Press Metal shares, warrants up after recent selldown

At 11.10am, its shares rose 42 sen to RM6.27 with some 2.97 million shares done between RM5.90 and RM6.37. 

Its warrants  PMetal-WC was up 49 sen to RM4.28 with 855,000 units done between RM3.90 and RM4.34.

The FBM KLCI was up 0.45 of a point to 1,840.95. Turnover was 1.123 billion shares valued at RM519.84mil. There were 315 gainers, 273 decliners and 356 counters unchanged.

RHB Research in a note said it continued to like Press Metal, as it is a world-class low-cost smelter in the first quartile of a global cost curve, thanks to its competitive 25-year power purchase agreement (PPA), state-of-the-art smelting technology and strategic plant locations.

"The improved market dynamics are timely as its smelters have returned to optimum production levels. 

"As we believe the recent selldown in its share price was not on a fundamental basis, we recommend investors to Buy on weakness," it said.

It noted that its RM8.30 fair value is derived from a 10% discount to a fully-diluted DCF, implying undemanding 2.4 times/2.1 times P/BVs and 17.0 times/11.9 times P/Es on FY14F/15F estimates respectively.

Considering that the company has only used up one-third of its landbank in Samalaju, RHB noted that Press Metal will continue to explore opportunities to expand its smelting capacity – although all this is subject to the availability of power from Sarawak Energy.