Malaysia Smelting – are you clear what business it is in?

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Bursa Malaysia Smelting Corp (MSC) is one of the world’s leading integrated producers of tin metal and tin-based products.

If you consider its net assets, about 2/3 is deployed for its smelting operations with the bulk of the balance for its tin mining operation. But when you look at the PBT over the past 12 years, 4/5 was from the tin mining operation.

Is this then a smelting company with a tin mining arm or a tin mining company with a smelting arm? This has implications for its valuation.

If this was a tin mining company, you would value it based on its tin reserves. If it was a smelting company, you would valued it based on its tin refining business. So what is the appropriate way to value it?

For more details on MSC, refer to “Is Malaysia Smelting an investment opportunity?”

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