KUALA LUMPUR: P.A. Resources Bhd
is well-positioned for multi-year earnings growth, according to Rakuten Trade.
The research house said the earnings growth of the leading aluminium extruders and fabricators’ will be driven by its recently secured RM1.08bil First Solar sontract; its new plant that will more than double the group’s extrusion capacity, facilitating customer and product diversification and potential margin expansion from operational efficiencies.
Rakuten Trade said PA has successfully completed its recent extrusion capacity expansion from 2,600MT to at least 3,200MT per month recently. The extra capacity will be fully operational by April 2024, just in time for P.A. to focus on fulfilling the new RM1.08bil First Solar contract.
“As such, we are especially confident on its earnings growth for FY25. We remain optimistic on PA’s prospects given First Solar plans to double its manufacturing capacity by 2026 to address its outstanding backlog of 80GW spanning until 2030,” it said.
PA is currently in a net cash position with RM46mil and has healthy cash flow generation capabilities to fund future capital expenditure via a combination of internal funds and bank borrowing.
“In view of its ongoing expansion, we anticipate a net gearing ratio of 0.27 times by FY25 and expect PA to pay dividends of 0.7 sen and 1.1 sen for FY24 and FY25 respectively, which translates into yields of 2.0% and 3.2%. That said, we anticipate a greater dividend payout ratio once its robust earnings outlook materialises,” Rakuten said.
The research house has a target price of 41 sen based on 11x PER over FY25 EPS of 3.7sen.
