Friday 29 Mar 2024
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KUALA LUMPUR: Press Metal Bhd expects a 10% to 15% increase in the production capacity of its aluminium smelter within Sarawak’s Samalaju Industrial Park this year.

Speaking to reporters after the group’s extraordinary general meeting yesterday, Press Metal (fundamental: 0.65; valuation: 2.4) group chief executive officer Datuk Paul PK Koon said the output increase would come from the planned Phase 3 of the aluminium smelter in the financial year ending December (FY15).

“We are currently constructing Phase 3 of our smelter in Samalaju, which will begin operation by the fourth quarter [4Q] this year. The group would also see an increased production capacity in FY16.

“As a result of the third phase expansion, we do expect to see an increased contribution to our sales and revenue for FY16. Earnings are dependant on a number of factors, but it should also move in tandem with revenue growth,” Koon said.

In December last year, Press Metal told Bursa Malaysia that Phase 3 of the aluminium smelter would raise group smelting capacity to 760,000 tonnes from 440,000 tonnes.

It said then it had signed a power purchase agreement with Syarikat Sesco Bhd, which would supply an additional 500mw of electricity for Phase 3.

According to Press Metal, Phase 3’s initial stage was due to start operations by 4QFY15 while stage two will begin in 1QFY18.

Yesterday, Koon told reporters the group is also looking for opportunities to diversify into downstream operations in Sabah and Sarawak. However, there were a number of factors to be considered before the plans could be firmed up. On the group’s outlook, Koon said while commodity prices had fallen, he is comfortable with the current level of aluminium prices. 

“The price so far has gone down 10%. It’s not possible for aluminium prices to fall much further, because [they] will be supported by the cost [of production], since it requires a lot of energy to produce. At this moment we are comfortable with the price levels,” he said.

“There will be no slowdown in our production levels. In fact we are able to expand, because we are a low-cost producer,” he said. 

Shareholders, meanwhile, approved the group’s request yesterday for exemption to make a mandatory general offer following the conversion of the outstanding eight-year redeemable convertible secured loan stocks held by one of Press Metal’s substantial shareholders, Alpha Milestone Sdn Bhd, and parties acting in concert.

Press Metal shares ended three sen or 1.11% lower at RM2.67, with a market capitalisation of RM2.98 billion.


The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to theedgemarkets.com for details on a company’s dashboard.

 

This article first appeared in The Edge Financial Daily, on February 5, 2015.

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