Timah: Weak FY12 results - 80% of consensus (Under review)
FY12 results below consensus. TIN recorded FY12 net profit of Rp432bn (-52%YoY), accounts 80% of consensus. Weak results mainly due to lower production volume at 29,512Mt (-23%YoY) and lower ASP of US$21,505 (-19%YoY). In 4Q12 TINS produced less refined tin at 6,257Mt (-35%YoY, -24%QoQ) however bottom line up significantly to Rp62bn (+67%YoY, +81%QoQ) mainly driven by gross margin improvement to 7% vs 4% in previous quarter thanks to higher ASP and forex gain amounting Rp15bn.
2013 Outlook: lower production volume. To align with trade ministry regulation no 78/2012, which only allow tin export with minimal 99.9%Sn grade effective per July 2013 and to push down illegal refined tix export, production volume for FY13 likely to be lowered. Company expects global tin consumption may grow modestly at 5-6%YoY and guides LME tin price in FY13 flat at US$21,500/t. We believe reserves one of the main concern on TINS, therefore company plans to expand overseas to conduct more exploration activities in Burma as it has crossed over ‘Asia tin belt’ and has potential huge reserves that has not been managed properly yet.
Currently we’re in a process reviewing the stock rating and forecast. Based on the consensus, TINS traded at 10.6x FY13 P/E.
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