RHB Investment Bank Bhd (RHB Research) and Maybank Investment Bank Bhd (Maybank IB) have both maintained BUY calls on Press Metal Aluminium Holdings Bhd, with renewed target prices ranging between RM6.39 and RM5.76.
Both analysts highlighted strong earnings performance in nine months of 2024 (9M24), with RHB Research noting that core earnings exceeded expectations, driven by stronger contributions from associates, and Maybank IB pointing out results in line with forecasts but above consensus.
Press Metal's 9M24 core earnings reached RM1.4 billion, reflecting a 55% year-on-year (YoY) increase, driven by higher aluminium prices and growing demand for value-added products. In 3Q24, the company recorded RM475.8 million in core earnings, a 49% YoY increase but a 7% decrease quarter-on-quarter (QoQ), attributed to a weaker US dollar and a dip in aluminium average selling prices (ASP).
The company declared a third interim dividend per share (DPS) of 1.75 sen, bringing the total DPS for 9M24 to 5.25 sen. Despite the QoQ decline, analysts remain optimistic due to long-term growth drivers, such as the recovery in aluminium prices and an increase in demand for low-carbon aluminium.
Maybank IB also highlighted the impact of rising alumina prices, benefiting Press Metal through its 25% stake in PT Bintan, though the company faced challenges with higher alumina input costs during 3Q24. The house also expects the P3 Samalaju plant, which suffered a fire incident in September, to be fully operational by January 2025. RHB Research anticipates a recovery in aluminium prices due to expected US Federal Reserve rate cuts and a growing demand for aluminium from non-China manufacturers.
Both analysts are optimistic about Press Metal's prospects, with RHB Research focusing on the company's potential to capitalise on the global trend toward green industries and sustainability, while Maybank IB sees the Baleh Hydroelectric Project, due for completion in 4Q28, as a significant long-term re-rating catalyst if the company secures the power supply for new smelting plants.
The outlook remains positive for Press Metal, driven by the aluminium market recovery and the company's strategic positioning in the low-carbon aluminium sector.
