Finding stocks that are ignored by the market may not be a fantastic way but in actual fact can be a great investment strategy to make outsize gains. These stocks can potentially have massive upside when the masses discover them.
With declining US dollar due to the massive money printing by the FED previously and more importantly due to the increased demand in AI, commodities that are related to AI such as copper and tin have seen increased in prices this year.
In this article, we feature this little-known company that is set to soar with the commodity boom.
Malaysia Smelting Corporation Bhd
Malaysia Smelting Corporation Bhd (MSC) is currently one of the world’s leading integrated producer of tin metal and tin-based products, involved in the upstream and downstream sector of the tin industry through tin mining and custom tin smelting.
Not many bloggers or analysts have written about this little-known company but it is where you can make the most gains before anyone discovers it.
During the quarter under review, MSC’s net profit attributable to owners of the company surged by 93.6% quarter-on-quarter to RM18.2 million, from RM9.4 million in the previous corresponding quarter.
The upward trend was primarily driven on the back of a rise in average tin prices in 1QFY24 (1QFY24: RM124,900/tonne vs 4QFY23: RM116,000/tonne).
However, compared to last year, MSC's net profit dropped from RM35.4 million to RM18.2 million as tin prices were lower in the previous corresponding quarter last year.
The Group’s tin smelting arm recorded a net profit of RM9.9 million in 1QFY24, from a net loss of RM2.2 million in 4QFY23. The earnings turnaround was attributed to favourable tin price movements and foreign exchange gain during the quarter.
Similarly, net profit for MSC’s tin mining operations also grew by 19.3% QoQ to RM14.2 million in 1QFY24 (4QFY23: RM11.9 million), benefiting from the stronger tin prices.
Meanwhile, MSC’s revenue stood at RM362.5 million in 1QFY24 (4QFY23: RM404.6 million). Despite higher tin prices, the Group’s performance was impacted by the shortage of tin ore, which resulted in lower refined tin sales and smelting revenue in 1QFY24.
The company noted that the situation in tin ore producing countries like Myanmar and Indonesia which has affected the toll smelting business of MSC will improve.
Uses of Tin
Tin is the ‘Glue of Technology’ and as such has many uses such as:
- It is use as an electronic solder to join electrical components and circuit boards together, with 49% of the world’s tin used for this purpose and a large portion of that used in semiconductor connections.
- Another prominent use of tin is in renewable energy where 10% of tin is used as solar ribbon and glass coating in solar panels.
- Tin is used as solder and a protective coating to avoid corrosion of the panels within the printed circuit boards of the GPU.
With so many uses of Tin especially in the technologies such as AI, Solar energy and others, MSC will stand to benefit from this trend.
Conclusion
MSC declared a total dividend of 14sen per share for year 2023 and thus giving a dividend yield of 5.3%. The share price is up 19.67% year to date far outperforming STI index return of 2.28%.
This little-known company share price is poised to go up further as Tin price has shot up to RM151,000/tonne in May 2024. However, as commodities prices are very volatile, it important that investors do their due diligence before investing in the stock.
You can view the company website
here.
