---
endpoint: analytics
pattern: Materials
status: done
latency_ms: 217815
conversation_id: c76cc33a-6647-4cd0-aa9a-9e2f4614f3b0
citations: 0
created: 2026-05-31 18:20:23Z
---

# What catalysts could drive upside/downside for Press Metal in the next 12–18 months?

# Press Metal Aluminium (PMAH MK / 8869) — 12-18 Month Catalyst Map

**Setup**: The latest internal research in scope is **CLSA's 22 May 2025 Outperform note** (TP RM7.30, +45% upside at time of writing) with three prior CLSA reports from Sep 2024 to Dec 2024 providing the historical narrative. CLSA's corpus end-date is May 2025, so "next 12-18 months" here means the FY26-FY27 window from CLSA's vintage. Public Manticore data does not contain Press Metal earnings calls directly (no embedded transcripts under PMAH ticker), so the catalyst framework is drawn primarily from CLSA's coverage cross-referenced with industry context where available.

---

## I. Upside Catalysts

### 1. PT Bintan Alumina Capacity Doubling — The Single Largest Driver

This is the highest-conviction near-term catalyst. CLSA expects Press Metal's **PT Bintan alumina refinery (held via a 21.75% effective stake in Nanshan Aluminium, down from 25%) to expand from 2m tonnes to 3m tonnes by end-3Q25, then to 4m tonnes by end-3Q26** [2]. CLSA explicitly states: *"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].

The financial impact is material:
- Associate profit contribution forecast to reach **new highs in FY26 (RM601m) and FY27 (RM745m)** despite lower alumina price assumptions [2]
- Associate share of net profit rises from 21% (FY25) → 27% (FY26) → 31% (FY27) [1]
- Doubling alumina production is the explicit thesis for **margin expansion through FY26** [1]
- This drove CLSA's **TP upgrade from RM6.30 → RM7.30** (+16%) and FY25/FY26 EPS lifts of **+4%/+7%** [3]

### 2. Aluminium Price Support from China Supply Cap

The structural ceiling on China's primary aluminium capacity is a multi-year tailwind. CLSA notes aluminium prices are *"well supported by outlook of slower output in China, driven by Beijing's cap of 45m ton"* [8]. Demand-side support comes from new economy sectors (EVs, renewables) where CLSA expects ASPs to *"stay above historical levels"* — a structural change that justifies a premium valuation multiple [6].

Each US$100/mt move in LME aluminium prices is highly leveraged to fair value — CLSA's sensitivity table (from the Oct 2024 vintage) showed fair value swinging from RM4.91 at US$2,300/mt to RM7.74 at US$2,900/mt around a base of US$2,600/mt. As of 1Q25, aluminium was at **US$2,600/mt (+19% YoY, +2% QoQ)** [2] — already at the upper-mid end of that band.

### 3. China's Removal of Aluminium Export Tax Rebate (Dec 2024)

A structural one-off tailwind: *"China cancelling export tax rebate for aluminium on 1 Dec 2024; positive for prices"* [11]. This reduces Chinese export competitiveness and supports global ex-China premiums (MJP, EU) — both of which Press Metal commands.

### 4. Easing Alumina Input Costs

Alumina prices **dropped 25% QoQ in 1Q25 to US$518/mt** [2], and CLSA assumes prices steady at **~US$400/mt** going forward [2]. The May 2025 model cuts alumina cost assumptions by **-7.6%/-8.0% for FY25/FY26** [3]. Easing input costs combined with a higher hedge ratio (**raised from 30% → 50% for FY25, from 25% → 40% for FY26** [3]) compresses earnings volatility on the downside while keeping the upside intact.

### 5. Value-Added Product (VAP) Mix Expansion

Management aims to lift **VAP sales mix to 60% by end-2025 from 47% currently** to enhance margins [9]. In 3Q24, half of sales volume was already from VAP (+2% QoQ / +23% YoY) [10]. This is a margin lever that compounds with smelting throughput.

### 6. Phase 3 (P3) Smelting Plant Fully Restored

P3 (which suffered a fire in mid-2024) was **"fully restored in Mar 2025"** [1], removing the one-time operational drag from 1H25. Smelting output normalisation should drive **higher YoY volume comparisons through 2H25 and into 1H26**.

### 7. Fed Rate Cuts + China Stimulus (Macro Reflexivity)

CLSA's Oct 2024 note flagged that *"a continued Fed fund rate cut cycle over the next 6-12 months may also have an indirect positive impact on aluminium prices"* [12], compounded with China stimulus driving industrial and property demand [13]. To the extent further Fed easing materialises within the 12-18 month window, USD weakness is a tailwind for USD-denominated commodity prices.

