UOB Kay Hian
Date of Report: Friday, 22 August 2025
Press Metal Aluminium Holdings: 2Q25 Results Review – Stronger Growth Ahead with Alumina Expansion

Overview: Press Metal Aluminium Holdings Delivers Solid 1H25, Poised for Robust 2H25

Press Metal Aluminium Holdings (PMETAL), a leading manufacturer and trader of primary aluminium and aluminium-based products, reported results for the first half of 2025 that came in line with expectations. The company’s performance was primarily driven by higher all-in aluminium prices, with further upside anticipated in the second half of the year due to the ramp-up of new alumina capacity. PMETAL continues to reinforce its position as an integrated aluminium player through strategic expansion and vertical integration.

Stock Snapshot and Performance

• Share Price: RM5.52
• Target Price: RM7.00 (Upside: +26.8%)
• Market Cap: RM45.5bn (US\$10.8bn)
• 52-week High/Low: RM5.64/RM4.14
• Major Shareholders: Alpha Milestone Sdn Bhd (33.8%), EPF (6.8%), Koon Poh Ming (6.2%)

2Q25 Financial Performance: Within Expectations, Stronger 2H25 Anticipated

Key highlights for 1H25:

• Revenue increased by 7% YoY, core net profit rose by 2% YoY, underpinned by higher all-in aluminium prices (LME aluminium: US\$2,540/t vs US\$2,363/t in 1H24).
• Net profit growth was moderated by a higher effective tax rate due to provisions for global minimum tax.
• A second interim dividend of 2.0 sen per share was declared (34% payout ratio).
• Sequential earnings growth was driven by higher sales volume (post-fire resumption in Jan 2025) and lower alumina raw material costs.

Key Financial Metrics and Forecasts

Key Drivers and Strategic Initiatives

Favourable Raw Material Costs:

• Alumina prices dropped sharply to US\$355/tonne in 2Q25 (from US\$518/tonne in 1Q25), resulting in a cost ratio of 15% for alumina-to-aluminium.
• Carbon anode prices eased to Rmb5,000–5,500/MT by end-2Q25 (down from Rmb5,600/MT).
• As of August 2025, aluminium prices hedged: 60% at US\$2,600/tonne for 2025; 45–50% at US\$2,650/tonne for 2026; 38–40% at US\$2,700/tonne for 2027; 20% at US\$2,750/tonne for 2028.

Global Supply Dynamics:

• Ongoing global supply disruptions are supporting LME aluminium prices.
• China’s 45.5m-tonne production cap and removal of VAT rebates on over 5m tonnes of aluminium exports constrain supply.
• The US has reinstated and raised tariffs to 50% on all aluminium imports, tightening trade flows and amplifying global supply-side pressures.
• LME aluminium inventory is at 473,000 tonnes (-24% YTD), well below pre-pandemic levels of 1–2 million tonnes.

Expanding Alumina Refining Capacity:

• Nanshan Aluminium’s first 1m tonnes/year alumina refinery is operational, with another 1m tonnes/year to come online in 2H26.
• PMETAL entered a JV with KAN in Indonesia for a new alumina refinery (initial 1m–1.2m tonnes/year capacity), expected to contribute RM250m–500m in profit through PMETAL’s 80% stake, assuming normalised alumina price of US\$300–400/tonne and a similar cost structure as Nanshan Aluminium.

Earnings Sensitivities and Forecast Assumptions

• Every US\$20/tonne reduction in alumina price from US\$392/tonne in 2025 would increase PMETAL’s earnings by RM84m, assuming no hedging at a fixed aluminium price of US\$2,450/tonne, and vice versa.
• Every US\$100/tonne increase in aluminium spot price (from the US\$2,450/tonne in 2025) would boost earnings by 14% annually, assuming alumina costs of US\$392/tonne and carbon anode prices of Rmb5,000/tonne.

Valuation and Recommendation

• BUY rating maintained with a higher target price of RM7.00, based on 27.0x 2026 forward PE (previously 24x). This aligns with the five-year forward PE mean as visibility improves regarding US aluminium tariffs and the group’s Indonesian refinery expansion.
• Consensus net profit forecasts: RM1,940m (2025F), RM2,246m (2026F), RM2,495m (2027F).
• UOBKH’s forecast is in line with consensus for 2025 and slightly more conservative for 2026/27.

Environmental, Social, and Governance (ESG) Updates

• Environmental: Hydroelectricity powers smelting plants. Targets include 15%/30% GHG reduction by 2025/2030 (from 2020 baseline), carbon neutrality by 2050, and a 10% water withdrawal reduction by 2030 (from 2016 baseline).
• Social: Group-wide targets set in 2018: 30% women in managerial roles, 20% female workforce. In 2020, 24% of managerial roles held by women; 14% of workforce female; zero work fatalities recorded.
• Governance: Anti-bribery and anti-corruption policy compliant with Malaysia’s MACC Act 2009; zero whistleblowing or bribery cases in 2020.

Comprehensive Financial Statements

Profit & Loss, Balance Sheet, Cash Flow, and Key Metrics (2024–2027F)

Conclusion: Press Metal Aluminium Holdings – Well-Positioned for Long-Term Growth

Press Metal Aluminium Holdings is delivering resilient financial results and is well-positioned for accelerated growth in the second half of 2025. The company’s integration strategy, expansion in alumina refining, prudent hedging, and focus on ESG benchmarks reinforce its competitive edge in the global aluminium market. With favourable fundamentals, manageable risks, and visible growth drivers, PMETAL remains a compelling BUY for investors seeking long-term exposure to the materials sector.