieve smooth operations at Pulau Indah. We anticipate our financial performance to improve, as we phase out production at the Butterworth plant.

" “Meanwhile, our tin mining business has delivered a strong performance in FY21, being a direct beneficiary of high tin prices. Despite the FMCO, we have successfully increased the daily mining output at the Rahman Hydraulic Tin mine in Klian Intan, thanks to our efforts to mechanise operations and introduce new technologies at the mine. We look forward to an even higher mining productivity in 2022, barring any unforeseen circumstances," he added.

MSC closed up 5 sen or 1.24% at RM4.08 on Friday (Feb 18), giving it a market capitalisation of RM1.71 billion.

http://www.theedgemarkets.com/article/malaysia-smelting-corp-net-profit-jumps-fourfold-yoy-4q-soars-record-high-fy21