Tin producer Malaysia Smelting Corp Bhd (MSC) saw new 52-week high of RM3.18 on Apr 22. There were some profit taking activities, pushing the counter to close at RM3.01. Not too worry as there are signs of continued uptrend with near-term resistance level is seen at RM3.20, followed by RM3.50.

The counter has fared pretty well in the past year, gaining 50%. It was trading at a low of RM1.88 in May last year.

One possible reason for the heightened interest in MSC is the anticipated rise in tin prices. This is because there is a shortage of tin inventories at the London Metal Exchange, which nearly reduced by half. Many players believe there will be a severe shortage of tin moving forward as tin producers can’t just increase their supply overnight to cater to the rising demand.

Tin prices are likely to break the all time high price of US$50,000 per tonne and go to a new high this year. This is buoyed by multiple fronts ranging from new models of handphones, semiconductor chips, solar panels, electric batteries, high end automotive electronics, and 5G base stations.

These are certainly good reasons to make investors smile after MSC saw its net profit fell nearly 64% year-on-year in the fourth quarter (4Q) 2023 dragged by foreign exchange losses as well as the absence of sale of refined tin from processed tin intermediates and by-products.

Net profit for the three months ended Dec 31, 2023 fell to RM9.37 million from RM25.84 million a year earlier. This is despite posting higher revenue of RM404.63 million versus RM391.15 million on the back of higher tin prices. Prices of tin averaged RM116,000 per tonne compared to RM98,100 per tonne in the same three-month period in 2022.

Net profit declined 13.5% in FY23 to RM85.05 million from RM98.31 million in 2022 while revenue decreased 4.5% to RM1.44 billion from RM1.5 billion. Despite the lower net profit, MSC proposed a final single-tier dividend of seven sen per share for the quarter, bringing the full-year payout to 14 sen per share, higher than the seven sen per share in the previous year. It has adopted a dividend payout policy of at least 30% of net profit.

Going forward, MSC is exploring new tin resources and expanding its mining activities to increase daily production and overall mining productivity. At its smelting business, the company noted that the move to the Pulau Indah smelter is expected to result in savings of about 30%, while decommissioning its Butterworth smelter in stages, starting in 2024.