Thursday, January 12, 2017

MSC ( Malaysia Smelting Corp) (5916), Well Timing


MSC (5916)

Market price: RM4.16
NTA: 2.7098

Malaysia Smelting Corporation (MSC) is world second largest tin metal products producer with yearly average produce 40,000t  tonnes . Business is engaged in the custom tin smelting and tin mining operations in Malaysia and Indonesia.

Points to highlight:

1.       Famous institutional/ individual investor like I-Capital & Dr Neoh are largest 30 shareholders for this company.

2.       Strong cash flow will coming in due to increase in tin metal price per tonne by 50& since January 2016 from USD15,000 per tonne to USD21,000 per tonne and also huge foreign currency gain ready for grab. This will deliver super good profit margin for company’s tin metal selling price.

3.       Improved in fundamental of company by reducing debt from net borrowing position of RM572million (20110) to 162 million (2016). And, Company’s more worry write off issue will be settled soon due to amount left to write off is really not that much anymore. So, its near future result should be very fascinating.

4.       Tin ore reserve of Rahman Hydraulic Sdn Bhd (subsidiary of MSC) can last for at least 15 years. Based on company’s report showed that company has around 33,000 tonnes and the production of tin-in concentrates one year is nearly 2,200 tonnes. So, (33,000 tonnes/2,200 tonnes= 15.00 years.)

 

In so many good foctors as above, I believe MSC will doing good in 2017. If we assume MSC able to deliver total net profit RM80 Million in 2017 and PE will be around 5 only at current Rm4.00 market price.  Just imagine if PE 10 is standard thn MSC should worth at least RM8.

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