KUALA LUMPUR: Press Metal Aluminium Holdings Bhd is one of the top gainers on Bursa Malaysia after its net profit surged nearly three-fold year-on-year (y-o-y) in the second quarter ended June 30 (2Q21).

       The counter rose 3%, or 15 sen to RM5.15, the highest in more than two months.

       Press Metal’s net profit surged to RM255.58mil in 2Q21, bolstered by higher realised aluminium prices and increased production output.

       For the three-month ended June 30, Press Metal said revenue jumped 52% to RM2.64bil, while the group's profit before tax (PBT) tripled to RM376.8mil from RM125mil a year ago.

       The group has announced a one-sen dividend per share for the quarter.

       Cumulatively, in the first six months of financial year 2021, Press Metal’s net profit more than doubled to RM461.3mil as compared to RM192.63mil in the same period last financial year.

       Kenanga Research said Press Metal’s 1HFY21 core profit accounted for 38%/37% of house/street’s FY21 estimates.

       The house deems the results to be in line as it expects stronger 2HFY21 results especially in 4QFY21 given that aluminium prices remain highly elevated.

       Kenanga believes the best is yet to come given the current elevated aluminium prices coupled with favourable alumina costing.

       “Aluminium prices are expected to stay high in the near term on tightening supply trailing behind high demand as economies reopen.

       “We are still optimistic on its new capacity-driven earnings outlook. Thus, Press Metal remains an ‘outperform’ with an unchanged target price of RM6.50,” Kenanga said.

       RHB Research said Press Metal’s 2Q21 core net profit of RM256mil was deemed in line with the street's forecast but slightly below the house’s.

       Nonetheless, the research house said the results underscored Press Metal’s sustained earnings momentum heading into 2H21, as Samalaju Phase 3 progressively ramps up towards full production, whereas the LME aluminium price environment – both spot and forward – remains at its strongest in a decade.

       “We continue to like Pree Metal for its compelling 3-year earnings CAGR of 77%, favourable ESG positioning, and as an attractive proxy to play the reflation trade.

       “Key downside risks include a sharp deterioration in global economic conditions, raw material cost spikes, and teething issues at its Phase 3 Samalaju smelter and Bintan alumina plants,” RHB said, adding that it has maintained its “buy” call with a target price of RM8.