Thursday, August 13, 2015

PMetal: Top-line & bottom-line dropped

Results Update

For QE30/6/2015, PMetal's net profit dropped by 43% q-o-q or 59% y-o-y to RM25 million while revenue dropped 10% q-o-q or 5% y-o-y to RM947 million. Its PBT dropped 39% q-o-q due to lower output by its Samalaju Smelting Plant due to a fire incident in May and assets impairment loss of RM32.8 million. However, the sequential drop in its PBT was partially offset by lower unrealized forex losses of RM50.5 mil (compared to RM97.0 million previously).

Table 1: PMetal's last 8 quarterly results

Chart 1: PMetal's 31 quarterly results

Aluminium Outlook

Aluminium is moving within a bullish wedge formation ("ABRC"), with support at USD1550/MT and resistance at USD2000/MT. Due to aggressive growth in Chinese aluminum industry, this commodity - like many other basic metals - will continue to experience price downward pressure. Only the most cost-efficient producer will be able to sustain. PMetal is one of them.

Chart 2: Aluminium's monthly chart from 2007 to Aug 2015 (Source: LME) 


PMetal (closed at RM1.85 yesterday) is now trading at a PER of 10 times (based on last 4 quarters' EPS of 18.2 sen). Its DY stood at 4.9%. At these PER & DY, PMetal is deemed fairly valued.

Technical Outlook

PMetal is resting on its "uptrend" line support at RM1.85. A break below this support would signal a long-term trend reversal.

Chart 3: PMetal's monthly chart as at Aug 12, 2015 (Source:


Despite the poorer financial performance (due to unrealized forex losses), PMetal is still a good stock for medium-term investment due to reasonable valuation & still positive technical outlook. However, PMetal's technical outlook could change if its share price were to drop below ist long-term "uptrend line" support of RM1.85.

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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