Equity Research

Company Update
PT Timah
Stronger earnings outlook
Earnings came below ours and consensus
BUY
PT Timah (TINS) posted a financial improvement in 2020 where net loss was decreased to
Current Price 1,900
IDR341 bn vs. 2019 figure of IDR611 bn. This improvement was mainly caused by lower
Price Target 2,350
COGS that dropped 22.5% yoy and brought margins expansion across the board. The
Upside/Downside 23.7%
decrease in COGS was triggered by much lower cost of raw material -tin ore- that went BUY
down 63.7% yoy to IDR4.9 tn as a result of lower production volume and higher inventory
utilization for 2020 sales volume. The inventory of WIP goods and tin ore were declined by 16 March 2021
32.7% yoy and 60% yoy, respectively. Margins were expanded across the board with
gross and EBITDA margins stood at 7.4% (vs. 2019: 5.9%) and 6.5% (vs. 2019: 3.7%), INDONESIA
respectively.

On quarterly basis, the company recorded negative performance due to lower sales Metal
09 May 2018Mining
volume during the quarter. Revenues decreased by 14.3% qoq to IDR3.3 tn while earnings
turned from a net profit of ID135 bn in 3Q20 to a net loss of IDR85 bn in 4Q20. Stock Data
Bloomberg Ticker TINS IJ Equity
Lower production and sales volumes in 4Q20 Outs. Share (bn) 7.4
On operational figures, 2020 production volume decreased by 51.8% yoy to 39,757 tons Mkt Cap (IDR bn) 14,150
tin as production volumes for both land and sea were declined by 56.7% yoy and 32.7% 52 Week Range 328-2,540
yoy to 28,368 tons and 11,389 tons, respectively. Further, the production volume for tin (IDR)
metal was recorded at 45,698 tons, down 40.2% yoy while sales volume hovers at 55,782 6M Avg Val (IDR bn) 246.6
tons, down 17.6% yoy in 2020. On quarterly basis, both production and sales volume of tin YTD Returns (%) 27.9
metal declined by 16.9% qoq and 27.1% qoq to 8,110 tons and 10,234 tons, respectively. Beta (x) 1.8

ASP wise, the company recorded lower realization price in 2020 as the tin price fell
significantly during 2Q20 period and brought ASP down by 8.7% yoy to USD17,215/ton.
Nevertheless, this is an improvement compared to 3Q20 (USD16,832/ton) and 2Q20 Share Price Performance
(USD16,461/ton) average levels. (IDR/Share)

Solid tin outlook in 2021 onwards

Albeit lower-than-expected result in 4Q20, we upgrade our 2021-22F earnings forecasts
by 47.8% and 44.5%, respectively, as we raise our 2021-22F ASP assumptions by 14.2%
and 10% to USD20,000/ton and USD22,000/ton, respectively. Tin has started the year
strongly with demand across most markets and regions significantly higher than in 2020.
However, shipping container shortages continue to frustrate consumers. Many have been
forced to turn to the spot market in order to secure materials. New housing in the US has
seen increasing orders for tin chemicals, while demand for cars and consumer electronics
has resulted in a semiconductor shortage which make Tin demand extremely strong since
the end of 2020. There are indicators that these positive drivers will continue in 2021. Share Performance (%)
Month Absolute Relative
Upgrade to BUY with TP of IDR2,350 3m 37.2 19.7
At this stage, we raise our TP to IDR 2,350 due to higher ASP assumption in 2021F 6m 139.0 91.2
onwards. Our TP implies PE 2021F-2022F 51.9x and 35.1x, respectively. We upgrade our 12m 306.2 223.2
recommendation to BUY from Hold as our TP offers 23.7% potential upside.

VALUATION HIGHLIGHTS Hasan

Forecast and Valuation 2019 2020 2021F 2022F 2022F hasan@sucorsekuritas.com
Revenue (Rp bn) 19,303 15,216 16,754 19,378 19,393 +62 21 8067 3130
EBITDA (Rp bn) 717 697 1,831 1,988 2,063
Net profit (Rp bn) (609) (341) 337 498 554
EPS (Rp/share) (82) (82) 45 67 74
DPS (Rp/share) 39 (41) (23) 23 33
ROE (%) (11.6) (6.9) 6.4 9.0 -
Dividend yield (%) 1.9 (2.0) (1.1) 1.1 1.6
P/E ratio (x) (25.0) (25.0) 45.1 30.5 27.4
EV/EBITDA (x) 22.3 23.0 8.7 8.1 7.8
 TINS: Stronger earnings outlook
March 2021
Fig. 1 : 5 years tin price and inventory level Fig. 2 : TINS production and sales volume (tin metal in tons)

