---
endpoint: analytics
pattern: Materials
status: done
latency_ms: 270322
conversation_id: 3def56fd-87ab-4d57-a8a4-3c482106d05b
citations: 13
created: 2026-05-31 22:27:01Z
---

# What is the investment thesis for Press Metal in the current market environment?

# Press Metal Aluminium Holdings (PMAH MK / 8869) — Investment Thesis

**Current Setup (as of 31-May-2026)**: Press Metal is Southeast Asia's only integrated aluminium player, and the thesis going into the current environment rests on three structurally reinforcing pillars: (1) low-cost / low-carbon Sarawak hydropower smelting, (2) a doubling of upstream alumina capacity via the Pulau Bintan refinery (now wholly housed inside HKEX-listed NAIHL), and (3) a tight global aluminium supply backdrop driven by Beijing's 45m-tonne production cap. The most recent internal coverage is CLSA's 22-May-2025 update (O-PF, TP RM7.30) [1]; PMAH's own Integrated Annual Report 2025 confirms execution against the expansion plan into early 2026 [11][13].

> **Note on vintage**: Internal coverage on Press Metal in the org's research library stops at the CLSA 22-May-2025 note — no Press Metal-specific broker note dated after 1-Jun-2025 is present in the corpus. The June-2025 Malaysia strategy piece references PMAH only in passing. The Integrated Annual Report 2025 (filed in/around April 2026 and quoting an "As of April 2026" position [13]) is the freshest primary-source datapoint. Public news pulls for May-2026 returned only aggregate SEA 52-week high/low summaries — nothing materially thesis-changing was found in the news scan.

---

## 1. The Core Thesis — What You're Actually Buying

| Pillar | Substance |
|---|---|
| **Cost-curve advantage** | 100% hydropower-fed smelters in Sarawak — locked into long-dated PPAs with the state utility, **not** floating-rate coal/gas-linked tariffs. This is the moat: most non-Press-Metal smelters face energy-cost volatility; Press Metal does not [12]. |
| **Green premium / scarcity premium** | Sarawak hydropower qualifies output as low-carbon "green aluminium" — products like GEM™ (<4.0 t CO₂e/t Al, Scope 1+2) and CYCAL™ recycled-content billets are positioned for OEMs facing tightening Scope-3 carbon procurement rules [11]. Only integrated ASEAN player; MSCI ESG AA; Shariah-compliant — supports a scarcity premium in the valuation multiple [8]. |
| **Upstream integration (the 2025–27 earnings driver)** | Press Metal has effectively doubled its captive alumina exposure via the **Pulau Bintan refinery** (now inside Nanshan Aluminium International Holdings Limited / "NAIHL", HKEX-listed 2025). Bintan reached **4 million tonnes** of capacity by end-2025 [11]. PMAH holds 20.62% of NAIHL and an **80% stake in PT Kalimantan Alumina Nusantara (PT KAN)**, the second refinery in Indonesia — first 1m-tonne phase expected to commission in 2027 [13]. CLSA had baked Bintan reaching 4m t by end-3Q26 — execution is **running ahead of schedule** [2][13]. |

---

## 2. The Earnings Engine — Why It Matters Now

The May-2025 CLSA note explicitly framed the alumina expansion as the swing factor: "We expect a stronger 2H25 as it expands its alumina refinery capacity at Nanshan Aly from 2m tonnes to 3m tonnes by the end of 3Q25 and eventually to 4m tonnes by mid-2026" [1]. Two transmission channels:

- **Direct margin**: Soft alumina prices (Australian FOB dropped from US$780/mt Aug-24 to US$310–350/mt in Feb–Apr-25 [1]) widen smelting margin so long as LME aluminium holds at ~US$2,500/t. CLSA's base assumption for LME aluminium is US$2,500/t (2025), US$2,550 (2026), US$2,600 (2027), with hedge ratios of 50% / 40% / 35% respectively [1].
- **Associate uplift**: Bintan's expansion sits in the associate line, not consolidated revenue. Profit from associates was modeled to rise from RM559m in FY2024 to RM601m FY26 and RM745m FY27 — i.e. associates would supply ~27–31% of net profit by FY26–27 [1].

