We left MSC’s briefing with the following key takeaways:
4QFY25 mining output impacted by temporary suspension. Mining operations were temporarily halted for c.3 weeks (13 Nov–3 Dec 2025) following environmental concerns involving river discolouration near the mining site. The shutdown affected several mines in the area and led to lower production volumes during the quarter. As a result, RHT tin metal production declined to 525mt (-20.7% QoQ, -19.1% YoY) from 662mt in 3QFY25 and 649mt in 4QFY24, broadly in line with our earlier assumption of a 20–25% production decline. For the full year, however, RHT production declined only marginally by 2.4% YoY to 2,455mt (FY24: 2,516mt) as stronger output in earlier quarters partially mitigated the impact of the temporary suspension.
Tin intermediates inventory normalising. Tin intermediates inventory declined to 1.9k tonnes in 4QFY25 (3QFY25: 2.7k tonnes; 4QFY24: 4.1k tonnes) following continued encashment during the quarter. Management noted that while intermediates will continue to be processed, depletion is expected to moderate going forward as Pulau Indah continues to generate some intermediates during normal smelting operations.
Sand-tailings recovery plant. Looking ahead, MSC has constructed a new processing plant to extract tin from the mine’s sandy tailings, aimed at improving recovery efficiency and lifting overall production. The facility is expected to commence operations in Apr 2026 (2QFY26), with management targeting c.3 t/day of incremental output over a 3–6 month ramp-up period. This is consistent with our earlier assumptions following our initial site visit, during which we incorporated higher RHT output in our model, increasing production assumptions from 11t/day to 14t/day.
Butterworth smelter closure to unlock structural cost savings. The legacy Butterworth smelter ceased operations in 3QFY25 and is currently undergoing decommissioning, with all smelting activities consolidated at the Pulau Indah facility. Management expects recurring cost savings of RM1.5m–RM2.0m per month, mainly from lower labour costs, fuel oil consumption, consumables and maintenance expenses. The consolidation also improves operational efficiency as Pulau Indah utilises a single-stage Top Submerged Lance (TSL) smelting process, which offers higher recovery rates and lower operating costs compared with the older multi-stage reverberatory furnace previously used at Butterworth. In addition, labour requirements are significantly lower, with the Pulau Indah smelter requiring c.300 employees versus c.550 previously at Butterworth. As a result, the closure should support margin expansion going forward, with the full benefit expected to be reflected in FY26 following the elimination of duplicated operating costs. This is consistent with our earlier assumptions, as we had already incorporated higher smelting margins in our model following the Butterworth closure.
Global ore supply constraints remain the key bottleneck. Smelter ore feed intake declined by 21% YoY to 19,097mt in FY25 (FY24: 24,083mt) due to slower recovery in Myanmar, and Indonesia’s crackdown on illegal mining activities. The situation was further compounded by heightened competition for raw materials, particularly from Chinese smelters aggressively sourcing ore globally. In addition, operations were temporarily disrupted by the Petronas gas pipeline fire incident in 2QFY25, which affected smelter operations during the period. Looking ahead, management highlighted that supply conditions could improve modestly in FY26, supported by steady ore shipments from Australia, which currently account for c.20–25% of total feedstock intake, with a committed minimum supply of c.4,000 tonnes annually. Australian supply is considered relatively reliable given the shorter shipping routes and lower exposure to geopolitical and logistics disruptions compared with other sourcing regions.
Tin price assumption – revised upward. We raise 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 and uneven recovery in Myanmar, limiting the scope for supply normalisation and keeping tin prices structurally elevated. Accordingly, we raise our tin price assumptions by 2.9%/3.0%/3.3% to USD36.1k/USD38.3k/USD40.7k per tonne for FY26F/FY27F/FY28F (from USD35.1k/USD37.2k/USD39.4k previously).
Earnings revision. Following the upward revision to our tin price assumptions, we raise our FY26F/FY27F/28F CNP forecasts by 10.5%/13.4%/16.9% to RM153.1m/RM195.2m/RM269.1m (from RM138.5m/RM172.1m/RM230.1m previously). The upgrade reflects MSC’s strong earnings leverage to higher realised tin prices.
Valuation. We maintain a BUY call on MSC with a higher target price of RM2.37 (from RM2.14) derived from 13x FY26F EPS of 18.2sen. Our positive stance is supported by (i) improving mining output and operational efficiency, (ii) structural cost savings following the Butterworth smelter closure, and (iii) MSC’s strategic position as the world’s largest independent tin smelter, allowing it to benefit from tin price volatility in a structurally tight market.
Risks. Tin-price volatility, feedstock supply disruption, and commissioning delays at the sandtailings plant may weigh on earnings and margin recovery.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 3.945191 | 3.976996 |
| EUR | 4.573958 | 4.578808 |
| CNY | 0.571807 | 0.572405 |
| HKD | 0.504979 | 0.508544 |
| SGD | 3.083126 | 3.104955 |