Press Metal Aluminium Holdings Berhad (Press Metal) has released its second-quarter results for 2024, which fell short of expectations. The company reported a core net profit of RM516 million for 2Q24, reflecting a quarter-on-quarter increase of 24% and a year-on-year rise of 65%. This brought the cumulative core earnings for the first half of 2024 to RM933 million, up 54% from the same period last year. Despite these impressive figures, the results were below analyst forecasts.

Analysts have provided a range of recommendations following the report. Two analyst maintains a BUY rating with a new target price of RM6.53, down from RM6.67 and another target price of RM6.35. This represents a potential upside of 27% from the current share price of RM5.15. The analysis highlights the recovery in aluminium prices and strong demand from green sectors as positive factors. Another analyst also maintains an OUTPERFORM call with a target price of RM6.35, noting that the results met expectations for the first half of the year and are supported by firm aluminium prices and better contributions from associate PT Bintan.

The key deviation from expectations was attributed to a slower-than-anticipated aluminium price rally following sanctions on Russian aluminium and US tariffs on Chinese aluminium products. The strong performance in 2Q24 was largely due to higher aluminium spot prices and improved contributions from PT Bintan, driven by elevated alumina prices.

Looking ahead, the outlook for the second half of 2024 is less optimistic. Press Metal may experience cost pressures due to elevated alumina prices, although these will be partially mitigated by its stake in PT Bintan. Additionally, a significant long-term growth catalyst for the company is the anticipated Baleh Hydroelectric Project, expected to be completed in late 2028, which could provide a substantial boost if Press Metal secures power for a new smelting plant.