**CLSA forecast track (lift over prior cycle, May 2025)**:

| RMm (FYE Dec) | 2023A | 2024A | 2025CL | 2026CL | 2027CL |
|---|---:|---:|---:|---:|---:|
| Revenue | 13,803 | 14,910 | 16,150 | 16,318 | 16,520 |
| Net profit | 1,214 | 1,761 | 2,083 | 2,249 | 2,404 |
| EPS (sen) | 15.0 | 21.8 | 25.8 | 27.9 | 29.8 |
| ROE (%) | 17.9 | 22.8 | 22.6 | 21.1 | 19.7 |
| Net debt/equity (%) | 45.5 | 26.3 | 17.9 | 8.0 | (1.0) |

Source: CLSA, 22-May-2025 [5]. FY25/26 EPS were lifted **+4%/+7%** at that note vs. the prior cycle [4].

**1Q25 inflection point (confirmation the model is working)**: 1Q25 PATMI RM462m, +13% YoY, with **associate profit at RM170m (+95% YoY)** — the associate channel began compounding before the larger Bintan tranches even fully commissioned. Smelting margin expanded (profit from operations +28% QoQ) on lower alumina input cost (-25% QoQ to US$518/mt) and resilient LME prices (US$2.6k/mt) [2][10].

---

## 3. Valuation Discipline — Why 26x Is the Right Multiple

CLSA values Press Metal at **26x FY26CL P/E** (5-year mean), deriving TP RM7.30 (from RM6.30 previously) [3][4]. The premium-to-trough rationale is explicit: scarcity premium (only ASEAN integrated player), top-decile ESG, Shariah-compliance lifting the eligible buyer pool, and structural demand from "new economy" applications keeping average selling prices above historical norms [8]. The May-2025 stock chart showed PMAH trading near **−1 standard deviation to its 5-year mean PE** (~20x at May-25 vs. mean 25–26x) [4] — i.e. valuations are not stretched on CLSA's own framework.

---

## 4. Catalysts (What Re-Rates the Stock)

- **Aluminium price recovery** beyond CLSA's US$2,500/t LME assumption [7].
- **Containment of raw material costs** — alumina has already cooperated; carbon anode has crept back to ~US$700/t in Apr-25 but is below the 2022 peak [7].
- **Further green capacity / renewable expansion** — including the 100 MWac Mukah solar PPA (40%-owned MSPSB) signaling diversification into renewable power assets, which could trigger a re-rating [7].

---

## 5. Key Risks (Asymmetry Watch List)

- **China supply normalization**: faster-than-expected return of Chinese smelter capacity toward the 45m-tonne cap would compress LME prices and dent both Press Metal's smelting margin and the structural-tightness narrative [9].
- **Sarawak state aluminium tax**: still pending finalization. A non-trivial regulatory overhang — would directly hit the Sarawak cost-advantage thesis [9].
- **Energy-cost sustainability**: low risk per CLSA (locked-in PPAs), but worth monitoring on PPA renewal cycles [9].
- **Commodity volatility from geopolitics**: Russia/Ukraine conflict continues to drive aluminium and raw-material price volatility — works both ways [9].
- **NAIHL stake dilution**: PMAH's equity in NAIHL has stepped down from 25.59% → 22% → 20.62% across 2024–April 2026 due to corporate actions [13] — earnings contribution from Bintan now flows through a smaller economic interest than originally modeled.

