KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
Press Metal Aluminium Holdings Bhd's third-quarter earnings may soften, impacted by the stronger ringgit, according to a report from RHB Investment Bank (RHB IB). Every 1% change in the ringgit against the US dollar could affect the company's bottom line by 1.8%-2.0%, due to the impact on its export receipts.
Other factors contributing to the softer earnings outlook include weaker aluminium prices, higher alumina costs, and a fire at the Samalaju factory. However, RHB IB noted that the long-term fundamentals for aluminium prices remain solid, which could mitigate the impact.
Since July 1, Press Metal's shares have declined 14%, partly due to rising expectations of a US Federal Reserve rate cut and the appreciation of the ringgit by 12% against the US dollar.
Despite the recent decline, Press Metal’s year-to-date gains stand at 3%. RHB IB expects alumina costs to remain elevated, with prices reaching US$508.50 per tonne in the third quarter, though they may normalize by 2025 as supply increases from refinery expansions in Indonesia and India.
Aluminium prices on the London Metal Exchange have fallen nearly 6% in the third quarter, further pressuring Press Metal’s earnings. The company's estimated core earnings for the quarter are expected to range between RM250 million to RM300 million.
Despite the challenges, 13 out of 14 research houses still have a "buy" recommendation on Press Metal, with only one suggesting a "hold". The consensus 12-month target price is RM6.15, offering a 24% return potential from its last price of RM4.96. RHB IB highlighted that Press Metal's valuations remain attractive, given its status as one of the lowest-cost smelters globally. Additionally, any future US Fed rate cuts could boost global demand for aluminium.
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