Hot Stock Malaysia Smelting falls 6% after wider 2Q loss

by **Cals** Thu 14 Aug 2014, 01:22

Hot Stock Malaysia Smelting falls 6% after wider 2Q loss

Business & Markets 2014

Written by Ahmad Naqib Idris Adzman Shah of theedgemalaysia.com

Wednesday, 13 August 2014 11:14

KUALA LUMPUR (Aug 13): Malaysia Smelting Corp Bhd (MSC) fell as much as 6.2% after it reported wider losses for its second quarter ended June 30, 2014 (2QFY14).

At 10.52am, MSC fell nine sen or 2.8% to RM3.12 with a total of 128,000 shares traded.

The counter had earlier declined as much as 20 sen or 6.2% to RM3.01, and was among the top decliners on the exchange.

Yesterday, MSC reported a net loss of RM28.8 million in 2QFY14 from a net loss of RM4.88 million a year earlier, as it registered losses from the disposal of its tin mining and smelting operations in Indonesia.
For the first half year, it recorded a loss of RM14.19 million compared with a net profit of RM10.65 million in the previous year.

MSC said the poorer results were “mainly due to the full provision of financial guarantee of US$3 million (RM9.64 million) and impairment of receivables of RM5.28 million made by the group consequent to the disposal of the group’s interests in its Indonesian subsidiaries”.

Despite the loss, RHB Research Institute Sdn Bhd maintained its “buy” call on MSC shares with a target price (TP) of RM4.20.

In a note today, RHB said MSC posted higher-than-expected core net profit of RM33.5 million for 1HFY14, supported by higher tin prices during the period.

“The improved core operation was mainly attributed to Rahman Hydraulic Tin SB’s mining operations, which benefitted from higher tin prices at the average USD23,140 a tonne in 2QFY14 (+2.3% q-o-q, +10.8% y-o-y),” it said.

Moreover, RHB maintained a positive outlook on MSC's prospects. RHB said this was based on encouraging fundamentals in the tin market as the demand for tin was supported by robust global semiconductor sales.

“We urge investors to look beyond MSC’s exceptional loss in 1H as we are hopeful that the writedown may eventually move the company to a new chapter going forward.

“In view of positive tin fundamentals and MSC’s better-than-expected 1HFY14 core results, we maintain BUY on the stock,” said RHB.