UOB Kay Hian
23 May 2025
Press Metal Aluminium Holdings: Robust Growth Prospects with New Alumina Capacity and Strong ESG Credentials
Overview: Strong Performance and Growth Trajectory
Press Metal Aluminium Holdings (PMETAL) continues to shine as Malaysia’s largest integrated aluminium producer, sustaining its BUY rating with a revised target price of RM6.26, signifying a notable upside of 24.5% from the last closing price of RM5.03. The company’s strategic investments in vertical integration and capacity expansion position it at the forefront of the aluminium market, with solid financials and long-term growth prospects.
Key Highlights and Investment Thesis
- Share Price (as of report date): RM5.03
- Target Price: RM6.26
- Market Cap: RM41,445.3m (US\$9,698.2m)
- Shares Issued: 8,239.6 million
- GICS Sector: Materials
- Major Shareholders: Alpha Milestone Sdn Bhd (33.8%), Koon Poh Ming (6.2%), EPF (5.8%)
- 52-Week Range: RM6.08 – RM4.14
- FY25 NAV/Share: RM1.21
- FY25 Net Debt/Share: RM0.31
1Q25 Results: In Line, Poised for a Stronger Second Half
PMETAL delivered a 1Q25 core net profit of RM447.7 million, representing 23% of full-year forecasts, and tracking in line with expectations. The company is on track for a much stronger 2H25, thanks to the ramp-up of an additional 1 million tonnes of alumina capacity from its associate, Nanshan Aluminium.
1Q25 Financial Performance Summary:
| Metric |
1Q25 |
QoQ % Change |
YoY % Change |
| Revenue (RMm) |
3,897.2 |
+9.5% |
+7.8% |
| EBITDA (RMm) |
672.6 |
+16.1% |
-1.9% |
| EBIT (RMm) |
497.9 |
+28.0% |
-0.5% |
| PBT (RMm) |
629.4 |
+16.0% |
+16.3% |
| Net Profit (RMm) |
461.8 |
+3.7% |
+13.2% |
| Core Net Profit (RMm) |
447.7 |
+0.5% |
+6.6% |
- Declared a first interim single-tier dividend per share (DPS) of 2.0 sen.
- Sales and core net profit grew 8% and 7% YoY, respectively, driven by higher all-in aluminium prices (LME: US\$2,626/tonne in 1Q25 vs US\$2,200/tonne in 1Q24) and increased Main Japanese Port (MJP) premiums (US\$272/tonne in 1Q25 vs US\$172/tonne in 1Q24).
- Net profit growth moderated by a higher effective tax rate due to provisions for the global minimum tax.
Financials: Steady Growth and Improving Margins
Key Financial Projections:
| Year (RMm) |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover |
13,803 |
14,910 |
15,366 |
15,751 |
16,103 |
| EBITDA |
2,352 |
2,784 |
2,794 |
2,905 |
2,874 |
| Operating Profit |
1,685 |
2,045 |
2,278 |
2,347 |
2,276 |
| Net Profit (Adj.) |
1,230 |
1,853 |
1,940 |
2,140 |
2,300 |
| EPS (sen) |
15.0 |
22.6 |
23.7 |
26.1 |
28.1 |
| PE (x) |
33.5 |
22.2 |
21.3 |
19.3 |
17.9 |
| P/B (x) |
6.0 |
4.8 |
4.2 |
3.6 |
3.1 |
| Dividend Yield (%) |
1.4 |
1.4 |
1.3 |
1.3 |
1.5 |
| Net Margin (%) |
8.8 |
11.8 |
12.6 |
13.6 |
14.3 |
| ROE (%) |
17.9 |
22.8 |
21.1 |
20.0 |
18.6 |
Stock Impact: Strategic Expansion, Vertical Integration, and Hedging
- Raw Material Costs: Alumina prices dropped sharply to US\$518/tonne in 1Q25 (from US\$691/tonne in 4Q24), reducing the alumina-to-aluminium cost ratio to 20%. The outlook is for further normalization as petcoke prices have corrected after a spike in carbon anode prices in China.
- Hedging: As of May 2025, 60% of 2025 aluminium prices have been hedged at US\$2,600/tonne, 40% at US\$2,700/tonne for 2026, and 35% at US\$2,700/tonne for 2027.
- Market Dynamics: Ongoing global supply disruptions (notably China’s 45.5m-tonne production cap and export tax rebate removals) are keeping LME aluminium prices strong. LME inventory stands at 388,000 tonnes, well below pre-pandemic levels.
- Supply Expansion: New alumina refinery capacity is coming online in 2H25 (1m tonnes p.a.) and another 1m tonnes in 2H26. A new JV with KAN in Indonesia (initial capacity of 1m-1.2m tonnes) is expected to contribute RM250m-500m in profit, based on a normalized alumina price of US\$300-400/tonne and a similar cost structure to Bintan’s operations.
