KUALA LUMPUR (Nov 27): Press Metal Aluminium Holdings Bhd gained 5.7% in the morning session after the group reported a 35% improvement in its net profit for the third quarter ended Sept 30, 2020 (3QFY20).

At 12.30pm, the counter rose 38 sen or 5.7% to RM7.08, with some 4.04 million shares exchanged. Its market capitalisation was RM28.59 billion.

Press Metal yesterday said its net profit rose 35% year-on-year to RM121.98 million, supported by higher aluminium prices amid an increase in demand after the global lockdowns this year.

The group also proposed a third interim dividend of one sen per share, payable on Jan 6.

In a note today, AmInvestment Bank had increased its FY20, FY21 and FY22 net profit forecasts for the group by 4%, 21% and 17% respectively to reflect higher aluminium price assumptions.

“We revise our assumptions for average aluminium selling price per tonne upwards for FY20–22F to US$1,780, US$1,950 and US$2,050 per tonne respectively (from US$1,680, US$1,800 and US$1,900). This is to reflect the general uptrend in global commodity prices on better recovery prospects with the availability of effective vaccines,” said AmInvestment analyst Jeremie Yap.

For comparison, aluminium spot prices averaged at US$1,702 per tonne year-to-date and it was last traded at US$1,970 per tonne, while alumina spot prices averaged at US$268 per tonne and was last traded at US$295 per tonne.

However, the analyst said the research house remains mindful of Press Metal’s premium valuations versus its global peers, despite the better outlook for commodities, as this would cap further upside to its share price.

For the cumulative nine-month period, Press Metal’s net profit fell 7.3% to RM314.61 million from RM339.5 million a year earlier, while revenue for the period declined 16% to RM5.42 billion from RM6.43 billion.

Yap said the group’s core net profit of RM322.8 million came in at 73% of AmInvest’s full-year forecast, but said this is still higher than expected as he expects a stronger 4QFY20 given the significantly higher aluminium prices.