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Singapore Investment


 Can  PMETAL 8869 PRESS METAL ALUMINIUM HOLDINGS BERHAD continue pressing forward on the back the positive outlook of the aluminium sector?

It is pretty amazing that Press Metal Aluminium Holdings Bhd was trading at iits one year peak of RM6.67.

At 4.79 currently, it seemed like a monumental task to reach  its 52-week high. But the high dissipated when it fell to a low of RM3.90 last month.

Is this a good time to accumulate the stock now it has climbed and trading at a PE ratio of about 28x?

Press Metal is largest integrated aluminum producer in Southeast Asia and one of the world-class low cost smelters.

It recently secured export sale of aluminium ingots worth RM110 million from Hong Kong’s Daching Enterprises Ltd, and the companies have also sealed a five-year export deal of the same product for RM670 million.

The deal was inked during a meeting recently held in conjunction with Malaysia’s trade and investment mission to China

This should be a good impetus for the company to growth further having bagged a long term export deal.

Apart from the contact, demand of aluminium is likely to be good due to increase in the demand of electric vehicles and renewable energy.

According to Press Metal, the RE sector is set to become a growth engine for alu­minium because of solar photovoltaic and wire rod demand from infrastructure spending on transmission lines.

The transportation and construction sectors were the key demand drivers for aluminium in 2022, making up close to 50% of the demand.

The electrical, packaging and foil stock industries were the other prominent sectors for aluminium demand.

The aluminium producer reckons the supply constraints from the West will continue to persist while stronger-than-expected recovery led by China will push the demand for aluminium higher.

What is also helping the company is the dissipating recession fears and high inflation with global freight costs declining more than 30% and easing of high prebake carbon price.

Kenanga Research likes Press Metal as a strong beneficiary in the aluminium sector.

The research housel is overweight on the sector with aluminium prices being well supported by demand recovery underpinned by the normalisation of economic activities.

Since China’s reopening in early January, commodity prices have rebounded strongly after a lacklustre 2HCY22, driven by expectations of a demand recovery in its property market.

ASPs are unlikely to retrace back to pre-COVID-19 levels in the near term as the demand recovery is largely due to normalisation of economic activities.

YTD, LME aluminium price average at USD2,436/MT is 4% higher than 2HCY22’s USD2,345/MT.

Press Metal looks good to trend higher given the positive stance in the aluminium industry and it appears to be a fair buy at current levels.


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