Hot Stock Press Metal, warrants continue to charge amid more upbeat reports

by **Cals** Fri 18 Apr 2014, 02:28

Hot Stock Press Metal, warrants continue to charge amid more upbeat reports

Business & Markets 2014

Written by Ho Wah Foon of theedgemalaysia.com

Thursday, 17 April 2014 13:45

KUALA LUMPUR (April 17): Press Metal Bhd and its two warrants continued to charge this morning amid more upbeat reports on the company.

Yesterday, the Sarawak-based aluminium maker soared 17 sen or 5.5% to end at RM3.25 per share after AmResearch raised its fair value by 46.5% to RM4.50/share (from RM3.07/share).

Its warrant PMetal-WC rose 17 sen or 13% to RM1.46 per unit.

Today, the mother share and its two warrants are again in the top gainers list, following a technical report in Nanyang Siang Pau which said Press Metal could rise up to RM3.40 in the short term.

At 12.30pm noon break, Press Metal surged 19 sen or 6% to RM3.44 on trades of some 3.96 million shares. It was the sixth top gainer.

Its warrant PMetal-WC rose 21 sen or 14.4% to RM1.67 while another warrant PMetal-LA was up 15 sen or 5% to RM3.22 per unit. While the former occupied the 4th spot in the top gainers’ list, the latter took the 7th spot.

Yesterday, AmResearch in its research report opined Press Metal is in the early stage of an earnings up-cycle.

The research house has raised its FY14 core earnings forecast for Press Metal by 55%, FY15 by 20% and FY16 by 15%.

The AmResearch’s report appeared in many newspapers, including Nanyang Siang Pau, today.

AmResearch said the “strong investability” of Press Metal is on its improved balance sheet, expected lower net gearing by year-end, upturn in aluminium prices, and capacity boost following production ramp-up of its two aluminium plants.

Press Metal’s balance sheet is being bolstered by the exit from its loss-making Chinese smelter business and a sale of 20% stake of its Samalaju plant to Sumitomo.

Press Metal is expected to benefit from a global upturn in aluminium prices, said AmResearch, that anticipates a global supply shortfall due to capacity cuts and rising demand.

AmResearch also said Press Metal is currently trading at an attractive PE of 8x. “Despite the recent share price run-up, there is deep valuation given its significant balance sheet improvement,” it said.