Kenanga raises Press Metal’s earnings outlook and target price on a stronger aluminium market

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Press Metal Aluminium Holdings could continue benefiting from elevated aluminium prices, prompting Kenanga Research to upgrade its earnings estimates and increase its target price for the company.

The brokerage said aluminium prices are likely to remain supported in the near term as supply disruptions in the Middle East continue to affect the market.

According to Kenanga, damaged refining facilities in the region may take anywhere between six and 12 months to return to normal operations, keeping supply tight and supporting prices.

Spot aluminium prices have seen an average of about USD 3,352 per tonne so far this year, while current market prices are still above USD 3,700 per tonne.

Kenanga also pointed to Press Metal’s hedging strategy as an advantage in the current environment. The company has already locked in about 65 per cent of its 2026 production at USD 2,800 per tonne. Around 50 to 60 per cent of its 2027 output has been secured at USD 2,900 per tonne, while 30 per cent of its 2028 production has been hedged at USD 2,850 per tonne.

The research house said strong spot prices combined with these hedge positions should support earnings over the coming quarters.

As a result, Kenanga raised its aluminium price assumptions for FY26 and FY27 to USD 3,000 per tonne and USD 3,100 per tonne, respectively, up from previous forecasts of USD 2,750 per tonne and USD 2,850 per tonne.

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The revised outlook led the brokerage to increase its FY26 earnings forecast for Press Metal by 26 per cent and its FY27 forecast by 21 per cent.

Dividend expectations were also revised higher, based on the company maintaining its 40 per cent payout ratio.

Consequently, Kenanga lifted its target price for Press Metal to MYR 8.80 from MYR 7.30 previously. However, it kept its “Market Perform” recommendation, citing risks from rising aluminium production in China and continued weakness in domestic demand.

The upgrade follows a stronger-than-expected first-quarter performance by Press Metal.

For the quarter ended March 31, 2026, the company reported a 33 per cent year-on-year increase in core net profit to MYR 597.5 million, helped by stronger aluminium selling prices and lower alumina costs.

Revenue rose 5 per cent from the same period a year earlier, while earnings before interest and tax margin expanded to 21 per cent from 13 per cent previously as the alumina-to-aluminium price ratio narrowed.

The company also announced a first interim dividend of 2.5 sen per share, higher than the 2 sen paid in both the previous quarter and the corresponding quarter last year.

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