RHT was temporarily shut for 3-weeks due to the Sungai Perak river issue. Operations are expected to resume in early-Dec following the shutdown.
Incremental c.3 t/day from sand and tailings recovery is targeted over a 3–6month ramp-up (by 2QFY26).
Decommissioning is progressing and is expected to structurally lower costs once smelting fully consolidates at Pulau Indah.
Earnings unchanged, as FY25 earnings remain within expectations despite the RHT shutdown.
Maintain a BUY call with an unchanged target price of RM1.70, based on a 12x FY26F P/E applied to an EPS of 14.1sen.
We left MSC’s analyst briefing with the following key takeaways:
Stable 9M25 margin. MSC’s PBT margin expanded marginally by 0.2ppt YoY to 6.8% in 9MFY25 (vs 6.6% in 9MFY24), supported by stronger performance from the tin mining segment, which recorded a PBT of RM91.3m in 9MFY25 compared with RM83.4m in 9MFY24, mainly due to higher tin production volumes. However, the smelting division weakened materially as refined tin sales volumes declined following the gas-pipeline incident in 2QFY25, which disrupted Pulau Indah operations and led to a temporary shutdown. The resulting production shortfall drove Tin Smelting PBT to deteriorate from RM5.8m to a loss of RM5.3m, despite a modest improvement in average tin prices.
Sungai Perak & RHT Shutdown. RHT was shut for approximately three weeks following the Sungai Perak river discolouration, alongside neighbouring mines as a precautionary measure. Management attributed the incident to heavy rainfall and elevated natural mineral runoff, though no conclusive source identified, and reiterated that RHT operates a closed-loop water system. Mining is expected to resume around 4–5 December. Based on a c.3-week disruption and an assumed c.11 t/day run-rate, we estimate RHT's 4QFY25 production could decline by c.20–25%, translating into a single-digit impact on group refined tin output, with limited full-year impact as 9MFY25 volumes already account for 80% of FY25 forecasts. The sand and tailings plant is expected to be commissioned shortly after resumption, targeting c.3 t/day of incremental output over a 3–6 month ramp-up or (by 2QFY26).
Ore Supply & Inventory Dynamics. Ore intake remains approximately 25% lower YoY, largely due to tight global supply conditions. Management expects a gradual improvement in feedstock availability as mining activity normalises in Myanmar and Indonesia, alongside new supply from Tasmania, Australia, where one supplier has already committed a minimum of 4,000 tonnes annually to MSC. Inventory is carried at weighted-average cost, which continues to rise in tandem with elevated LME tin prices. As at 3QFY25, tin stock stood at c.5,932 MT, comprising 2,753 MT of intermediates and c.3,200 MT of refined tin valued near prevailing spot prices. Tin intermediates carry a significantly lower implied valuation of c.USD20,000/t, well below current tin prices. As MSC continues to procure new ore and tin at higher prices, the weighted-average inventory cost trends upwards. Hence, inventory value cannot be directly inferred from flat price assumptions versus last year.
New Mining Technology & REE Co-Mining. MSC is testing a borehole and airlift mining method to extract ore without open pits or tunnelling. While technically viable, the project remains in the testing phase across different geological conditions, with no commercial timeline committed, as management adopts a cautious approach following the river incident. In parallel, MSC is exploring rare earth co-mining from residual material after tin extraction to generate dual revenue streams from a single mining cost base. Capital requirements are described as modest, with no production or timeline guidance at this stage.
Butterworth Decommissioning. The decommissioning of the Butterworth smelter remains on track for completion by end-December 2025. Upon full closure, MSC will remove duplicated overheads previously incurred alongside Pulau Indah operations and transition to a structurally leaner cost base, supported by a significantly lower labour requirement. Management expects the full cost savings from this rationalisation to be fully reflected from FY26 onwards.
Earnings revision. We maintain our earnings forecast, as MSC’s FY25 performance is still expected to fall within our projections. The temporary shutdown of RHT does not materially affect our estimates, given that conservative assumptions on tin ore output are already embedded in our model.
Valuation. We maintain a BUY call on MSC with an unchanged target price of RM1.70, derived from a 12x FY26F EPS of 14.1sen and an ascribed three-star ESG rating. Our investment case continues to be underpinned by (i) improving ore visibility and incremental tailings contribution, (ii) structural efficiency gains as smelting fully consolidates at Pulau Indah, and (iii) MSC’s entrenched position as the world’s largest independent tin smelter.
Risks. Tin price volatility, feedstock supply disruption, and commissioning delays at the sand-tailings plant may weigh on earnings and margin recovery.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.105718 | 4.139582 |
| EUR | 4.795482 | 4.806286 |
| CNY | 0.583656 | 0.584395 |
| HKD | 0.527377 | 0.531733 |
| SGD | 3.169746 | 3.195951 |