According to Statista, shipments of laptops, tablets and desktop-PCs are expected to rise 4% to 483.5 million units by 2025. Meanwhile, shipments of smartphones are expected to increase 20% to 1.54 billion units in 2025, according to the IDC, which will mean higher consumption of tin. In fact, tin finds far-reaching applications in the fabrication of these devices, as it has replaced lead as a soldering metal.
Thus, the price of tin per metric ton is expected to increase over the upcoming years. Usually, predictions for metals do not go beyond one year as the extreme volatility that usually reigns in the metals markets makes it impossible to cover longer periods of time. For the next 12 months, economists project an impressive 140% increase in the price of tin up to $40,150.00 per metric ton.
In the year-to-date period, the metal has soared by more than 80% to about $16,825 per metric ton, mainly on the back of strong demand for popular devices.
With the People’s Republic of China being the largest producer of the metal in the world (85,000 tons in 2019), it makes sense to search for tin investment opportunities among the publicly traded Chinese producers of the metal in order to take advantage of the expected upsurge in tin prices.
Thus, investors may want to consider Yunnan Tin Company Limited (SZSE:000960, Financial), as this Gejiu, China-based tin producer is one the biggest in the mainland. In the first half of 2021, Yunnan made ingots and other products, including mid-stream tin-containing products, for a total tin output of 43,200 tons, which, compared to the corresponding period of 2020, was more than a 25% jump.
Additionally, Yunnan produced some copper, increasing its copper output 26.1% year over year, and its zinc output increased by 11.1% year over year.
Regarding sales, Yunnan's shipments of tin ingots went up nearly 60% year over year, while shipments of copper cathodes rose by 17.1% and those of zinc ingots rose by 8%. This, coupled with higher tin and other base metal prices, allowed Yunnan to post a record net attributable profit of 960 million Chinese yuan ($150 million), which represented a 375% increase compared to 2020.
A few days ago, Yunnan released its earnings figures for the third quarter. The net attributable profit was again a record as it grew more than threefold on a year-over-year basis to ¥840 million, in line with the company's expectations.
The balance sheet looks robust. The company had ¥4.83 billion in cash on hand versus ¥130.22 billion in total debt as of Sept. 30. However, the trailing 12-month interest coverage ratio was 4.50, meaning that despite its size, total debt doesn’t represent a problem as the company can easily pay the interest expenses that mature on the outstanding amount.
As a result, the share price has risen by 44% so far this year, closing at ¥16.67 on Tuesday for a market cap of ¥27.82 billion and a 52-week range of ¥9.02 to ¥26.30.
The stock doesn’t look expensive, as it is trading below the 50-day moving average value of ¥19.70 and the 200-day moving average value of ¥17.55. The trailing price-earnings ratio is 13.33, the price-sales ratio is 0.52 and the price-book ratio is 1.86.
Looking ahead to full-year 2021, Yunnan expects to post another record net attributable profit helped by a positive outlook regarding both tin production and its prices in the spot market. Should this drive another significant upside in the share price, then at current levels, this stock seems to be a true bargain.
