KUALA LUMPUR: Analysts remain bullish on Press Metal Aluminium Holdings Bhd but are revising lower their earnings forecasts to account for changing price assumptions.

       Kenanga Research slashed its target price on the stock to RM5.58 from RM8.53 following an earnings estimate revision on the back of expectations of more conservative aluminium prices.

       "We lowered our targeted earnings multiplier to 26x FY23 PER (-0.5 SD 5-year mean) from 33x FY22 PER (+0.5SD 5-year mean) as aluminium prices are unlikely to hit the recent high in the near future," it said in a report.

       It said its previous aluminium assumption of US$2,600-2,800 per tonne for FY22-23 to be too optimistic and lowered it to US$2,550-2,650 per tonne.

       "Coupled with RM26.7mil final settlement with IRB’s tax assessment dispute to be

       paid in FY22, we cut our FY22-FY23 earnings estimates by 6-14% while dividend forecast are also adjusted proportionally with unchanged dividend payout of 40%," it said.

       However, the research firm retained its "outperform" recommendation on the aluminium producers on its earnings prospects with expectations of yet another record year in the offing.

       "Although prices are off the peak of USD3,849/MT in early April, aluminium price remains solid hovering at USD2,800/MT which is still higher than FY21 average of USD2,477/MT. As such, the high aluminium price will continue to benefit Press Metal," it said.

       Meanwhile, Hong Leong Investment Bank (HLIB) Research reduced its FY22-23 earnings forecast by 4% to 6% to account for structurally higher carbon anode price assumptions.

       Consequently, the research firm's target price was reduced to RM7.28 from RM7.59 previously based on a price-earnings multiple of 20x on revised FY23 forecast earnings.

       HLIB believes Press Metal remains a "buy" with the best yet to come for Press Metal.

       "We expect profits to more than double again in FY22, on the back of elevated aluminium spot prices; increased aluminium sales tonnage YoY, boosted by the full commissioning of the group’s Phase 3 Samalaju expansion project; and additional earnings boost from its 25%-owned Phase 1 and 2 PT Bintan alumina refinery business," it said.