Malaysia Smelting Corp sinks into the red amidst low tin price

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KUALA LUMPUR (May 11): Malaysia Smelting Corp Bhd (MSCB) has sunk into the red with a net loss of RM2.9 million in the first quarter ended Mar 31, 2015, from a net profit of RM14.7 million in the previous corresponding quarter.

The net loss was attributed to significant non-cash adjustments linked to tin price and foreign exchange (forex) fluctuations, MSCB (fundamental: 0.55; valuation: 0.3) announced to Bursa Malaysia today after the market close.

Weaker tin prices also contributed to the loss, it added.

The integrated tin group had incurred an unfavourable valuation adjustment of RM12.7 million on its Butterworth smelter’s closing stock of in-plant inventory, comprising mainly of recirculating tin-stock.

This resulted from a significant decline in the tin price as of March 31, compared to the preceding quarter, and a net forex translation loss of RM11 million due to a weaker ringgit, it said.

Meanwhile, revenue for the quarter came lower at RM381.6 million, down 11% from RM429.1 million a year earlier.

MSCB said the lower revenue was due to a decline in worldwide commodity prices in the first quarter this year as compared to the same quarter last year.

Average tin prices were lower by 18.6% to US$18,400 (RM66,600) per tonne from US$22,600 (RM74,400) per tonne previously.

On prospects ahead, MSCB expects to face difficult market conditions in 2015, particularly with further weakening of tin prices since the end of March.

“The group believes current price levels are unsustainable, although it is well-placed to build on its existing strengths to benefit from the positive long-term trends in the global tin market,” it said.

MSCB share price was up one sen or 0.4% to RM2.73, giving it a market capitalisation of RM272 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)