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MARKET MAKER : IHSG -22 Juni 2017
June 22, 2017 08:02 WIB

Kinerja harian IHSG cenderung bergerak terbatas untuk menguji level 5.820 sebagai level resistance dan 5.800 sebagai level support. Download artikel selengkapnya(501.99 Kb)

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Danareksa Equity Snapshot - TINS 22 Juni 2017
June 22, 2017 10:03 WIB

Timah(TINS IJ)

Higher production to support earnings in 2017


Timah (TINS) reported audited net profits of Rp67bn in 1Q17 (-66.9% qoq) vs. a net loss of Rp138bn in 1Q16. The net profit was below our previous expectation and the consensus. As we cut our long-term refined tin price assumption, we lower our Target Price to Rp1,050 (based on DCF valuation). Yet with the recent share price correction, the stock offers upside of 39.1%. Maintain BUY.

1Q17 result: Below our previous expectation and the consensus.  Timah (TINS) reported net profits of Rp67bn (-66.9% qoq) in 1Q17. The lower quarterly net profits were due to: a) 13.8% qoq lower sales volume, b) 2.6% qoq lower ASP and c) higher costs as reflected in the decline in the gross margin. Thanks to strong refined tin prices and higher sales volume the company booked net profits in 1Q17 vs. a net loss of Rp138bn in 1Q16. The results are below our previous expectation and the consensus.

Strong earnings on higher refined tin production.  Although refined tin prices have declined from a high of USD21,965/tonne in Nov 2017 to their current level of around USD19,800/tonne, we still expect the company to book strong earnings in 2017 owing to: a) 12.4% yoy higher average tin prices and b) 17.9% yoy higher refined tin production of 28,000 tonnes.

Expect tight supply to outweigh muted refined tin demand.  Global demand for refined tin is expected to remain muted with low single-digit growth supported by higher demand for electronics. However, the refined tin price is expected to increase as depleting tin-ore reserves will be reflected in a wider global refined tin deficit. We expect a refined tin price of around USD20,000/tonne in 2017 which will increase to USD20,500/tonne in 2018.

Maintain BUY with a lower target price of Rp1,050 (based on DCF valuation with WACC of 11.1%) as we cut our long-term refined tin price assumption to USD22,000/ton from USD24,000/ton. With the share price of TINS already correcting by more than 34.2%, while the refined tin price is down by only 9.9%, the stock looks attractive with upside of 39.1% to our revised Target Price.

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