Malaysia Smelting Corporation Berhad - Early Realisation of Structural Gains Drives 4QFY25
Tue, 24-Feb-2026 08:36 am
by Team Coverage • Apex Research

Counter

MSC (5916)

Target Price (RM)

2.14

Recommendation

Buy

  • MSC’s 4QFY25 CNP came in at RM38.0m (+84.0% QoQ, +22.1% YoY) bringing 12MFY25 CNP to RM80.4m (-0.3% YoY). This exceeded expectations, accounting for 153% of our full-year forecast and 143% of consensus estimates.

  • The Group declared a final single-tier dividend of 4.0sen (ex-date 25 Aug) (4QFY24: 7.0sen), bringing total DPS declared for FY25 to 8.0sen (FY24: 31.0sen).

  • The surge in CNP was primarily driven by (i) firmer realised tin prices, (ii) stronger sales and encashment of higher-margin tin intermediates, and (iii) structural cost savings following the closure of the Butterworth plant, partially offset by lower mining contribution due to the three-week temporary suspension of operations at RHT.

  • Global tin fundamentals remain favourable, underpinned by structural demand growth, while improving ore visibility and ongoing efficiency gains at Pulau Indah reinforce margin resilience and earnings sustainability.

  • Maintain BUY with an unchanged TP of RM2.14, based on 13x FY26F P/E applied to an EPS of 16.5sen.

     

Overshoot expectations. Excluding exceptional items (-RM1.9m), MSC’s 4QFY25 core net profit stood at RM38.0m (+84.0% QoQ, +22.1% YoY), bringing 12MFY25 CNP to RM80.4m (-0.3% YoY). This exceeded expectations, accounting for 153% of our full-year forecast and 143% of consensus estimates. The outperformance was primarily driven by (i) firmer realised tin prices, (ii) stronger sales and encashment of higher-margin tin intermediates, and (iii) structural cost savings following the closure of the Butterworth plant, partially offset by lower mining contribution due to the three-week temporary suspension of operations at RHT.

 

Lower Dividend Declared. The Group declared a final single-tier dividend of 4.0sen (ex-date 25 Aug) (4QFY24: 7.0sen) bringing total DPS declared for FY25 to 8.0sen (FY24: 31.0sen).

 

QoQ. 4QFY25 CNP rose 84.0% QoQ, supported by (i) firmer tin prices (RM158,100/t in 4QFY25 vs RM143,500/t in 3QFY25), (ii) higher sales and encashment of higher-margin tin intermediates, and (iii) cost savings following the closure of the Butterworth plant, despite lower ore intake from suppliers. This drove a turnaround in tin smelting PBT from a loss of RM1.5m to a profit of RM31.3m. However, tin mining PBT declined 22.9% QoQ to RM25.4m (from RM32.9m), reflecting lower tin production volumes following the three-week temporary suspension of operations at the RHT plant.

 

YoY. 4QFY25 CNP increased 22.1% YoY, supported by (i) a lower effective tax rate, (ii) a 7.2% YoY increase in smelting revenue driven by higher sales and encashment of higher-margin tin intermediates, (iii) a higher average tin price (RM158,100/t in 4QFY25 vs RM133,700/t in 4QFY24), and (iii) cost savings following the closure of the Butterworth plant. This translated into an 18% YoY improvement in tin smelting PBT (RM31.3m vs RM26.6m). In contrast, tin-mining PBT declined 6.4% YoY to RM25.4m (from RM27.1m), reflecting lower production volumes following the three-week temporary shutdown of the RHT plant.

 

YTD. 12MFY25 CNP slipped 0.3% YoY, primarily due to supply constraints in 1HFY25 and the three-week closure of the RHT mine. However, performance improved in 2HFY25, supported by a higher average tin price (RM146,100/t in FY25 vs RM138,500/t in FY24) and a more stable supply environment.

 

Outlook. Global tin fundamentals remain supportive, driven by structural demand from electronics, clean energy, AI and data centres which continues to outpace supply. While output from Myanmar and Indonesia is showing signs of recovery, regulatory and geopolitical risks still pose downside constraints to global tin supply. Against this backdrop, MSC stands to benefit from improved ore visibility and efficiency gains following the consolidation of smelting operations at Pulau Indah. The ongoing closure of the Butterworth plant is expected to deliver structural cost savings, lower manpower requirements and improved operational efficiency, alongside a reduced carbon footprint. On the mining side, management is focused on lifting daily output, expanding resources and enhancing recovery rates through modernised processing methods and potential joint ventures. Overall, we see a clear pathway for earnings recovery and margin expansion into FY26–27.

 

Earnings revision. Although FY25 earnings exceeded expectations, the outperformance was primarily driven by earlier-than-expected realisation of (i) cost savings from the Butterworth plant closure, (ii) firmer tin prices, and (iii) improved operational efficiencies at Pulau Indah plant we had originally assumed would materialise in FY26. As such, we maintain our FY26 and FY27 forecasts as these structural drivers are already factored in into our forecasts. We introduce a FY28 earnings forecast of RM230.1m.

 

Valuation. We maintain a BUY call on MSC with an unchanged target price of RM2.14 derived from 13x FY26F EPS of 16.5sen. Our view is supported by (i) lower dependence on third-party feedstock alongside greater flexibility to capture upside from tin price volatility in a structurally tight market, and (iii) MSC’s strategic standing 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.

Read more details in:

Disclaimer

The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report.

Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against Apex Securities Berhad. Apex Securities Berhad may from time to time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written approval of Apex Securities Berhad.

Market Mover
Settlement Rates
Currency Buy Rates (RM) Sell Rates (RM)
USD 3.874515 3.905813
EUR 4.587974 4.592881
CNY 0.564620 0.565245
HKD 0.495804 0.499311
SGD 3.062969 3.084769