· Tin shipments from Indonesia , the largest tin exporter in the world, are expected to decrease by 19% YoY to 80,000 ton this year due to unpredictable weather. As an impact, Tin futures on the London Metal Exchange have rallied to the highest price since July 2008, driven by the fall in supplies from Indonesia , lower stockpiles and rising demand.
· The impact to world supply is severe where inventories of tin in LME warehouses stood at 13,655 tons on Sept. 17, down 49.0% YTD. Tin, used for packaging and as solder, has advanced about 38.9% YTD in London this year, beating second-placed nickel’s 25.1% jump.
· This event is positive for Timah (TINS, Rp2,825), which is the largest tin producer in Indonesia that sells most of its product to overseas market. TINS is currently trading at 2011F consensus PER of 11.3x and EV/EBITDA of 6.1x.
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