Timah (TINS)

1Q26 Beat Confirms Earnings Inflection; Royalty Overhang Keeps Valuation in Check

• TINS’ 1Q26 earnings beat confirms FY26F inflection, driven by stronger tin ASP, solid sales volume, and margin expansion.
• We raised our FY26F net profit estimates by 13.4% to Rp3.4tr, despite lowering sales volume assumption.
• Maintain Buy rating with TP of Rp4,500/sh, based on lower multiple 10x P/E FY26F to reflect royalty overhang.

Strong 1Q26 Earnings Driven by Strong ASP and Margin Expansion.

TINS’s 1Q26 results confirm our earnings inflection thesis, with net profit of Rp1.5tr already reaching 44.6% of our revised FY26F estimate. The strong delivery was supported by refined tin sales volume of 6.0kt, ASP of US$49.2k/t, cash cost of US$21.5k/t (+3.0% y-y), and significant margin expansion, as gross, EBITDA, and net margins improved to 38.6%, 37.2%, and 27.5%, respectively.

FY26F Upgrade Supported by ASP Strength, but Royalty Risks Remain.

We raise our FY26F net profit estimate by 13.4% to Rp3.4tr, mainly driven by our higher ASP assumption of US$50k/t versus US$40k/t previously, while maintaining a conservative sales volume assumption of 25kt. Despite strong 1Q26 sales volume of 6.0kt, we avoid annualizing the quarterly run-rate as Apr26 shipment may have been disrupted by regulatory transition and RKAB timing risk, following the implementation of new export rules and the expiry of RKAB relaxation at end-Mar26. This supports our prudent stance on production-to-sales conversion beyond FY26F, leading to an 8.7% cut in our FY27F net profit estimate to Rp3.5tr. We have not incorporated the proposed royalty revision into our base case, but view it as the key downside risk, as a higher royalty burden could materially dilute cash margins and cap TINS’ near-term rerating.

Maintain Buy Rating with Revised TP of Rp4,500.

We maintain our Buy rating on TINS with a revised TP of Rp4,500, based on a lower 10.0x FY26F P/E. Our revised target multiple of 10.0x remains equivalent to around +2 standard deviations above TINS’ historical forward P/E mean, reflecting continued earnings inflection despite regulatory overhang. Based on our sensitivity analysis (details on p.3), TINS’ net profit could decline to around Rp1.98tn, (vs our base-case forecast of Rp3.36tn), if the previously proposed royalty is implemented. Across the sensitivity range, FY26F net profit would move between Rp1.46tr–2.50tr, while the implied TP range would fall to Rp2,000–3,400. Key risks to our call include: 1) lower-than-expected tin prices, 2) shipment disruption from regulatory transition and RKAB timing, and 3) higher-than-expected royalty or cash cost pressure.

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