TINS
Contact our analyst Revita
11% upside, Hold
7th July 2020
Current price Rp640
Target price Rp705
7th July 2020
Current price Rp640
Target price Rp705
Production target 55k tons
As we said previously TINS plans to expand and grow production through adding two new processing technologies, Fuming and Ausmelt. Fuming has started production in 2019 while Ausmelt will be delayed due to the current pandemic, but is expected to be completed in 2021. In terms of production for 2020F, TINS is targeting a decrease of 33% from 2019FY, which saw annual production of tin ore grow 85% yoy and tin metal 128% yoy. Most of the tin ore production in 2019FY was from onshore at around 80%. In 2020F, TINS is targeting lower tin ore production volume of 55k tons or -33% yoy and expects lower tin prices as demand is still weak, affected by the spread of the corona virus. It is estimated 2020F ASP will be down 8% yoy. As of 1Q20, TINS recorded tin ore production of 15,217 Mt (1Q19:21,610 Mt) which is 84% from onshore, 16% from offshore. The volume of metal production reached 14,133 Mt (1Q19:16,302 ton) with a metal sales volume of 17,553 Mt (1Q19:12,553 Mt).
Continued higher efficiencies
In the midst of Covid-19 pandemic, TINS continues to improve efficiency including by cutting operational expenditure up to 30%, while capital expenditure will be prioritized to support production targets. Efficiencies in production will reduce production and operating expenses. TINS is also improving cash flow to maintain the health of the finances and reduce interest expenses. During 1Q20, TINS de ‐ leveraged to reduce interest payments, and re ‐ profiled bank loan payment schedules for both types of currencies. As a result, 1Q20 operating cash flow was Rp 1.27 trillion compared to 1Q19 minus Rp 1.59 trillion. In addition, TINS managed to pay off part of its short term bank loan amounting to Rp 1.7 trillion reducing the outstanding to Rp 7.1 trillion or a decrease of 19% compared to the December 2019 position of Rp 8.8 trillion.
Valuation: 11% upside
We have a target price for TINS within one year of IDR. 705 / share or trading at 29xPER, or 11% upside. Our recommendation is HOLD.
As we said previously TINS plans to expand and grow production through adding two new processing technologies, Fuming and Ausmelt. Fuming has started production in 2019 while Ausmelt will be delayed due to the current pandemic, but is expected to be completed in 2021. In terms of production for 2020F, TINS is targeting a decrease of 33% from 2019FY, which saw annual production of tin ore grow 85% yoy and tin metal 128% yoy. Most of the tin ore production in 2019FY was from onshore at around 80%. In 2020F, TINS is targeting lower tin ore production volume of 55k tons or -33% yoy and expects lower tin prices as demand is still weak, affected by the spread of the corona virus. It is estimated 2020F ASP will be down 8% yoy. As of 1Q20, TINS recorded tin ore production of 15,217 Mt (1Q19:21,610 Mt) which is 84% from onshore, 16% from offshore. The volume of metal production reached 14,133 Mt (1Q19:16,302 ton) with a metal sales volume of 17,553 Mt (1Q19:12,553 Mt).
Continued higher efficiencies
In the midst of Covid-19 pandemic, TINS continues to improve efficiency including by cutting operational expenditure up to 30%, while capital expenditure will be prioritized to support production targets. Efficiencies in production will reduce production and operating expenses. TINS is also improving cash flow to maintain the health of the finances and reduce interest expenses. During 1Q20, TINS de ‐ leveraged to reduce interest payments, and re ‐ profiled bank loan payment schedules for both types of currencies. As a result, 1Q20 operating cash flow was Rp 1.27 trillion compared to 1Q19 minus Rp 1.59 trillion. In addition, TINS managed to pay off part of its short term bank loan amounting to Rp 1.7 trillion reducing the outstanding to Rp 7.1 trillion or a decrease of 19% compared to the December 2019 position of Rp 8.8 trillion.
Valuation: 11% upside
We have a target price for TINS within one year of IDR. 705 / share or trading at 29xPER, or 11% upside. Our recommendation is HOLD.
Previously
| tins_19_march_2018.pdf |
| tins_18_january_2018.pdf |
| tins_7_december_2017.pdf |
| tins_9_october_2017_.pdf |
