Malaysian aluminium giant ‘Press Metal’ to enhance production capacity in 2H 2021

The world-class aluminium producer, Press Metal Aluminium Holdings Bhd of Malaysia could take the advantage of the rising LME aluminium spot prices in 4Q, provided that its Samalaju Phase 3 facility is anticipated to be just weeks away from being fully operational.

RHB Research pointed: “Samalaju Phase 3 could have been held back for one to two months from Press Metal's initial July target but sees little downside surprises moving forward.”

"This will allow 4Q21 to more freely capture the upside in LME aluminium spot prices Vs a hedged sales proportion at 2021F’s $ 2,050/tonne price.”

"This is in addition to the widening spread Vs alumina spot prices – Phase 1 of PMAH’s 25%-owned Bintan alumina refinery should come on stream around the same time.”

"Hence, amid its slew of successive quarterly earnings growth, we foresee momentum picking up even stronger from 4Q21 onwards," the research said.

The Malaysian aluminium company’s 2Q21 core net profit of RM256 million, which was a bit below RHB's expectations but in line with that of consensus at 33.6% and 36.8% of full-year estimates respectively.

The research firm added that the results underscored Press Metal's sustained earnings momentum headed into H2 2021.

This needs to be noted that Samalaju Phase 3 gradual boost up towards full production, while LME aluminium prices remain at their strongest in a decade.

"We make no changes to our existing forecasts, pending an update from tomorrow’s briefing.”

"Overall, while we see some volume downside on our 2021 estimates, 2022-2023 forecasts appear very much intact, given the subsequent full-year contributions of Samalaju Phase 3 and the aluminium market’s solid price trajectory," the research further detailed.