
Press Metal Aluminium Holdings Bhd’s earnings estimates have been raised by the RHB Research. The growth in forecasts is due to rise in aluminium prices on the London Metal Exchange.
"PMAH expects the recovery in LME aluminium prices to extend into 2021, due to healthy supply-demand conditions under a reflationary macroeconomic environment. This is underpinned by strong persistent demand by China, which recently became a net importer of primary aluminium, amid tightening supply," according to the RHB.
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Press Metal’s estimates earnings rose by 9% for FY21 to FY22 in tandem with higher alumina and carbon anode raw material prices.
"We anticipate sequential core earnings improvement in 2HFY20 (3QFY20F: RM110 million-130 million) in tandem with higher aluminium prices as well as recovery in LME physical premiums and value-added products mix. Subsequently, FY21F is set to mark the transition from recovery to a new growth phase, underpinned by Samalaju’s Phase 3 expansion in January 2021 coupled with the firmer LME forward prices — US$1,930-1,980/tonne average for 2021-22F — which should incentivise management to further hedge its forward sales volume (2021F: c.15% at US$1,950/tonne),” RHB analyst Lester Siew earlier said.
RHB hiked its target price for the company to RM8.50 from RM8 previously.
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