KUALA LUMPUR (April 24): Malaysia Smelting Corp Bhd (KL:SMELT) is positioned to capitalise on near-record tin prices, with PublicInvest Research maintaining its positive outlook on the back of a sustained structural deficit in the global tin market.
The research house in a note on Friday said that tin prices on the London Metal Exchange (LME) are currently hovering around US$50,000 per tonne, having recently spiked to nearly US$57,000 following the US-Iran war. This represents a significant jump from the US$30,000-US$40,000 range seen throughout 2025, driven by supply constraints in Myanmar and Indonesia alongside surging demand from digital and energy transitions.
"With supply growth failing to keep pace with the projected 3.5% rise in demand, the market is expected to slip into a deficit, a trend that is likely to continue over the medium term," PublicInvest said.
In the long term, a key risk is limited mining expansion as older deposits run out, which could disrupt the supply chain.
PublicInvest said to tackle this, Malaysia Smelting Corp is increasing its mining capacity by investing in new tin tailing scavenging plants and infrastructure. It is also spending RM10 million on a new rotary furnace at Rahman Hydraulic Tin (RHT), expected to be ready by the third quarter of 2026. This furnace will process 10 tonnes of tin daily, allowing ore to be converted into crude tin on-site. This reduces transport needs, lowers costs, and improves efficiency.
The firm said a site visit to the RHT open-pit mine showed meaningful operational improvements.
PublicInvest expects profit after tax and minority interest (Patami) to grow by almost 42% to RM116.1 million in FY2026 and RM122 million in FY2027. While higher diesel prices are expected to raise production costs by US$1,000 per tonne for every one-ringgit increase, this is comfortably offset by current tin trading prices.
For the full FY2025, Malaysia Smelting Corp reported a Patami of RM82 million on the back of RM1.76 billion in revenue. The company has also maintained a steady dividend policy, with a forecasted payout of five sen for FY2026 and six sen per share for FY2027.
PublicInvest reiterated its "outperform" call on the stock, with an unchanged target price of RM2.60, based on 18 times FY2027 earnings per share, which represents an expected return of 39.8% from the current price.
Beyond its core business, the research house highlighted Malaysia Smelting Corp's strategic potential to participate in Malaysia's emerging rare earth industry and local supply chain development, given its extensive experience in mineral mining.