Background

Press Metal Berhad ('PMetal') is an integrated aluminium producer, with an annal remelt capacity of 200,000 metric tonnes and an annual aluminium extrusion capacity of 160,000 metric tonnes. For more, go here.

Financial results

PMetal's results rebounded after incurring losses for QE31/12/2008 & QE31/3/2009. The net loss incurred was RM23.1 million for QE31/12/2008 due mainly to forex losses of RM16.4 million while that incurred for QE31/3/2009 was due to provision for inventory impairment loss as aluminium prices deteriorated as well as additional cost to re-start a smelting plant in China.



Financial Position

PMetal's financial position as at 30/9/2009 is marginal, with adequate liquidity position as reflected by a current ratio of 1.1 times but fairly high leverage position as shown by total borrowings to shareholders' funds of 1.5 times.

Valuation

PMetal (at RM1.37 as at 4.20pm) is trading at a current PER of 11 times. This is based on full-year EPS estimated at 12.5 sen (derived from the annualization of the last 2 qaurters' EPS of 2.51 sen & 3.76 sen, respectively). At this PER, PMetal is fully priced.

Technical Outlook

PMetal has just broken to the upside of a medium-term downtrend line at RM1.33 (see Chart 1). Its immediate horizontal resistance is at RM1.42 & thereafter at RM1.55. Its warrant has similar done an upside breakout at RM0.83 (see Chart 2).


Chart 1: PMetal's daily chart as at Jan 19, 2010_3.20pm (Source: Quickcharts)


Chart 2: PMetal-WB's daily chart as at Jan 19, 2010_3.22pm (Source: Quickcharts)

Conclusion

Based on technical consideration, PMetal could be a good trading BUY.