PMETAL (8869) : RHB Research maintains Buy on Press Metal
RHB Research maintains Buy on Press Metal
Thursday, 20 November 2014
KUALA LUMPUR: RHB Research has reiterated its Buy call on Press Metal with a target price of RM5.75.
The research house said on Thursday it was excited over the news of the capacity expansion, as it is timely for Press Metal to ride on the bottoming out of aluminium prices and expand its presence in the aluminium industry.
"Its projected record earnings indicate that the company can fund this project using internally-generated funds together with bank borrowings, while maintaining its generous dividend payout policy of 30%-50%," it said.
It added that Press Metal Bintulu inked a term sheet with Syarikat Sesco for the supply of an additional 500 megawatts (MW) of power to PMB to undertake its proposed Phase III expansion.The expansion would double the present aluminium smelting capacity at its plant in Samalaju, Sarawak to 640,000 tonnes per annum (tpa).
Together with its smelting plant in Mukah, the expansion could see the group expanding its smelting capacity to 760,000 tpa, which is about 1.5% of global primary aluminium consumption.
Press Metal already runs successful aluminium smelters in Sarawak, which are in the first quartile of the global production cost curve, RHB said.
"Although the tariff for the additional power supply is confidential, we understand from management that the profitability of Phases II and III of the smelter is similar, after imputing alower capex and potentially greater efficiency, for the new plant.
"Meanwhile, the first drawdown of 330MW will start in end-2015, while the remaining 170MW will be drawn down from early-2018 onwards," it said.
http://www.thestar.com.my
RHB Research maintains Buy on Press Metal
Thursday, 20 November 2014
KUALA LUMPUR: RHB Research has reiterated its Buy call on Press Metal with a target price of RM5.75.
The research house said on Thursday it was excited over the news of the capacity expansion, as it is timely for Press Metal to ride on the bottoming out of aluminium prices and expand its presence in the aluminium industry.
"Its projected record earnings indicate that the company can fund this project using internally-generated funds together with bank borrowings, while maintaining its generous dividend payout policy of 30%-50%," it said.
It added that Press Metal Bintulu inked a term sheet with Syarikat Sesco for the supply of an additional 500 megawatts (MW) of power to PMB to undertake its proposed Phase III expansion.The expansion would double the present aluminium smelting capacity at its plant in Samalaju, Sarawak to 640,000 tonnes per annum (tpa).
Together with its smelting plant in Mukah, the expansion could see the group expanding its smelting capacity to 760,000 tpa, which is about 1.5% of global primary aluminium consumption.
Press Metal already runs successful aluminium smelters in Sarawak, which are in the first quartile of the global production cost curve, RHB said.
"Although the tariff for the additional power supply is confidential, we understand from management that the profitability of Phases II and III of the smelter is similar, after imputing alower capex and potentially greater efficiency, for the new plant.
"Meanwhile, the first drawdown of 330MW will start in end-2015, while the remaining 170MW will be drawn down from early-2018 onwards," it said.
http://www.thestar.com.my
