Malaysia Smelting Corporation Bhd - Riding the Wave of Tin Demand
Tue, 09-Sep-2025 08:01 am
by Research Team • Apex Research

Counter

MSC (5916)

Target Price (RM)

1.51

Recommendation

Buy

  • MSC is poised to benefit from long-term global tin market fundamentals, driven by steady demand and constrained supplies.

  • Core earnings growth will be driven by (i) stable output levels supported by consistent mining and smelting operations, (ii) favourable metal price movement, and (iii) ongoing cost optimisation. Our projections currently exclude potential upside from any new resource discoveries or expansions in processing capacity, which could provide additional earnings catalysts.

  • We initiate coverage on MSC with a BUY call and a target price of RM1.51 pegged to 12x PE multiple on FY26F EPS of 12.6sen, and ascribed with three-star ESG rating. The assigned PE multiple reflects a 19.5% discount to the selected smelting peers’ average of 14.9x, to account for MSC’s smaller market capitalisation and lower trading liquidity compared to its peers.

 

Key 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 (acquired in 2004) spanning 267.3 ha and equipped with a 1.0 MW hydropower station. The mine has a mining lease period until November 2034 and has consistently delivered improved mining output over the years. Today, MSC ranks among the world’s largest producers of tin metal and tin-based products, with refined tin capacity of up to 60,000 tonnes.

 

Strategic Landbank Unlocking in Butterworth (via STC). The decommissioning of MSC’s legacy Butterworth smelter unlocks c.40 acres of prime waterfront land, which is being redeveloped into Straits City by parent company Straits Trading Company (STC). The project carries an estimated GDV of RM4.6bn, presenting potential upside via land monetisation, capital gains, or strategic JV participation. While non-core, the redevelopment offers a medium-term structural re-rating catalyst for MSC.

 

Beneficiary of Global Tin Supply Tightness. Global tin supply remains structurally constrained due to Myanmar’s export ban, ESG-related mining curbs in Indonesia and Africa, and declining ore grades worldwide. As one of the few LME-certified smelters with partial upstream integration via RHT mine, MSC is well-positioned to benefit from tighter spreads, elevated smelting premiums, and rising tin prices. The group’s new Pulau Indah facility further enhances its ability to monetise market dislocations through improved efficiency and ESG compliance.

 

Leveraging elevated tin prices. Tin prices surged to a multi-year high of USD37,100/MT (RM170,660/MT) in 1MFY25 on supply disruptions, before easing to USD32,910/MT (RM151.386/MT) in 5MFY25, still well above the 10-year pre-pandemic average of USD20,000–22,000/MT (RM82,000-RM92,400/MT). We project prices to rise by 7% to USD33,990/MT (RM146,000/MT) in FY26F and 5% to USD35,690/MT (RM153,000/MT) in FY27F on sustained demand growth and tight supply. We believe this uptrend will persist, underpinned by persistent supply constraints and robust demand stemming from the proliferation of electric vehicles, increased consumption of electronic devices, and the global push towards ESG-aligned initiatives. 

 

Valuation & Recommendation. We initiate coverage on MSC with a BUY call and a target price of RM1.51, pegged to a 12x PE multiple on FY26F EPS of 12.6 sen and ascribed a three-star ESG rating. The assigned PE multiple reflects a 19.5% discount to the selected smelting peers’ average of 14.9x, to account for MSC’s smaller market capitalisation and lower trading liquidity compared to its peers.

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