Malaysia Smelting – are you clear what business it is in?

Bursa Malaysia Smelting Corp (MSC) is one of the world’s leading integrated producers of tin metal and tin-based products.

If you consider its net assets, about 2/3 is deployed for its smelting operations with the bulk of the balance for its tin mining operation. But when you look at the PBT over the past 12 years, 4/5 was from the tin mining operation.

Is this then a smelting company with a tin mining arm or a tin mining company with a smelting arm? This has implications for its valuation.

If this was a tin mining company, you would value it based on its tin reserves. If it was a smelting company, you would valued it based on its tin refining business. So what is the appropriate way to value it?