KUALA LUMPUR (Feb 16): Malaysia Smelting Corp Bhd (MSC) dropped as much as 2.9% to a low of RM2.01 in early trade on Friday, following its announcement of a 64% decline in net profit for the fourth quarter ended Dec 31, 2023 (4QFY2023).
As at the time of writing, MSC shares had pared some losses to trade at RM2.04, valuing the company at RM856.80 million.
Year to date, the counter had risen marginally by 0.99% or two sen, but it had slipped by 2.86% or six sen over the past 12 months.
Trading volume stood at 282,000, relatively lower than the counter's 200-day average volume of 336,468.
MSC is currently trading at a historical price-earnings ratio of 8.34 times.
According to Bloomberg data, there are currently one 'buy' and one 'sell' recommendations for MSC, with a 12-month target price (TP) of RM2.12.
In a note earlier on Friday, Malacca Securities downgraded its recommendation to 'sell', with a lower TP of RM1.82, based on an assigned target price-earnings ratio of eight times its estimated FY2024 earnings per share of 22.7 sen.
"As FY2023 ended on a softer note and below our expectations, we reduced our core profit after tax and minority interest (Patami) [forecasts] by 10% to RM95.4 million for FY2024, and by 9% to RM99 million for FY2025," the research house added.
For 4QFY2023, the group's net profit slipped to RM9.37 million, compared with RM25.84 million a year earlier, according to a filing with Bursa Malaysia on Thursday.
The group attributed the lower earnings to foreign exchange losses and the absence of sale of refined tin from processed tin intermediates and by-products.
Despite the weak performance, MSC proposed a final single-tier dividend of seven sen per share for the quarter, bringing the full-year payout to 14 sen per share.
The group also reported a 3.5% increase in quarterly revenue to RM404.63 million from RM391.15 million a year ago, driven by higher tin prices that averaged RM116,000 per tonne, compared with RM98,100 per tonne in 4QFY2022.
Straits Trading Co Ltd, a Singapore-based conglomerate, is the largest shareholder of the group with a 26.75% stake, followed by Straits Trading Amalgamate at 16.55%, Bloomberg data showed.
On its prospects, MSC chief executive officer Datuk Dr Patrick Yong said the company is exploring new tin resources and expanding its mining activities to increase daily production and overall mining productivity, while continuing to streamline operations and enhance efficiencies.
He added that the company expects to save about 30% in costs and reduce its carbon footprint by moving to the Pulau Indah smelter, while decommissioning its Butterworth smelter in stages, starting in 2024.