Press Metal saw heightened buying interest after posting good FY24 results

Press Metal Aluminium Holdings Bhd is seeing heightened buying interest as the counter touched a new 52-week high and it is likely move upwards further. The counter may see near-term resistance level at RM6, followed by RM6.50.

It was too long ago the Press Metal was trading at its 52-week low of RM4.43 in March before it shoot up to RM6.50. Trading at the current price, the counter considered as relative ‘expensive with a price to earnings multiple of 38%. But given its strong fundamentals, investors may be excited to take a bet on Press Metal.

The company rose as much as 4.7% or 26 sen to RM5.85, its highest since May 2022. This is likely due to commendable first quarter results, which analysts' and consensus estimates. Mostly, analysts favour Press Metal for its favourable cost structure, as the bulk of its energy costs are secured through 15- to 25-year power purchase agreements with Sarawak Energy.

Additionally, it has a strong track record as an investible aluminium proxy in Malaysia, and a favourable environmental, social, and governance (ESG) profile, due to its hydro-powered smelters. Notably, Maybank IB upgraded the stock to buy from hold, and increased its target price by 26% to RM6.10, up from RM4.84.

Press Metal’s core net profit of RM417 million for the first quarter ended March 31, 2024 (1QFY2024) exceeded expectations, representing 28% of the research house's full-year estimate, and 26% of the consensus. “The next anticipated huge power supply will come from the Baleh Hydroelectric Project expected to complete in 4QFY2028.

We strongly opine that if Press Metal is able to secure power for another new smelting plant, this will be a major rerating catalyst for the group,” Maybank IB said. This is commendable for HLIB,which revised its TP higher 8%to RM6.51, from RM6 previously, for Press Metal. The counter looks too good to give it a miss.