PETALING JAYA: Despite some volatility in ferrosilicon (FeSi) and manganese (Mn) alloys prices, OM Holdings Ltd
remains upbeat about a price recovery.
In a recent briefing with the company’s management, BIMB Research said the company revealed that Mn alloys prices have shown more volatility due to fluctuations in ore prices and rising inventories in China.
Despite this, OM Holdings remains optimistic about a price recovery as high-cost producers exit the market, focusing on profitability, sustainability goals and capital structure optimisation,” the research house added.
The management also shared that FeSi and Mn alloy production remains on track for 2024, with profitability maintained across all furnaces due to effective cost management, particularly in securing manganese ore.
FeSi prices have been stable, with a slight increase due to Chinese crackdowns on illegal exports.
OM Holdings engages in mining, smelting, trading and marketing manganese ores and ferroalloys.
According to the brokerage, the recent stimulus measures announced in late September 2024 briefly rallied industrial metals, including FeSi and Mn alloys.
“However, this rally faded and prices for both metals dropped again by the third week of October and continued to weaken through the end of the month.
“We believe the stimulus measures lack clear details and we do not see any short-term factors that would drive additional demand for these metals. Additionally, uncertainty surrounding the United States presidential election is dampening risk appetite, “ BIMB Research noted.
The research house is maintaining its financial year 2024 (FY24) to FY26 earnings forecast for the company and reiterates its “buy” call, albeit at a lower target price of RM1.61.
“Despite these challenges, we remain optimistic about the company’s long term outlook, supported by several key factors.
“They include a competitive advantage as a low-cost ferroalloy smelter compared to peers, continued capacity growth and a diversified product mix aligned with expanding sectors, such as renewable energy and a strong environmental, social and governance standing due to their focus on clean energy resources.
“Overall, it is expected to benefit from rapid industry consolidation and is well-positioned to outperform, thanks to its competitive and low-cost structure,” the brokerage said.
