MSC Berhad Tin - supply tightness drives earnings upgrade
Mon, 12-Jan-2026 08:04 am
by Research Team • Apex Research

Counter

MSC (5916)

Target Price (RM)

2.140

Recommendation

Buy

  • Global tin supply remains disrupted, driven by policy-led production curbs in Indonesia, elevated geopolitical risks in the DRC and a slow, uneven recovery in Myanmar.

  • We expect MSC to benefit from higher tin prices despite ongoing tin ore supply disruptions, as total refined tin production is anticipated to remain broadly flat at the company.

  • We revise our FY26F/FY27F tin price assumptions upward to USD35.1k/USD37.2k per tonne (from USD34.4k/USD36.3k) to reflect the persistent supply-side tightness.

  • Consequently, we upgrade our FY26F/FY27F earnings forecasts by 16.6%/26.6% to account for our higher tin price assumptions.

  • Maintain BUY call with a higher target price of RM2.14 based on a 13x FY26F P/E applied to an EPS of 16.5sen.

 

Supply risk back in focus? Tin supply risks have resurfaced following Indonesia’s crackdown on c.1,000 illegal mines in Sumatra, raising concerns over refined tin export availability given Indonesia’s position as the world’s largest refined tin exporter. This is compounded by elevated disruption risk at the Bisie mine in the Democratic Republic of the Congo, which accounts for c.8% of global tin ore supply amid ongoing security challenges and restrictions on manual mining. Meanwhile, tin ore output in Myanmar, remains constrained by weather, labour and equipment bottlenecks, limiting near-term supply normalisation despite sizeable reserves of c.700kt (c.15% of global total, per USGS). That said, MSC is largely insulated from these disruptions, supported by rising in-house ore contribution from RHT, where output is targeted to ramp up to 15 mt/day by 4QFY26F on improved sand-tailings recovery, alongside previously secured Tasmanian feedstock. Our assumptions remain conservative, with RHT production modelled flat at c.14 mt/day in FY26F, implying that tighter global supply should translate into pricing and margin upside rather than volume risk for MSC.

 

Robust demand anchors tin market growth. While geopolitical developments influence tin supply dynamics, a contained risk environment in FY26 should support stable global manufacturing activity and semiconductor output, thereby underpinning refined tin demand and MSC’s offtake visibility. Demand remains structurally anchored by the electronics industry, which accounts for c.50% of global consumption, driven by semiconductor packaging, printed circuit boards and the ongoing transition toward lead-free solder. According to World Semiconductor Trade Statistics (WSTS), the global semiconductor market grew 18.9% YoY in 1HFY25, with growth forecast at 29%/17% in FY26F/FY27F, providing further support to refined tin demand. Structural demand from EV electrification and photovoltaic installations adds to medium-term demand visibility, although tin price performance remains predominantly supply driven.

 

Tin price assumption – revised upward. We increase our tin price assumptions as we previously underestimated the persistence of supply-side disruptions. Global tin supply tightness is expected to persist over the medium term, driven by (i) policy-led production curbs in Indonesia, (ii) elevated geopolitical risks in the DRC and (iii) a slow, uneven recovery in Myanmar, limiting the scope for supply normalisation and keeping tin prices structurally elevated. Accordingly, we raise our tin price assumptions by 2.0%/2.5% to USD35.1k/USD37.2k per tonne for FY26F/FY27F (from USD34.4k/USD36.3k previously).

 

Earnings revision. Following the upward revision to our tin price assumptions, we raise our FY26F/FY27F CNP forecasts by 16.6%/26.6%, from RM118.8m/RM135.9m to RM138.5m/RM172.1m, respectively. The upgrade reflects higher realised tin prices, with higher earnings sensitivity at the mining business through better operating leverage at RHT, alongside margin improvement from increased in-house ore contribution at the smelting segment.

 

 

Valuation. We maintain a BUY call on MSC with a higher target price of RM2.14 (from RM1.70), derived from a 13x (previously 12x) FY26F EPS of 16.5sen. We believe the higher ascribed PE valuation is warranted by (i) stronger earnings visibility from rising in-house ore supply, (ii) reduced reliance on external feedstock and enhanced ability to monetise price volatility in a supply-constrained tin market, and (iii) MSC’s 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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