### 8. Premium Re-rating Vectors

Several stock-specific reratings remain available:
- **Scarcity premium**: only integrated aluminium player in ASEAN [6]
- **ESG**: Blended ESG Score of **75 vs country average 57** and sector average 62.3 [6]; hydropower-sourced energy qualifies products as "green" aluminium [7]
- **Shariah compliance** (Malaysia category) — expands the investable base [6]
- **Further green-growth expansion plans** could trigger re-rating [4][14]

---

## II. Downside Catalysts / Risks

### 1. Sarawak Aluminium Tax (Regulatory Risk)

The single most binary near-term risk. CLSA flags *"regulatory risk (imminent aluminium tax pending finalisation by the Sarawak state)"* as a key risk in both the Sep 2024 and May 2025 notes [5][15]. Press Metal's entire smelting base is in Sarawak (Mukah, Samalaju), so a state-level tax directly hits unit economics and is not easily mitigable. Magnitude depends on the final tax rate.

### 2. Faster-Than-Expected China Capacity Restart

CLSA explicitly highlights *"a quicker-than-expected recovery in China's capacity"* as the top investment risk [5]. The 45m-ton cap is policy — a relaxation would re-flood the global market and pressure LME prices.

### 3. US Tariffs / Demand Softness

The May 2025 note acknowledges *"anticipated modest demand due to US tariffs"* — supply tightness is the offset [2]. The risk is asymmetric: if tariffs spread to a broader trade dispute or demand from Western customers weakens beyond CLSA's modeled drag, the supply cushion may not be enough.

### 4. Raw Material Cost Re-inflation

Alumina prices were up 50% YoY in 3Q24 [10] before crashing 25% QoQ in 1Q25. A reversal — particularly if Chinese alumina refinery utilization tightens or bauxite supply (Guinea/Australia) is disrupted — would compress margins. Carbon anode prices have also re-accelerated, hitting **US$700/mt in Apr 2025 from US$510/mt in Oct 2024** (+37%) [from the carbon anode chart, doc 607960312]. Russia-Ukraine continues to drive commodity volatility [5][15].

### 5. Slower Ramp at P3 / Bintan Phase 2

CLSA's own model already trims revenues by 4.7%/5.6% for FY25/FY26 reflecting *"slower ramp-up in P3 capacity"* [3]. If the Nanshan Bintan 3→4m tonne phase (mid-2026) slips, FY26-27 associate profit (the entire margin expansion thesis) is delayed.

### 6. Energy Source Sustainability (Low but Non-Zero)

CLSA classes *"inability to sustain low costs for its energy sources"* as low risk [5][15], but a drought year affecting Sarawak hydropower output would force grid sourcing at higher cost — directly hitting the green premium and unit margins.

### 7. Valuation Already Discounting Much of the Story

The May 2025 TP of RM7.30 sits at **26× FY26 PE**, which is the 5-year mean [3]. With the stock at RM5.08 (1M +7%, 3M -2.9%, 12M -6.0%) [from doc 607960312 stock performance table], a flat-to-down market multiple compression alone could absorb the entire +45% potential CLSA flags. Note PE has compressed from a +1SD peak ~32× to ~21× as of May 2025 — meaningful normalisation has occurred, but it's not a deep-value setup.

---

## III. Summary Catalyst Matrix

| Catalyst | Direction | 12-18M Probability | Magnitude (TP impact) | Source |
|---|---|---|---|---|
| Nanshan Bintan 2→3m tonne ramp (3Q25) | Upside | High (in flight) | ++ EPS +4-7% on FY25-26 | [1][3] |
| Nanshan Bintan 3→4m tonne (3Q26) | Upside | Medium-High | +++ associate profit RM745m FY27 | [2] |
| Sarawak aluminium tax | Downside | Medium (pending) | -- depends on rate | [5][15] |
| LME aluminium > US$2,700/mt sustained | Upside | Medium | +++ each US$100/mt ≈ +RM0.47 FV | [13][8] |
| China 45m-ton supply cap holds | Upside | High | + structural | [8] |
| China export tax rebate stays cancelled | Upside | High | + premiums supported | [11] |
| VAP mix to 60% by end-2025 | Upside | Medium-High | + margin mix | [9] |
| P3 smelter fully restored | Upside | Done (Mar 2025) | + base case in numbers | [1] |
| China capacity restart (policy reversal) | Downside | Low-Medium | --- LME prices break | [5] |
| Alumina re-inflation | Downside | Medium | -- input cost squeeze | [5][15] |
| Carbon anode re-inflation | Downside | Manifesting | -- already +37% YoY | (from carbon anode chart) |
| US tariff broadening | Downside | Medium | -- demand drag | [2] |

