Posted by i3garysoon > 2015-04-29 10:26 | Report Abuse

keep fingers crossed . storm should pass

Posted by BURSAMASTER > 2015-05-06 08:40 | Report Abuse

Negatives news likely discounted. PMETAL’s s hare prices nosedived 15.6% in four days to end at RM2.86 yesterday as investors fear the surprised China’s government decision to remove export taxes on bars and rods of primary aluminium and aluminium-alloy effective 1 May will exacerbate global glut of the metal and dampen further global aluminium prices.
China’s aluminium prices are less attractive than global prices. We gather that the latest export tax cut would have a minimal impact on the aluminium market outside China. Management viewed that the export tax is only removed for a specific category of aluminium strips, bars and rods that are produced in smaller quantities (these products are still subject to the 13- 17% VAT that reduces China’s competitiveness to export). Moreover, China’s aluminium prices are less attractive than global prices as China’s domes tic price of the commodity has found strong support above US$2100/MT against the global all-in aluminium prices of circa US$2050.
Undemanding valuations. At RM2.86, PMETAL is trading at undemanding 7.2x Bloomberg FY16 P/E, 44% below its 10-year historical average P/E of 13x, supported by an EPS CAGR of 17.8% for FY15-17 and decent dividend yield of 4.5%-5.2%. Hence, we advocate investors to take this opportunity to buy on weakness given that PMETAL’s fundamental and pros pects remain intact. We think such steep discounts would have provided a sufficient margin of safety and cushion further share price decline.
Accumulate as values emerge. PMETAL is grossly oversold after recent slump in share price. Currently, PMETAL is building its base above 61.8% FR support near RM2.76. Immediate resistance levels are RM3.00 (200-d SMA). A decisive breakout above RM3.00 could spur prices higher towards RM3.22 (23.6% FR) and our long term objective of RM3.31 (200-h SMA and 100-d SMA). Key supports are RM2.76 and RM2.70. Cut loss below RM2.65.
Source: Hong Leong Investment Bank Research - 28 Apr 20