25,000 12,000 25,000

20,000 10,000
20,000
8,000
15,000
15,000
6,000
10,000
4,000 10,000
5,000 2,000
5,000
- -
Mar-18
Mar-15

Mar-16

Mar-17

Mar-19

Mar-20
Jul-15
Nov-15

Nov-16

Nov-17

Nov-18

Nov-19

Jul-20
Nov-20
Jul-16

Jul-17

Jul-18

Jul-19
-
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20

Tin price (USD/ton) (LHS) Tin inventory (in tons) Production Sales volume

Source : Bloomberg, Sucor Sekuritas Source : TINS, Sucor Sekuritas

Fig. 3 : TINS EV/EBITDA band Fig. 4 : Revenue and earnings trends

25
25,000 800
600
20 20,000
400

15 15,000 200
-
10 10,000 (200)
(400)
5 5,000
(600)
0 - (800)
2016 2017 2018 2019 2020 2021 2018 2019F 2020 2021F

P/E STD +2 STD +1 Revenue Net profit

Average STD -1 STD -2

Source : Bloomberg, Sucor Sekuritas Source : TINS, Sucor Sekuritas

Fig. 5 TINS margins trend Fig. 6 : Upward ASP trend

20.0 23,000
22,000
15.0
21,000
20,000
10.0
19,000

5.0 18,000
17,000
- 16,000
2018 2019F 2020 2021F
15,000
(5.0) 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20

Gross margin Operating margin Net margin ASP (USD/ton)

Source : TINS, Sucor Sekuritas Source : TINS, Sucor Sekuritas

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 TINS: Stronger earnings outlook
March 2021

Fig 19: TINS FY20 result

Financial result (Rp bn) FY20 FY19 YoY Chg 4Q20 3Q20 QoQ Chg
Revenue 15,216 19,342 -21.3% 3,341 3,896 -14.3%
COGS 14,096 18,198 -22.5% 3,490 3,653 -4.5%
Gross profit 1,120 1,144 -2.1% 360 510 -29.4%
SG&A (605) (673) -10.2% (171) (112) 52.0%
EBITDA 990 715 38.6% 359 485 -25.9%
Others-net 87 98 -11.6% 104 (90) -215.5%
Net profit (341) (611) -44.3% (85) 135 -163.3%
EPS - - #DIV/0! - - #DIV/0!

Gross margin 7.4% 5.9% 10.8%

EBITDA margin 6.5% 3.7% 10.8%
Net margin -2.2% -3.2% -2.6%
Source: TINS, Sucor Sekuritas

Fig 19: Forecasts changes

2021F 2022F
Old New Chg Old New Chg
Revenue 14,247 16,754 17.6% 15,613 19,378 24.1%
Gross profit 1,895 2,085 10.0% 2,197 2,589 17.8%
EBITDA 1,767 1,831 3.6% 1,890 1,988 5.2%
Net profit 228 337 47.8% 345 498 44.5%

Gross margin 13.3% 12.4% 14.1% 13.4%

EBITDA margin 12.4% 10.9% 12.1% 10.3%
Net margin 1.6% 2.0% 2.2% 2.6%

Source: TINS, Sucor Sekuritas

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 TINS: Stronger earnings outlook
March 2021

Appendix
Fig 7: Income statement and Balance sheet

Profit & Loss (IDR bn) 2019 2020 2021F 2022F 2023F Balance Sheet (IDR bn) 2019 2020 2021F 2022F 2023F
Revenue 19,303 15,216 16,754 19,378 19,393 Cash and equivalents 1,599 807 1,209 2,479 1,911
Cost of revenue (18,167) (14,096) (14,669) (16,789) (16,744) Trade receivables 1,620 1,198 1,150 1,173 1,196
Gross profit 1,136 1,120 2,085 2,589 2,649 Inventories 6,501 2,881 3,170 3,487 3,567
Selling expenses (153) (69) (126) (145) (145) Net- Fixed assets 3,601 3,436 3,635 2,733 2,330
G&A expenses (1,059) (833) (916) (1,260) (1,261) Other assets 7,039 6,195 7,612 7,308 7,559
Operating profit (76) 217 1,043 1,184 1,243 Total Assets 20,361 14,518 16,775 17,180 16,564
EBITDA 717 697 1,831 1,988 2,063 Trade payables 1,969 885 1,485 1,700 1,695
Other op. income/exp (64) 41 - - - Short-term debt + CMLTD 9,459 3,802 3,612 3,251 2,276
Finance income 27 30 - - - Long-term debt 2,093 2,093 2,051 2,098 2,147
Finance expense (782) (607) (782) (797) (813) Other liabilties 1,582 2,798 4,402 4,576 4,587
Inc/loss from assoc. (9) (8) - - - Total Liabilities 15,103 9,578 11,550 11,625 10,704
Pre-tax profit (722) (270) 261 387 429 Minority interest 0 0 0 0 0
Tax expense 114 (67) 76 112 124 Paid capital 372 372 372 372 372
Minority interest - - - - - Retained earnings 4,950 4,610 4,894 5,224 5,529
Net profit (609) (341) 337 498 554 Other equities (65) (42) (42) (42) (42)
EPS (IDR) (82) (82) 45 67 74 Total Equity 5,258 4,940 5,225 5,555 5,859

