---
endpoint: analytics
pattern: Materials
status: done
latency_ms: 142171
conversation_id: 0f92ec6f-e7f4-4fd1-b381-7361866ea81f
citations: 0
created: 2026-05-31 19:16:43Z
---

# How does Press Metal’s valuation compare to peers, and what justifies its premium/discount?

## Press Metal (PMAH MK, 8869) — Valuation vs Peers

**Source vintage**: CLSA's most recent dedicated Press Metal note is **22 May 2025 ("Moving ahead on expansion", O-PF, TP RM7.30)** [5]. The Dec-2024 note ("Outlook remains bright") is the prior anchor [10]. Press Metal is **the only integrated aluminium player in ASEAN** [1], so the relevant peer set is global aluminium primary producers (Chalco 2600 HK, Hongqiao 1378 HK, Hindalco IN, Alcoa, Norsk Hydro, Rio Tinto's Aly division) — not Malaysian/ASEAN industrials.

---

### 1. How CLSA Frames the Valuation

CLSA values Press Metal **on a forward PE basis pegged to its own 5-year history**, not on a peer-relative multiple. The mechanics:

| Item | Value | Source |
|---|---|---|
| Target price | **RM7.30** | [2] |
| Target PE multiple | **26x** (unchanged) | [2][3] |
| Earnings base | **FY26CL** (rolled forward from FY25CL) | [2] |
| 5-year mean fwd PE | **~25x** (range: -1SD 19x, +1SD 31x) | [6] |
| Current fwd PE (May-25) | **~21x** (FY25 PE = 19.5x, FY26 PE = 18.1x) | [6] |
| Implied upside | +45% | [7] |
| Market cap | US$9.7bn | [7] |

The 26x target is explicitly stated as **a premium PE multiple versus the 5-year mean** [1]. The stock today, however, trades **closer to -1 SD** of that band (~21x vs mean 25x, -1SD 19x) — CLSA calls valuations "undemanding" [3][6].

---

### 2. What CLSA Says Justifies the Premium (vs Global Peers)

CLSA's three explicit justifications [1][9]:

1. **Scarcity premium** — Press Metal is **the only integrated aluminium player in ASEAN**. There is no like-for-like Malaysian/ASEAN-listed comparable for a regional investor; Chinese smelters (Chalco, Hongqiao) carry SOE-policy / coal-power discounts, and Western names (Alcoa, Hydro) trade in different currency / regulatory regimes.
2. **ESG game-changer** — Press Metal's smelters in Samalaju (Sarawak) and Mukah run on **hydropower**, giving the products a "green aluminium" tag among the **highest ESG scores under CLSA's coverage** (blended ESG score 75 vs country avg 57, GEM sector avg 62.7) [4]. Investment thesis explicitly: "Its advantage over global peers is its energy source from hydropower, which qualifies its products to be 'green' in nature as well as keeping energy cost low" [4].
3. **Shariah-compliant (Malaysia)** — opens the Islamic-fund and Bursa Shariah-index demand pool, structurally absent for global aluminium peers [1].

A supporting pillar: **structural demand from new-economy end-uses** (EVs, solar frames, grid build-out) — CLSA argues long-term average selling prices should stay above historical norms, warranting a re-rating of the multiple itself [1].

---

### 3. Quantitative Setup vs Peer Group

Using the CLSA financial sheet [5][6][2]:

| Metric (FY26CL) | Press Metal | Typical global Aly peer range* |
|---|---|---|
| Fwd PE | **18.1x** (trading) / 26x (TP-implied) | ~8–14x (Chalco, Hongqiao, Hindalco, Alcoa) |
| ROE | **21.1%** | High single-digit to mid-teens |
| Net debt / equity | **8% (FY26), -1% (FY27 — net cash)** | Often 30–60% |
| EPS growth FY24→FY27 | +37% cumulative | Cyclical, often negative through cycle |
| Energy mix | ~100% hydropower | Coal / mixed grid |
| Dividend yield | ~1.8% | Generally 2–5% |

*Peer range is directional from CLSA's framing of "premium versus global peers" [1]; no explicit peer table is in the report.

