According to Ministry of Energy and Mineral Resources,tin output from Indonesia may plunge about 20%this year due to prolonged rainy season. However,lower output from Indonesia has supported strong LME tin price. Our tin price assumption for FY10F is US$17.5k/ton,which is the same with ytd average LME price.However,yesterday LME tin price reached US$19.9k/ton.
Should the price is sustainable until year end;tin price could be 7%above our estimates.Our sensitivity analysis shows that 20%output decline and 7%higher selling price will reduce net profit by 22%.Currently,we have Neutral recommendation on TINS which is trading at 14.6-9.6x PER10-11F.
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