For QE31/12/2014, PMetal's net profit dropped by 49% q-o-q to RM42 million on the back of a 10%-drop in revenue to RM1.134 billion. For QE31/12/2013, PMetal incurred a net loss of RM29 million on a revenue of RM807 million.
PBT dropped y-o-y from RM116 million to RM61 million after accounting for forex losses of RM81 million & RM23 million respectively. If forex losses are excluded, PBT would be adjusted to RM142 million & RM139 million for QE31/12/2014 & QE31/12/2013, respectively.
Table 1: PMetal's last 8 quarterly results
Chart 1: PMetal's 29 quarterly results
Current Expansion & Aluminium Price Trend
PMetal is reported to be operating at full capacity. It is in the midst of an expansion program that would raise its capacity by 73% to 760,000 MT by end of 2015. The plant expansion would drive its earning growth. For more, go here.
However, aluminium is still in a long-term downtrend despite rebounded in the second half of 2014. If aluminium can surpass USD2000/MT, it could turn bullish. Currently, aluminium is trading at USD1820-1830/MT.
Chart 2: Aluminium's monthly chart as at Feb 12, 2015 (Source: Tradingeconomics.com)
Valuation
PMetal (closed at RM3.01 yesterday) is now trading at a PER of 14 times (based on last 4 quarters' EPS of 21.3 sen). At this PER, PMetal is deemed fairly valued.
Technical Outlook
PMetal has been rising in an irregular upward channel. It tested the upside boundary at RM3.60-3.70 in September 2014. Until it has surpassed this mark, the price is likely to trade within the price channel.
Chart 3: PMetal's monthly chart as at Feb 12, 2015 (Source: ShareInvestor.com)
Conclusion
Based on reasonable valuation & positive technical outlook, PMetal is considered a good stock for medium-term investment. However, its upside is likely to be capped at RM3.60-3.70.
Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Pmetal.
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