MSC: Robust Earnings Performance on Cost Efficiencies and Strong Tin Prices

Malaysia Smelting Corporation Bhd (MSC) recorded a strong financial close to the year, with its 4QFY25 headline net profit surging 32.2% year-on-year to RM39.9 million. This impressive performance brought the cumulative 12MFY25 net profit to RM82.0 million, significantly exceeding both Public Investment Bank’s and consensus estimates by 142.8% and 144.4% respectively. The robust results were primarily driven by higher average realised tin prices, improved profit from the sale of tantalum slag, and strategic cost efficiencies following the closure of its Butterworth plant.

Performance Review

For the fourth quarter of fiscal year 2025, the company’s revenue increased by 7.2% year-on-year to RM480.7 million. This growth was largely attributable to a higher average realised tin price, which stood at RM158,100 per metric tonne, compared to RM133,700 in 4QFY24. However, the revenue increase was partially moderated by lower refined tin sales volume and a 7.7% year-on-year decrease in revenue from the mining segment, which experienced a temporary three-week suspension of operations.

Core net profit for 4QFY25 saw a substantial 17.6% year-on-year improvement to RM35.3 million. This was fueled by stronger performances across both the tin smelting and tin mining segments. The tin smelting segment’s profit after tax (PAT) recorded a significant 41.4% year-on-year improvement to RM27.1 million, supported by higher sales and encashment of tin intermediates with better margins, increased profit from tantalum slag sales, and ongoing cost savings. Concurrently, the tin mining segment’s PAT grew 16.7% year-on-year to RM19.6 million, benefiting from elevated tin prices despite lower ore intake from suppliers due to supply shortages.

Future Outlook

The outlook for the global tin market remains highly positive, with prices anticipated to stay elevated due to a persistent supply deficit. Demand for tin is robust, driven by its critical role in electronics, where it accounts for over 45% of consumption as solder. This demand is further amplified by the burgeoning AI sector, strong semiconductor sales, and the growing adoption of green technologies and electric vehicles, all of which utilize tin in conductive components and batteries.

Despite the strong demand, supply continues to face challenges due to ongoing disruptions in major producing nations such as Indonesia and Myanmar. This sustained tightness in supply is expected to underpin strong tin prices. Public Investment Bank has upgraded its call on MSC to Outperform with a revised target price of RM2.00, up from RM1.48 previously, based on 15x FY26F EPS.