---

## IV. Key Numbers to Track (CLSA Estimates, May 2025)

| Metric | FY23A | FY24A | FY25CL | FY26CL | FY27CL |
|---|---|---|---|---|---|
| Revenue (RMm) | 13,803 | 14,910 | 16,150 | 16,318 | 16,520 |
| Net Profit (RMm) | 1,214 | 1,761 | 2,083 | 2,249 | 2,404 |
| EPS (sen) | 15.0 | 21.8 | 25.8 | 27.9 | 29.8 |
| EBITDA margin (%) | 15.7 | 17.7 | 19.0 | 19.2 | 19.4 |
| Net debt/equity (%) | 45.5 | 26.3 | 17.9 | 8.0 | (1.0) |
| ROE (%) | 17.9 | 22.8 | 22.6 | 21.1 | 19.7 |
| Associate profit (RMm) | 180 | 559 | 434 | 601 | 745 |
| Dividend yield (%) | 1.4 | 1.4 | 1.7 | 1.8 | 1.9 |

Source: CLSA model [3] — Press Metal moves to **net cash by FY27** under base case, which itself becomes a potential capital-return catalyst (special DPS or expansion announcement).

---

## V. The Asymmetric Read

CLSA's framework essentially has **two upside legs (Bintan alumina ramp + tight LME prices) and one binary downside (Sarawak tax)**. The Bintan alumina story is locked in by capex already underway — execution risk only, not concept risk. The Sarawak tax is the one swing factor that could re-set the bear case entirely; until it's clarified, the stock will likely carry a discount. The valuation is undemanding (PE at -1SD to 5-year mean as of May 2025) but not screaming cheap, so the path to RM7.30 requires both alumina ramp execution AND LME prices staying in the US$2,500-2,700/mt band.

---

**Sources**

[1] Press Metal - O-PF (Moving ahead on expansion) — CLSA, 22 May 2025 — 607960312LinqAlpha.PDF (Doubling alumina production by 2026)
[2] Press Metal - O-PF (Moving ahead on expansion) — CLSA, 22 May 2025 — 607960312LinqAlpha.PDF (PT Bintan capacity ramp + 1Q25 commodity prices)
[3] Press Metal - O-PF (Moving ahead on expansion) — CLSA, 22 May 2025 — 607960312LinqAlpha.PDF (TP raise to RM7.30, EPS revisions, hedge ratio)
[4] Press Metal - O-PF (Moving ahead on expansion) — CLSA, 22 May 2025 — 607960312LinqAlpha.PDF (Catalysts: aluminium recovery + green expansion)
[5] Press Metal - O-PF (Moving ahead on expansion) — CLSA, 22 May 2025 — 607960312LinqAlpha.PDF (Investment risks: Sarawak tax, China capacity)
[6] Press Metal - O-PF (Moving ahead on expansion) — CLSA, 22 May 2025 — 607960312LinqAlpha.PDF (Valuation: scarcity premium, ESG, Shariah)
[7] Press Metal - O-PF (Moving ahead on expansion) — CLSA, 22 May 2025 — 607960312LinqAlpha.PDF (Investment thesis: hydropower green aluminium)
[8] Press Metal - O-PF (Moving ahead on expansion) — CLSA, 22 May 2025 — 607960312LinqAlpha.PDF (China 45m-ton cap and Aly price support)
[9] Press Metal - O-PF (Temporary operational hiccup) — CLSA, 11 Sep 2024 — 607939402LinqAlpha.PDF (VAP mix target 60% by end-2025)
[10] Press Metal - O-PF (Outlook remains bright) — CLSA, 1 Dec 2024 — 607945803LinqAlpha.PDF (3Q24 results, alumina +50% YoY)
[11] Press Metal - O-PF (Outlook remains bright) — CLSA, 1 Dec 2024 — 607945803LinqAlpha.PDF (China export tax rebate cancellation)
[12] Press Metal - O-PF (Tailwinds are blowing) — CLSA, 7 Oct 2024 — 607940734LinqAlpha.PDF (Fed rate cut cycle macro tailwind)
[13] Press Metal - O-PF (Tailwinds are blowing) — CLSA, 7 Oct 2024 — 607940734LinqAlpha.PDF (China stimulus tailwinds)
[14] Press Metal - O-PF (Temporary operational hiccup) — CLSA, 11 Sep 2024 — 607939402LinqAlpha.PDF (Catalysts: green growth re-rating)
[15] Press Metal - O-PF (Temporary operational hiccup) — CLSA, 11 Sep 2024 — 607939402LinqAlpha.PDF (Investment risks)

