Malaysia Smelting Corporation Bhd - Global integrated tin mining & smelting player

Malaysia Smelting Corporation Bhd - Global integrated tin mining & smelting player

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Malaysia Smelting Corporation Bhd - Global integrated tin mining & smelting player

    Malaysia Smelting Corporation Bhd (MSC) history traces back to 1902 and is now ranked as the 3rd largest producer of tin metal and tin-based products in the world with total smelting capacity of 80,000 MT pa.

    Tin mining production is gradually on the uptrend, owing to better production efficiency, while new smelting plant at Pulau Indah is expected to anchor the smelting division’s growth.

    We initiate coverage on MSC with a HOLD call and fair value of RM5.36, based on 13.0x P/E pegged to its forward FY23f EPS of 41.2 sen.

Investment Highlights

    Largest local integrated tin mining and smelting player. Through Rahman Hydraulic Tin Sdn Bhd, MSC owns the largest and one of the oldest tin mines in Malaysia since 2004 that spans across 267.3-ha and is equipped with 1.0MW hydropower station. The mine has a mining lease till November 2034 and has consistently delivered improvement mining output throughout the years. Today, MSC is ranked as the 3rd largest producer of tin metal and tin-based products in the world.

    Well supported by 2 smelting plants. MSC currently operates 2 smelting facilities with a total annual production capacity of 40,000 MT each, with the newer plant (located at Pulau Indah) that is equipped with the cutting-edge Top Submerged Lance (TSL) furnace able to scale up the annual production capacity to 60,000 MT through oxygen enrichment process.

    Leveraging onto elevated tin prices. Tin prices have hit a historical all-time high level (above USD 50,000 MT) in March 2022. While the rally has cooled off in recent weeks, we think that tin prices will stay elevated above the pre-pandemic levels, owing to the supply shortage and rising demand from the gradual electric vehicles production, usage of electronic devices and the focus towards ESG practices through the installation of solar PV both residential and commercial premises.

Source: Mplus Research - 21 Apr 2022

https://klse.i3investor.com/web/blog/detail/MplusOnline/2022-04-21-story-h1621547831-Malaysia_Smelting_Corporation_Bhd_Global_integrated_tin_mining_smelting