MBSB retains BUY on Press Metal as 24.3% FY26 earnings growth offsets lower aluminium outlook

MBSB Investment Bank Bhd (MBSB Research) has maintained its BUY recommendation on Press Metal Aluminium Holdings Bhd, although it lowered its target price to MYR 9.56 (USD 2.36) from MYR 9.66 (USD 2.39). The research house expects the company’s low-cost, renewable-powered smelting operations and favourable alumina spreads to continue supporting its margins.

MBSB Research expects LME aluminium prices to average around USD 3000 to USD 3,200 per tonne in the second half (H2) of 2026 as supply disruptions ease. Prices averaged USD 3,565 per tonne in 2QCY26 but have fallen to USD 3,196 per tonne in 3QCY26 to date.

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Despite the lower price outlook, physical aluminium premiums remain elevated, and the global market is expected to record a deficit of one to two million tonnes this year. Press Metal also has some protection from its hedge book, with 65 per cent of its FY26 production hedged at USD 2,700 per tonne.

The research house expects alumina prices to increase in the third quarter (Q3), but noted that the alumina-to-LME ratio remains below historical levels, which should continue to support smelting margins. MBSB Research forecasts Press Metal’s FY26 core earnings to rise 24.3 per cent year-on-year to MYR 2.7 billion (USD 660 million), with its net margin increasing to 15.3 per cent.

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Press Metal’s expansion plans could also add to its production capacity. The company has secured a 129MW hydropower allocation under an 18-year contract, which can support around 80,000 tonnes per annum of additional aluminium capacity. Its PT KAN project is expected to start operations in 2027, which could raise the company’s alumina self-sufficiency to around 40 per cent.

MBSB Research cut its FY27 earnings forecast by 1 per cent following the lower aluminium price assumption, but kept its BUY recommendation and based the revised target price on 27 times FY27 earnings.

Press Metal’s share price is at  MYR 7.86 (USD 1.94) as of 12.29 GMT.