TINS prepares Rp 2.6 trillion capex

January 18, 2017, 01.18 PM  | Reporter: Narita Indrastiti
TINS prepares Rp 2.6 trillion capex


JAKARTA. PT Timah Tbk (TINS) will be more expansive in this year. This issuer has increased the capex (capital expenditure) from Rp 1 trillion in 2016 to Rp 2.2 trillion-Rp 2.6 trillion in this year.

Corporate Secretary of TINS Sutrisno S. Tatetdagat said, the increase in the capex is in line with TINS’s plan to increase the tin productions by 20% to 300,000 ton in this year. Last year, this state owned tin company produced 25,000 ton tin.

Most of the capex will be allocated to enhance the capacity of mining and processing equipments. “We are focusing on increasing the capacity of mining excavation equipments,” Sutrisno said.

TINS estimates that the tin price will be more stable this year, due to the reduction in tin production in Myanmar amid the high demands. Therefore, TINS expects to sell up to 31,000 ton tin this year. TINS will depend on internal cash, while looking for chances for external funding to fund the expansions.

This mining company will also diversify to hospital, property, and suction dredger businesses. TINS will also launch expansion to residential business by utilizing 170 ha lands in Bekasi.

TINS expects to increase the revenues by increasing tin productions and launching business expansions. Understandably, TINS’ revenues dropped in the third quarter of 2016.

As of September 2016, TINS recorded Rp 4.68 trillion revenues, dropped by 8.98% compared with the same period in 2015. The reduction in TINS revenues was in line with around 22.83% decline in tin ore production to 15,973 ton.

However, TINS’ efficiency strategy had been able to increase the net profit to Rp 50,65 billion, or five times compared with the same period in 2015 that amounted to Rp 10.47 billion.

TINS will establish fuming plant unit in Muntok Metallurgy Unit to enhance the efficiency in the costs of tin metal productions, as well as to reduce the amount of slag.

Analyst at Binaartha Parama Sekuritas Reza Priyambada estimates that tin price is likely to improve in 2017. “But the increase is not necessarily significant, due to the recovery process,” he said. According to Reza, TINS’ business diversification will boost the revenues in this year.

Analyst at Ciptadana Securities Kurniawan Sudjatmiko in his research on 4 November 2016 predicted that TINS’ revenues are predicted to increase from 2016 projection as much as Rp 6.5 trillion to Rp 7.1 trillion in 2017. Meanwhile, the net profits might hike doubled from Rp 71 billion in 2016 to Rp 140 billion in 2017.

Kurniawan recommends ‘hold’ for TINS’s shares, with the target price of Rp 920 per a share. Reza also recommends ‘buy’ with the target price of Rp 1,260 per a share. TINS’ stock price dropped by 3% to Rp 1,100 on Tuesday (17/1).

(Muhammad Farid/Translator)

Editor: Dupla Kartini

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