Malaysia Smelting Corporation Berhad - Efficiency Tailwinds + Supply Visibility = Earnings Re-Rate Ahead
Wed, 26-Nov-2025 09:27 am
by Amir Hamdan • Apex Research

Counter

MSC (5916)

Target Price (RM)

1.70

Recommendation

Buy

  • MSC’s 3QFY25 CNP came in at RM20.7m (+47.5% QoQ, +41.6% YoY) bringing 9MFY25 CNP to RM38.0m (-14.4% YoY). The results were broadly within expectations, representing 80% of our full-year forecast and 81% of consensus estimates.

  • The surge in CNP was primarily attributable to: (i) stronger smelting revenue driven by higher tin-ore availability, (ii) firmer tin prices, and(iii) higher mining revenue from RHT.

  • Global tin fundamentals remain favourable, while improving ore visibility and efficiency gains at Pulau Indah continue to support margin resilience.

  • Maintain BUY with an unchanged TP of RM1.70, based on 12x FY26F EPS of 14.1 sen.

 

Within expectations. Excluding exceptional items (+RM0.3m), MSC’s 3QFY25 core net profit stood at RM20.7m (+47.5% QoQ, +41.6% YoY), bringing 9MFY25 CNP to RM42.4m (-14.4% YoY). The results were broadly within expectations, representing 80% of our full-year forecast and 81% of consensus estimates.

 

Dividend. No dividend was declared for the quarter.

 

QoQ. 3QFY25 CNP rose 47.5% QoQ, supported by (i) firmer tin prices (RM143,500/t in 3QFY25 vs RM139,800/t in 2QFY25), and (ii) higher production and throughput at Pulau Indah as operations normalised following the resolution of the 2QFY25 gas-pipeline incident that had previously constrained output and suppressed productivity.

 

YoY. 3QFY25 CNP surged 41.6% YoY, supported by a 12.7% YoY increase in smelting revenue and a 6.3% YoY increase in mining revenue, driven by higher sales volumes of refined tin and tin-bearing intermediates, alongside a higher average tin price (RM143,500/t in 3QFY25 vs RM141,500/t in 3QFY24). This translated into an 8% YoY PBT improvement in the tin-mining segment (RM32.9m vs RM30.5m).

 

YTD. 9MFY25 CNP declined 14.4% YoY, mainly due to lower refined-tin sales volumes in 2Q25, as production at the Pulau Indah smelter was disrupted following the gas-pipeline incident, resulting in a temporary shutdown. This production shortfall directly drove the deterioration in Tin Smelting PBT, which fell from RM5.8m to -RM5.3m, despite a slightly higher average tin price.

 

Outlook. Global tin fundamentals remain favourable, with accelerating demand from electronics and clean energy applications continuing to outpace constrained supply. Against this backdrop, MSC stands to benefit from improving ore visibility and ongoing efficiency gains as smelting consolidates at Pulau Indah. The Butterworth closure unlocks cost savings, while rising mining productivity and incremental tailings output reinforce margin resilience. Overall, we see a clear path for sustained earnings uplift into FY26–27.

 

Earnings revision. Forecasts maintained, as results were within expectations.

 

Valuation. We maintain a BUY recommendation on MSC, with an unchanged TP of RM1.70 based on a 12x FY26F EPS of 14.1sen and an ascribed three-star ESG rating. Our view is supported by (i) improving ore visibility and incremental tailings contribution, (ii) efficiency gains as smelting consolidates at Pulau Indah, and (iii) MSC’s position as the world’s largest independent tin smelter.

 

Risks. Earnings remain sensitive to tin-price volatility, potential feedstock supply disruptions, and any delays in commissioning the sand-tailings facility, all of which could affect margin recovery.

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