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Friday, June 17, 2016

Press Metal sees revenue hitting record-high of RM6b in FY16

Press Metal sees revenue hitting record-high of RM6b in FY16
By Billy Toh / The Edge Financial Daily | June 17, 2016 : 9:39 AM MYT

This article first appeared in The Edge Financial Daily, on June 17, 2016.

KUALA LUMPUR: Press Metal Bhd may achieve a record-high revenue of RM6 billion in its current financial year ending Dec 31, 2016 (FY16), with additional capacity coming onstream and aluminium prices staying in the US$1,600 (RM6,560) range, according to its chief executive officer Datuk Koon Poh Keong.

“We expect that we are able to reach a RM6 billion turnover this year. It will be a big increase,” said Koon, explaining that based on the group’s current production level, if the prices of aluminium remain at last year’s level, the RM6 billion revenue target would be achievable.

The group posted a revenue of RM4.32 billion for FY15, with a gross profit of RM737.2 million. If Press Metal were to hit the RM6 billion revenue mark, the group would have an increase of nearly 39% from a year ago.

The capacity expansions include the completion of its Phase 3 aluminium smelter in Sarawak. With this expansion, Press Metal’s annual smelting capacity will rise by 760,000 tonnes, which is about 1.5% of global primary aluminium production.

Koon was speaking to the media after the group’s 30th annual general meeting yesterday.

Commenting on the outlook for the aluminium prices, Koon said that the commodity prices, including aluminium, fell to a very low level during 2015 and he believed the prices have reached the bottom. However, he noted that the recovery of the commodity depends on many factors and it could take sometime, although there are positive signs on the stronger demand for aluminium.

“We are definitely seeing some strength in the commodity now, especially in the aluminium sector,” said Koon. The demand for aluminium is growing in industrial sectors like packaging, automobile and even the electricity cable.

Koon also revealed that Press Metal intends to extend the value chain of its operations to more mid-stream products, such as billets and alloy wheel ingots, adding value and enhancing its profit margin.

“Currently, we are at 30% for mid-stream products but our ideal target is 50%. Hopefully within a year or two, we will be able to reach that target,” he said.

Currently, 90% of the contribution from the plant in Sarawak is for the export market as the output volume is much more than the country’s total consumption.

Press Metal’s share price was unchanged at RM3.25 with 2.1 million shares traded yesterday. At current level, its shares are trading at a trailing price-earnings ratio of 22.5 times, with RM4.22 billion of market capitalisation.

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