TINS Oct2024

TINS

Contact our analyst Eka

BUY 18% Upside
8th October, 2024
Current price Rp 1250
Target price Rp 1475

Production increased amid global supply disruption

Production increased amid global supply disruptionsIn 1H2024, tin production increased by 19% YoY to 9,675 metric tons (MT), while tin ore production rose by 32% YoY to 10,250 MT. Tin metal sales volume grew slightly by 0.1% YoY to 8,299 MT, while tin metal production volume decreased by 18% YoY to 11,540 MT.
Higher production and sales align with a 13% YoY increase in the average selling price (ASP) of tin metal, reaching USD 30,397 per MT compared to USD 26,828 per MT in the previous year. As of October 2024, the LME tin price reached USD 33,805 per ton, with a peak in April 2024 at USD 35,334 per ton, driven by supply constraints from Indonesia, Myanmar, and the Democratic Republic of Congo, tightening the global tin market.
For FY2024, management is targeting production of 23,000 MT, with TINS already reaching 13,000 MT by August 2024. In terms of global supply disruptions, Indonesia delayed tin export quotas in early 2024 due to delays in Work Plan and Budget (RKAB) approvals, contributing to the LME tin price surge in April. Myanmar has halted production since August 2023, and regions in China, including Yunnan and Jiangxi, have reduced output due to feedstock shortages.
Looking ahead, we anticipate higher LME prices, driven by strong demand and ongoing supply disruptions.

2Q2024: Profit surge after previous losses

TINS reported a significant turnaround in 2Q2024, with net income rising to IDR 405 billion, following a loss of IDR 34 billion in 2Q2023, representing a 1271% QoQ growth. For 1H2024, net income increased by 2574% YoY to IDR 434 billion.
This was fueled by a 32% YoY (53% QoQ) revenue increase to IDR 3.15 trillion in 2Q2024, alongside a 14% YoY growth in 1H2024 revenue to IDR 5.2 trillion, reflecting higher demand and a stronger ASP. The bottom line was further supported by lower cash costs, down 18% YoY to USD 17,743 per ton, resulting in a 4% YoY reduction in the cost of revenues for 1H2024. Management anticipates further reductions in cash costs, targeting USD 17,000 in FY2024, as margins improve and production volumes rise.
We project TINS’ net income will reach IDR 1.19 trillion by year-end 2024, a strong recovery from the previous year’s loss, driven by a higher ASP amid increased demand.

Valuation: Upgrade to BUY with TP 1,475

Given the LME tin price increases due to global supply disruptions, combined with higher production and sales volumes, we are upgrading our recommendation to BUY, with a target price of IDR 1,475 per share, implying an EV/EBITDA of 3x and 18% upside potential.

Previously

TINS Nov2023