Valuation, Sensitivities, and Earnings Outlook
- Valuation: Target price is based on a 24.0x 2026F PE, which is -0.5SD below the five-year forward PE mean.
- Sensitivity:
- Every US\$100/tonne increase in aluminium price (base case: US\$2,450/tonne in 2025) could add 14% to annual earnings, assuming alumina costs of US\$392/tonne and carbon anode prices of Rmb5,000/tonne.
- Every US\$20/tonne reduction in alumina cost (from the assumed US\$392/tonne in 2025) would increase earnings by RM84m.
- Earnings Forecast: No changes to previous estimates, with LME aluminium price assumptions for 2025/26/27 at US\$2,450/tonne, US\$2,500/tonne, and US\$2,550/tonne respectively.
ESG Commitments: Environmental, Social, and Governance Highlights
- Environmental:
- Smelting plants powered mainly by hydroelectricity, supporting low-carbon aluminium production.
- Targets: 15%/30% GHG reduction by 2025/2030 from 2020 baseline; carbon neutrality by 2050; 10% water withdrawal reduction by 2030 from 2016 baseline.
- Social:
- Group-wide targets to increase women’s participation in managerial roles to 30% and overall female workforce to 20%.
- In 2020, 24% of managerial roles were held by women and 14% of the workforce was female. Zero work fatalities reported.
- Governance:
- Robust Anti-Bribery and Anti-Corruption Policy aligned with the MACC Act 2009.
- No whistleblowing or bribery occurrences reported in 2020.
Key Operating and Financial Metrics
| Year Ending 31 Dec |
2024 |
2025F |
2026F |
2027F |
| Production Volume (MT p.a.) |
1,080,000 |
1,080,000 |
1,080,000 |
1,080,000 |
| Aluminium Spot Price (US\$) |
2,400 |
2,450 |
2,500 |
2,550 |
| All-in Aluminium Price (US\$) |
2,520 |
2,580 |
2,640 |
2,690 |
| MJP Premium (US\$) |
120 |
130 |
140 |
140 |
| Alumina (US\$/tonne) |
495 |
392 |
375 |
383 |
| EBIT Margin (%) |
13.7 |
14.8 |
14.9 |
14.1 |
| US\$/RM Rate |
4.50 |
4.40 |
4.40 |
4.40 |
| Effective Tax Rate (%) |
11.0 |
11.0 |
11.0 |
11.0 |
Comprehensive Profit & Loss, Balance Sheet, and Cash Flow Outlook
Profit & Loss (RMm)
| Year |
2024 |
2025F |
2026F |
2027F |
| Net Turnover |
14,909.6 |
15,366.3 |
15,750.7 |
16,102.7 |
| EBITDA |
2,784.3 |
2,921.0 |
3,332.2 |
3,305.7 |
| EBIT |
2,044.9 |
2,374.6 |
2,745.0 |
2,680.4 |
| Associate Contributions |
559.2 |
533.6 |
673.2 |
879.5 |
| Net Profit (Adj.) |
1,853.2 |
1,940.1 |
2,140.1 |
2,300.1 |
Balance Sheet (RMm)
| Year |
2024 |
2025F |
2026F |
2027F |
| Fixed Assets |
7,045.3 |
8,107.2 |
8,670.0 |
9,194.8 |
| Cash/ST Investment |
1,508.7 |
588.3 |
703.0 |
958.8 |
| Total Assets |
16,685.0 |
17,590.4 |
19,149.1 |
21,019.1 |
| Shareholders’ Equity |
8,507.7 |
9,904.5 |
11,488.2 |
13,190.2 |
| Minority Interest |
1,835.5 |
2,232.8 |
2,641.9 |
3,037.9 |
Cash Flow (RMm)
| Year |
2024 |
2025F |
2026F |
2027F |
| Operating |
2,400.5 |
2,101.8 |
2,663.2 |
2,821.7 |
| Investing |
(718.2) |
(1,150.0) |
(1,150.0) |
(1,150.0) |
| Financing |
(1,392.8) |
(1,329.0) |
(1,313.4) |
(1,326.2) |
| Ending Cash & Cash Equivalent |
1,431.8 |
1,054.5 |
788.1 |
1,048.5 |
Conclusion: Press Metal Aluminium Holdings Poised for Sustainable Growth
Press Metal Aluminium Holdings stands out with its vertically integrated operations, strong balance sheet, disciplined hedging, and robust ESG practices. With major alumina expansion projects on the horizon and a strategic approach to raw material costs and market risks, PMETAL offers investors a compelling growth story in the aluminium sector. The company’s ability to drive margin expansion while maintaining conservative forecasts positions it as a leading choice for exposure to the global aluminium value chain.
