KUALA LUMPUR: Press Metal Aluminium Bhd's fourth quarter of 2023 (Q4 2023) earnings are anticipated to be between RM305 million and RM325 million, representing an 18 per cent year-on-year (YoY) increase, said Hong Leong Investment Bank (HLIB Research).
According to the research firm, this was calculated using Q4 2023 LME aluminum spot prices of US$2,193 per tonne.
"In turn, FY23 core net profit would range from RM1.19 billion to RM1.21 billion (down 16 per cent to -15 per cent YoY), representing 98 per cent to 99 per cent of our FY23 forecasts," it said in a note today.
The firm said that aluminium prices remained largely stable in the second half of 2023 (2H23) until the end of December, when Shanghai Alumina futures jumped to above 3,300 yuan per tonne at end-202.
"This was due to fears of a bauxite shortage, no thanks to an explosion at an oil terminal in Guinea (the world's third largest bauxite exporter), coupled with decreased alumina capacity in China attributed to the winter cuts policy.
"Hence, this has pushed aluminium prices to above US$2,300 per tonne (vs USD2,200 per tonne) over the same period.
"However, the rally in aluminium was short-lived and reverted to the current US$2,250 per tonne level at the time of writing as the panic subsided."
A modest surplus in the aluminium market is expected in 2024, as China's construction and automotive sectors are expected to fuel the 2.8 per cent growth in aluminium consumption in 2024.
This growth would be supported by policy support for the property sector, rapid solar capacity growth, and growing eclectic vehicle sales.
HLIB Research raised its earnings forecasts for the company in FY23, FY24, and FY25 by 1.5 per cent, 4.3 per cent and 3.9 per cent as it lowered its carbon anode cost assumptions.
It also upgraded 'hold' on the stock with a higher target price of RM4.38.