Malaysia Smelting Corporation Bhd's (MSC) 2QFY24 results fell short of expectations, according to Malacca Securities.

The company reported a core Profit After Tax and Minority Interests (PATMI) of RM16.7 million for the quarter, reflecting a 9% decline quarter-on-quarter and a 41% drop year-on-year, resulting in a 1H24 core PATMI of RM35.0 million, which only met 37% of forecasted estimates. This underperformance was attributed to reduced tin smelting output due to scheduled maintenance of the TSL furnace.

Malacca Securities has decided to cease coverage on MSC due to a reallocation of resources. The firm's final recommendation was a HOLD with a target price of RM3.41, based on a Price to Earnings (P/E) ratio of 15.0x for its FY24 forecasted Earnings Per Share (EPS) of 22.7 sen.

The company is transitioning its tin smelting operations from Butterworth to Pulau Indah by 2025, aiming for cost reductions and improved efficiency, though this shift has not mitigated recent performance declines.