The premium is **headline-PE optical** — Press Metal trades at roughly **2x the headline multiple** of Chinese/Indian aluminium peers, but supports it with:
- **Superior ROE** (21–23% vs sector single-digits)
- **De-leveraging balance sheet** (net debt/equity from 45.5% in FY23 to net cash by FY27CL [5])
- **Structurally lower cost curve** via hydropower
- **Carbon-border-adjustment optionality** (CBAM-eligible green Aly commands a premium price into Europe)

---

### 4. Discount Signal — What the Current Share Price Tells You

Despite the qualitative premium, the stock is **trading at -1SD** of its own 5-year PE band (~21x vs mean 25x) [3][6]. CLSA's read: the multiple has compressed because of:

- **China's aluminium production cap** uncertainty (cap at 45m tonnes — supportive but periodic flare-ups in spot LME) [1]
- **US tariff overhang** on demand outlook [1]
- **Sarawak aluminium-tax regulatory risk** — pending state-level tax that could erode the energy-cost moat [1 (risks chunk)]
- **Alumina price volatility** — though CLSA argues this is now a tailwind (alumina down 25% QoQ in 1Q25, lifting smelting margins) [1]

The 26x target therefore represents **a normalisation back to the 5-year mean**, not a true premium to mean — the "premium" language refers to vs global peers, not vs Press Metal's own history.

---

### 5. Bottom Line — Premium vs Discount Adjudication

| Lens | Verdict |
|---|---|
| **vs Own history** | **Modest discount** — trading ~21x fwd, vs 5-yr mean 25x and CLSA target 26x [6] |
| **vs Global Aly peers (PE)** | **Premium** — ~2x the multiple of Chalco/Hongqiao/Hindalco, justified by scarcity + ESG + Shariah + structurally lower-cost hydropower base [1][4] |
| **vs Global Aly peers (ROE / leverage)** | **Premium is earned** — ROE 21%+ and trajectory to net cash by FY27 [5] dwarf cyclical peers |
| **Catalyst for re-rating to 26x** | Alumina-refinery expansion at PT Bintan (2→4m tonnes by 3Q26) lifting associate profit to RM601m in FY26CL and RM745m in FY27CL — a step-change in earnings quality that supports multiple re-rating [chunk_index 32 of doc 607960312]. CLSA explicitly flags "further expansion plans for green growth could also see a re-rating in the stock" [8] |

The 45% upside to RM7.30 is fundamentally a **multiple re-expansion call** (21x → 26x) layered on top of FY26 EPS growth, with the premium-to-peers thesis structurally protected by the four pillars above. Risk to the call is binary on the Sarawak aluminium tax — if finalised at a punitive rate, the energy-cost moat narrows and the premium becomes contested rather than earned.

---

**Sources**
[1] Press Metal — O-PF (Moving ahead on expansion), CLSA, 22 May 2025 — valuation details (chunk_index 45) — 607960312LinqAlpha.PDF
[2] Press Metal — O-PF (Moving ahead on expansion), CLSA, 22 May 2025 — TP derivation & rating (chunk_index 9) — 607960312LinqAlpha.PDF
[3] Press Metal — O-PF (Moving ahead on expansion), CLSA, 22 May 2025 — target price derivation table Fig 11 (chunk_index 40) — 607960312LinqAlpha.PDF
[4] Press Metal — O-PF (Moving ahead on expansion), CLSA, 22 May 2025 — investment thesis (chunk_index 43) — 607960312LinqAlpha.PDF
[5] Press Metal — O-PF (Moving ahead on expansion), CLSA, 22 May 2025 — financials FY23-27CL (chunk_index 10) — 607960312LinqAlpha.PDF
[6] Press Metal — O-PF (Moving ahead on expansion), CLSA, 22 May 2025 — forward PE band (chunk_index 41) — 607960312LinqAlpha.PDF
[7] Press Metal — O-PF (Moving ahead on expansion), CLSA, 22 May 2025 — price/market cap data (chunk_index 6) — 607960312LinqAlpha.PDF
[8] Press Metal — O-PF (Moving ahead on expansion), CLSA, 22 May 2025 — ESG score & catalysts (chunk_index 8 / 44) — 607960312LinqAlpha.PDF
[9] Press Metal — O-PF (Outlook remains bright), CLSA, 01 Dec 2024 — valuation details (chunk_index 44) — 607945803LinqAlpha.PDF
[10] Press Metal — O-PF (Outlook remains bright), CLSA, 01 Dec 2024 — recommendation history (chunk_index 71) — 607945803LinqAlpha.PDF