Source: INCO, Sucor Research

Fig 8: Cash flow and key ratios

Cash Flow (IDR bn) 2019 2020 2021F 2022F 2023F Key Ratios (%) 2019 2020 2021F 2022F 2023F
Net income (609) (341) 337 498 554 Revenue growth 74.7 (21.2) (13.2) 27.4 15.8
Depreciation & amortization 261 605 310 411 411 EBIT growth (110.2) (386.3) (1,473.2) 444.4 19.1
Change in working capital (550) 4,120 694 2,732 2,021 EBITDA growth (33.0) (2.8) 162.8 8.6 3.8
Cash flow from operations (898) 4,385 1,341 3,641 2,986 Net profit growth (205.9) (44.1) (198.9) 48.0 11.1
Capex (1,427) (28) (1,280) (2,606) (2,532) Gross margin 5.9 7.4 12.4 13.4 13.7
Others (406) (273) 123 641 118 EBIT margin (0.4) 1.4 6.2 6.1 6.4
Cash flow from investments (1,834) (301) (1,157) (1,965) (2,414) EBITDA margin 3.7 4.6 10.9 10.3 10.6
Changes in debt 4,147 (4,989) (143) (313) (926) Net margin (3.2) (2.2) 2.0 2.6 2.9
Changes in equity - 64 - - - ROA (3.0) (2.3) 2.0 2.9 3.3
Dividends paid (287) 304 170 (168) (249) ROE (11.6) (6.9) 6.4 9.0 9.5
Others 22 526 191 9 9 Net gearing (x) 0.1 0.3 0.2 0.0 0.1
Cash flow from financing 3,881 (4,094) 218 (472) (1,166) Net debt/EBITDA (x) 18.8 12.6 5.6 4.6 4.3
Net Cash Flow 1,150 (10) 402 1,204 (594) Interest coverage ratio (x) (0.1) 0.4 1.3 1.5 1.5

Source: INCO, Sucor Research

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 TINS: Stronger earnings outlook
March 2021

Sucor Sekuritas rating definition, analysts certification, and important disclosure

Ratings for Sectors

Overweight : We expect the industry to perform better than the primary market index (JCI) over the next 12 months.
Neutral : We expect the industry to perform in line with the primary market index (JCI) over the next 12 months.
Underweight : We expect the industry to underperform the primary market index (JCI) over the next 12 months

Ratings for Stocks

Buy : We expect this stock to give return (excluding dividend) of above 10% over the next 12 months.
Hold : We expect this stock to give return of between -10% and 10% over the next 12 months.
Sell : We expect this stock to give return of -10% or lower over the next 12 months

Analyst Certification

The research analyst(s) primarily responsible for the preparation of this research report hereby certify that all of the views
expressed in this research report accurately reflect their personal views about any and all of the subject securities or
issuers. The research analyst(s) also certify that no part of their compensation was, is, or will be, directly or indirectly,
related to the specific recommendations or views expressed in this research report.

Disclaimers

This document has been prepared for general circulation based on information obtained from sources believed to be
reliable but we do not make any representations as to its accuracy or completeness. PT SucorSekuritasaccepts no liability
whatsoever for any direct or consequential loss arising from any use of this document or any solicitations of an offer to buy
or sell any securities. PT SucorSekuritas and its directors, officials and/or employees may have positions in, and may
affect transactions in securities mentioned herein from time to time in the open market or otherwise, and may receive
brokerage fees or act as principal or agent in dealings with respect to these companies. PT SucorSekuritas may also seek
investment banking business with companies covered in its research reports. As a result investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as
only a single factor in making their investment decision.

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 TINS: Stronger earnings outlook
March 2021
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