KUALA LUMPUR (Sept 2): Aluminium smelter Press Metal Bhd rose as much as 4.4% as aluminium prices continue to surge on favourable industry fundamentals.
At 10.50 am today, Press Metal gained 24 sen or 3.6% to RM6.88. The fourth top gainer saw trades of 891,900 shares. It had earlier hit a high of RM6.93.
Rising in tandem were its warrants, PMETAL-WC, which leapt 36 sen or 8.5% to RM4.62. The second top gainer saw trades of 547,700 units.
RHB Investment Bank Bhd’s research analyst Ng Sem Guan told theedgemalaysia.com that the ongoing aluminium supply deficit continued to boost aluminium prices.
“The London Metal Exchange’s (LME) aluminium cash price has been inching up. It has broken the US$2,100 per tonne level,” he told over the telephone.
He adds that physical premiums, which are the amount paid on top of the LME price for immediate delivery of the metal, has hit US$408 per tonne. Furthermore, aluminium spot premium is also higher at US$450/tonne.
Ng forecasts that Press Metal will gain a net profit of RM400 million in FY15. He said that for every US$100 hike in aluminium price, this translates to an additional RM50 million in net profit for the firm.
“Press Metal is fully leveraged on strong aluminium fundamentals, on top of its low cost structure,” he adds.
Meanwhile, analyst Max Koh from AmResearch reaffirms that Press Metal is a beneficiary of the global deficit in aluminium supply.
“The fundamentals of the industry are solid, thus prices are rising,” he said.