Hot Stock Press Metal up 3.8% on stellar 2Q profit, dividend, bonus shares

by **Cals** Thu 14 Aug 2014, 01:22

Hot Stock Press Metal up 3.8% on stellar 2Q profit, dividend, bonus shares

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Wednesday, 13 August 2014 11:51

KUALA LUMPUR (Aug 13): Press Metal Bhd rose as much as 3.8% after the aluminium processor reported net profit in the second quarter ended June 30, 2014 had tripled to RM60 million. The firm, which plans to pay a tax-free dividend of five sen a share, has also proposed a one-for-one bonus share issue.

At 11.12am, Press Metal gained 15 sen or 2.5% to RM6.25. The fifth-largest gainer saw trades of some 1.6 million shares. It earlier rose as much as 23 sen to RM6.33.

In a note, RHB Investment Bank Bhd said Press Metal’s spectacular financial results were due to optimum production at its smelting plants and higher aluminium prices.

RHB analyst Ng Sem Guan said the research firm continued to like Press Metal for its ability to leverage on aluminium prices, which had bottomed out

“We continue to like Press Metal, as it is a world-class low-cost smelter in the first quartile of the global cost curve that is set to leverage on the bottoming out of aluminium prices,” Ng said.

Ng maintained RHB's "buy" call for Press Metal shares with a higher target price of RM8.30. This compares to RM7.38.

AmResearch Sdn Bhd, however, downgraded Press Metal to a "hold" as Press Metal shares were deemed fully valued.

The fair value for Press Metal shares at RM6.00 remained unchanged.

AmResearch said Press Metal’s core net profit of RM88 million for the first half made up 32% of both house and consensus full-year estimates.

“We deem Press Metal to be fully valued at this juncture given its strong share price performance,” said analyst Max Koh of AmResearch.

According to Koh, the firm’s strong earnings growth was attributed to the full production achieved at its Bintulu plant as well as recovering global aluminium prices and premiums.

“With both Bintulu and Mukah plants running at full capacity, we expect earnings to grow sequentially for the coming two quarters.

“We expect prices to rise further due to high demand for the rest of the year,” Koh said.