FY25 Outlook bright for Press Metal: Stable aluminium prices and China's economic recovery in focus

According to Hong Leong Investment Bank (HLIB), Press Metal Aluminium Holdings Bhd, with a current smelting capacity of 1.08 million tonnes and an extrusion capacity of 240,000 tonnes per annum, is the largest integrated aluminium producer in Southeast Asia. It is set to achieve double-digit earnings growth in FY2025. This growth is driven by stable aluminium prices, easing global monetary policies, and China's economic recovery.

The investment banker and research house anticipates steady aluminium prices and an expected decline in alumina prices to bolster the company's profit margins going into the next fiscal year.

However, near-term challenges remain. Press Metal is expected to report weaker earnings for the third quarter of 2024, impacted by a 5.5 per cent drop in average aluminium prices to US$2,385 per tonne (MT) and an 18 per cent increase in alumina costs. As a result, HLIB forecasts the company's Q3 2024 earnings to range between RM325 million and RM375 million, marking a quarter-on-quarter decline of 27 per cent to 37 per cent.

Despite the near-term challenges, Press Metal's year-on-year outlook is more optimistic. The expected earnings growth of 6 per cent to 22 per cent is bolstered by the significant impact of the ringgit's appreciation against the US dollar.

Considering these factors, HLIB has revised its forecasts for FY2024, FY2025, and FY2026, reducing them by 16 per cent, 7 per cent, and 7 per cent, respectively.