Analisa Saham TINS | Illegal Miners No More

*TINS IJ: Illegal Miners No More; Initiate with a BUY TP: IDR2,530 (92% Upside Potential)*

(Andrew Hotama - RHB)

Good morning Team,

- We *initiate coverage on Timah (TINS IJ)*, with a *strong BUY call* TP:2,530/ share for *92% upside potential*.

- Believe the *On-Going illegal mining crackdown is real & more proper* with *Indonesia's National Police & Criminal Investigation Agency* playing a role in *arresting illegal smelters.* Note that, *Indonesia's tin exports* have *gone down* by *24.8% YoY* ever since the regulatory crackdown began.

- *TINS should be the sole beneficiary*; *expect 80%/78% increased in  production/sales volume* to *60k tons*.

- *Supply side of the industry is interesting*, potential price drivers: *Indonesia (23% of global supply)* facing *supply disruptions* *(1Q19 Indonesia tin exports -10% YoY)* while *Myanmar* (accounting for *40% of China's total ore feed)* facing *declining supply* due to *declining ore stocks* *(China's January ore import from Myanmar -36% YoY!!)* This could drive up global tin prices going forward.

- *Ideal post-election play*: *Both candidates aim to eliminate illegal miners*; this will benefit *TINS*, which have *>90% of Indonesia's total tin mining concessions* but only accounted for 33% of Indonesia's tin exports in 1Q18 (1Q19: 98%).

- Expect *+153% earnings growth* in 19F; this is largely driven from *higher production (+80% YoY)* while we conservatively forecast *flat ASP YoY*.

- *Consensus' earnings upgrade to follow soon* (we are 53% above consensus). *1Q19 indicated net profit: IDR300bn (+9% QoQ, +450% YoY*.

- *Cheapest tin miner out there*; *trading at 19F P/E of 7.3x* Vs. *10 year average of 15.5x*.

Thank you