KUALA LUMPUR (Feb 23): Kenanga Research has maintained “trading buy” on Malaysia Smelting Corp Bhd (MSC) with a fair value of RM5.55 and said MSC is likely to see a record financial year in the financial year ending Dec 31, 2022 (FY22).

In a note on Wednesday (Feb 23), the research house said the world’s largest toll smelter is riding on the current commodity rally, which saw both its earnings and share price escalating to all-time highs.

It said with supply of tin expected to remain tight, especially from Indonesia, China and Myanmar, with elevated demand still rising due to usage such as in the electric vehicle segment, tin prices are expected to remain high in the near future.

“Given the persistent supply-demand imbalance, the record tin prices of more than US$44,000 (about RM184,052)/MT are likely to stay elevated in the near future.

“Together with its tin mining unit going for secondary mining, which will boost volume, and the efficient new Pulau Indah plant, MSC is likely to see another record in FY22.

“MSC’s share price will ride on the commodity rally wave.

“At 11 times FY22E forward earnings, which is the peers’ average, MSC is valued at RM4.62 based on the consensus tin price forecast while at the forward tin price, it is priced at RM6.48,” it said.

In view of strong price prospects, Kenanga said MSC should be valued at RM5.55, which is the mean of these fair values above.