Timah (TINS IJ)

Earnings Inflection in Sight; Resuming Coverage with Buy Rating and TP of Rp4,800

 

  • We see FY26F as an earnings inflection year, supported by operational normalization and sustained firm tin prices.
  • We reset FY26F estimates to Rp21.4tr revenue and Rp3tr NP, incorporating conservative volume and higher cash cost assumptions.
  • Resume coverage with a Buy rating (unchanged) and a higher TP of Rp4,800, backed by operating leverage and structurally tight global tin.

 

Positioning for a FY26 earnings inflection

We see a potential earnings inflection in FY26 for TINS, supported by operational normalization and firm tin prices. While FY25 production (at 17.8kt) was below target due to permitting bottlenecks, improving run rates in 4Q25 underpin the ~30kt FY26F target, with possible upside pending RKAB revision. With ~75ktpa installed smelter capacity, ore supply stability remains the key constraint for TINS. Estimated seized assets of ~Rp1.4tr (comprising tin ingot, tin ore, and related cash assets) currently remain unaccounted for in TINS’ books, providing additional earnings and valuation optionality.

 

A more conservative FY26-27 forecast; operating leverage intact

We recalibrate our FY26F forecasts to reflect a more conservative operating baseline, lowering revenue by 18% to Rp21.4tr on softer volume assumptions (30kt vs. 35kt prev.) amid RKAB timing risks and a more gradual ore flow normalization. We also raise cash cost to US$28.9k/t to incorporate higher ore procurement benchmarks (~Rp300k/t) and anticipated HPM issuance, resulting in a 29% EBITDA and 35% net profit adjustment to Rp3tr. While earnings are reset lower, cash margins remain in line with management guidance at ~US$10–12k/t under our US$40k/t ASP assumption.

 

Resuming coverage with Buy rating and TP of Rp4,800

We resume our coverage on TINS with Buy rating and a target price of Rp4,800 (from Rp3,000 prev.), based on 11x FY26F P/E, reflecting a 25% discount to average global tin peers, which we view as justified given improving upstream control, structurally tight global tin supply, and visible earnings inflection into FY26F. Our sensitivity analysis underscores strong operating leverage, where every +5kt increase in production could lift FY26F net profit by ~8–10%, while a +US$2k/ton (~5%) increase in tin price may raise earnings by 15–18%. Under our base case of 30kt production, US$27–28k/ton cash cost, and US$40k/ton tin price, we estimate FY26F net profit of Rp2.97tr. Key risks include potential delays in RKAB, regulatory inconsistency, tin price normalization, and softer demand.

 

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