---

## 6. Synthesis: How To Frame It For The Current Environment

The Press Metal thesis in mid-2026 is a **margin-expansion / earnings-CAGR story dressed in a green-equity wrapper**, not a commodity-price beta trade. The setup:

1. The **smelting side** is a cost-locked, hydropower-fed franchise that operates as a price-taker on LME but a price-setter on the carbon-premium attached to GEM™ / CYCAL™ output. The Beijing 45m-tonne cap supplies the floor under LME [2].
2. The **upstream side** has compounded faster than the May-2025 CLSA framework assumed — Bintan hit 4m tonnes by end-2025 [11], not mid-2026. That means the upside-skew CLSA modeled into FY26–27 associate earnings is **already arriving**, not still pending.
3. The **balance sheet** is de-leveraging fast — CLSA modeled net debt/equity at 8% in FY26 and net cash by FY27 [5][1]. This re-routes free cash from interest to either dividends or the next leg of growth (PT KAN Phase 1 in 2027).

**Bull case**: aluminium holds >US$2,500/t (already running ~US$2,600/t in Q1-25), Bintan expansion fully consolidates into associate line by FY26 ahead of schedule, PT KAN Phase 1 commissions on time in 2027 — earnings re-base higher and the stock re-rates back toward the 5-year mean (or above on scarcity / ESG premium logic).
**Bear case**: Sarawak imposes a material aluminium tax, Chinese capacity normalizes faster than expected, and the GEM™ premium proves narrower than positioned — multiple compresses back to the −1 SD band.

The position to take depends on view on LME aluminium and Chinese supply discipline — but the company-specific execution risk has already de-risked materially given the ahead-of-schedule Bintan ramp.

---

**Sources**
[1] Press Metal — O-PF (Moving ahead on expansion), Executive summary — CLSA, 22-May-2025
[2] Press Metal — O-PF (Moving ahead on expansion), PT Bintan capacity / LME pricing — CLSA, 22-May-2025
[3] Press Metal — O-PF (Moving ahead on expansion), Share statistics & 12M TP RM7.30 — CLSA, 22-May-2025
[4] Press Metal — O-PF (Moving ahead on expansion), Stock performance & EPS lift — CLSA, 22-May-2025
[5] Press Metal — O-PF (Moving ahead on expansion), Forecast financials — CLSA, 22-May-2025
[6] Press Metal — O-PF (Moving ahead on expansion), Investment thesis (hydropower advantage) — CLSA, 22-May-2025
[7] Press Metal — O-PF (Moving ahead on expansion), Catalysts — CLSA, 22-May-2025
[8] Press Metal — O-PF (Moving ahead on expansion), Valuation details (premium PE rationale) — CLSA, 22-May-2025
[9] Press Metal — O-PF (Moving ahead on expansion), Investment risks — CLSA, 22-May-2025
[10] Press Metal — O-PF (Moving ahead on expansion), 1Q25 results summary — CLSA, 22-May-2025
[11] Press Metal Aluminium Holdings — Integrated Annual Report 2025: NAIHL HKEX listing, Bintan 4m-tonne capacity, GEM™/CYCAL™ sustainable product lines
[12] Press Metal Aluminium Holdings — Integrated Annual Report 2025: Sarawak hydropower advantage and fixed-rate PPAs
[13] Press Metal Aluminium Holdings — Integrated Annual Report 2025: Strategic Focus Areas — Indonesian upstream assets (NAIHL 20.62%, PT KAN 80%) as of April 2026

## Citations

- [1] **607960312LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960312LinqAlpha.PDF>
- [2] **607960312LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960312LinqAlpha.PDF>
- [3] **607960312LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960312LinqAlpha.PDF>
- [4] **607960312LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960312LinqAlpha.PDF>
- [5] **607960312LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960312LinqAlpha.PDF>
- [6] **607960312LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960312LinqAlpha.PDF>
- [7] **607960312LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960312LinqAlpha.PDF>
- [8] **607960312LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960312LinqAlpha.PDF>
- [9] **607960312LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960312LinqAlpha.PDF>
- [10] **607960312LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960312LinqAlpha.PDF>
- [11] **Press Metal_IAR2025 (Part 1)** · external
- [12] **Press Metal_IAR2025 (Part 1)** · external
- [13] **Press Metal_IAR2025 (Part 1)** · external

