• Maintain BUY (TP: RM5.43). Press Metal Aluminium Berhad (Press Metal) FY23 core PATAMI of RM1.2bn was within our in-house and consensus estimates, making up 100% and 98.6% respectively. The Group has declared 4th interim single tier dividend of 1.75sen per share for FY23, bringing total dividend payout of 7.5sen for FY23.This is also translated into 1.6% dividend yield at current share price. In 4QFY23, revenue and PBT improved by 2.7% QoQ and 5.1% QoQ respectively, given higher ASP during the quarter. We make no changes on our FY24-25F earnings forecast. We foresee that shortterm aluminium outlook is dimmed by lower demand due to high inflation on the back of persistent tight supply. Nonetheless, we foresee that longterm prospects are positive, driven by the increasing adoption of electric vehicles and greater use of aluminium in various vehicle types. Maintain a BUY call on the stock with unchanged TP of RM5.43. Our valuation is based on average 3-year PER of 33.1x, pegged to FY24F EPS of 16.4sen.

• Key Highlight. As for 4QFY23, PT Bintan contribution soared by 78% YoY, thanks to additional of alumina production volume. Alumina price was traded around USD333/tonne. Nonetheless the pricing for alumina as of January 2024 surged by 10.2% from 4QFY23, due to concerns over mining checks from China and supply disruption from Guinea. Meanwhile for midstream segment, the group intend to achieve value added products (VAPs) volume to reach 50% by end of 2024 (vs 4% currently).

• Earnings Revision. Unchanged.

• Outlook. Moving forward, we anticipate a short-term dampening of the aluminium outlook due to subdued demand caused by high inflationary pressure. On the supply side, despite the resumption of production from Chinese aluminium players, the current tight supply is expected to persist. Factors such as supply cuts from Europe and the potential ban on Russia's production pose threats to inventory levels, potentially pushing aluminium prices higher. Nevertheless, global demand for aluminium is expected to gradually increase, driven by the growing adoption of electric vehicles (EVs) and the increased use of aluminium across various industries. We project an aluminium spot price assumption of USD2,550-USD2,600 per tonne for FY24- FY25F.

Source: BIMB Securities Research - 29 Feb 2024