Bimb Research Highlights

ESG: Industrial Sector - Metals and ESG: Nurturing a Greener Future

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Publish date: Tue, 14 Nov 2023, 05:25 PM
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Bimb Research Highlights
  • Malaysia is committed to achieving net-zero greenhouse gas emissions, aiming for a 32% reduction from 259 MtCO2eq in 2019 to 175 MtCO2eq by 2050. The National Energy Transition Roadmap includes initiatives like efficient switches, renewable energy zones, energy storage solutions, and green hydrogen production.
  • Metal companies, especially in aluminium, steel, and ferroalloys, are major contributors to carbon emissions due to energy-intensive processes. This report highlights their efforts to reduce emissions and promote sustainability within the metal industry.
  • In summary, OMH has effectively reduced GHG emissions, particularly in Scope 2, but has not disclosed future emission targets. Ann Joo plans to measure Scope 1-3 GHG in upcoming projects without specifying a timeline. In contrast, Press Metal has outlined specific, staged targets with clear timelines for reducing GHG emissions intensity.
  • We have a NEUTRAL stance on industrial sector given persistence downside risks in short term despite promising long-term prospects for metal companies, particularly Press Metal and OMH.

Malaysia to green energy journeys

Achieving net-zero greenhouse gas (GHG) emissions means balancing the amount of greenhouse gases produced with an equivalent amount removed from the atmosphere, typically through mitigation measures and carbon offsetting. According to Ministry of Economy, the National Energy Transition Roadmap outlines Malaysia's commitment to a low-carbon pathway in the energy sector, aiming to reduce GHG emissions by 32%, from 259 MtCO2eq in 2019 to 175 MtCO2eq by 2050. The key catalyst projects and initiatives aimed at achieving the target include the implementation of efficient switches, the establishment of renewable energy zones, the development of energy storage solutions, ensuring energy security, and promoting the production of green hydrogen.

Carbon emission reduction efforts in metal industries

Metal companies such as those in aluminium, steel, and ferroalloys are key players in industries known for substantial carbon emissions. The production processes, particularly in aluminium and steel involve energy-intensive methods, contributing significantly to greenhouse gas emissions. Therefore, this report will focus on the 'Environmental' aspect in the context of the sustainability of metal companies, with a specific emphasis on their efforts to reduce carbon emissions. By examining the strategies, initiatives, and practices adopted by these companies in addressing environmental concerns, we aim to provide insights into their commitment to mitigating climate change and fostering a more sustainable future within the metal industry.

Neutral on the Sector

We have a NEUTRAL stance on industrial sector given persistence short-term downside risks despite promising long-term prospects for metal companies, particularly Press Metal and OMH. We have BUY call for Press Metal (RM5.43), OMH (RM2.11), Scientex, (RM4.15) and Wellcall (RM1.73), HOLD call for Hextar Global (RM0.69) and KPS (RM0.77) while SELL call for PMB Technology (RM1.11) and Ann Joo Resources (RM0.84).

Source: BIMB Securities Research - 14 Nov 2023

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