PETALING JAYA: Press Metal
Aluminium Holdings Bhd is entering a sweet spot of higher aluminium prices and easing alumina costs, setting the stage for a strong financial year ending Dec 31, 2026 (FY26) earnings upcycle.
RHB Research said despite the recent share price rally, valuations remain reasonable at 23 times FY27 forecast earnings, in line with the stock’s five-year average.
It believes elevated aluminium prices and the improving earnings cycle justifies the share price rise.
Press Metal manufactures and sells extruded aluminium and other aluminium products to customers worldwide.
It noted that so far this quarter, London Metal Exchange (LME) aluminium prices have averaged US$3,610 per tonne, while alumina and carbon anode costs have edged up by 1% and 5%, respectively.
Meanwhile, the Main Japanese Port (MJP) premium has averaged US$292 per tonne, supporting expectations of another strong quarter.
On the flip side, the research house said elevated aluminium prices could lead to near-term demand weakness or destocking activities.
“However, we believe this should be offset by its relatively inelastic demand profile and limited substitutes.
“Should the Hormuz Strait reopen, LME prices may soften momentarily, though it could be cushioned by restocking activities,” RHB Research said in a note to clients.
On the company’s upcoming first-quarter FY26 (1Q26) results slated for May 28, the research house estimates it to post earnings of RM650mil to RM720mil, translating to a 5% to 15% sequential growth.
It expects the improvement to be mainly driven by higher aluminium prices of US$3,192 per tonne, while MJP alumina prices stayed flattish quarter-on-quarter at US$317/tonne.
This brought the spot alumina-to-aluminium cost ratio to 10% in 1Q26 versus 4Q25’s 11%.
According to the research house, Press Metal’s management previously guided for a cost ratio of 13% to 14% for FY26, given that 40% of alumina are hedged at 14% to 15% of LME prices.
RHB Research kept its “buy” call on the stock with a RM10.50 target price.
The stock was trading at RM9.05 at the time of writing.
