- Is Press Metal Aluminium Holdings Berhad's (KLSE:PMETAL) Latest Stock Performance A Reflection Of Its Financial Health?
Dec 11, 2025
Most readers would already be aware that Press Metal Aluminium Holdings Berhad's (KLSE:PMETAL) stock increased significantly by 21% over the past three months. Since the market usually pay for a company’s long-term fundamentals, we decided to study the company’s key performance indicators to see if they could be influencing the market. In this article, we decided to focus on Press Metal Aluminium Holdings Berhad's ROE.
Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. Put another way, it reveals the company's success at turning shareholder investments into profits.
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How Do You Calculate Return On Equity?
Return on equity can be calculated by using the formula:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for Press Metal Aluminium Holdings Berhad is:
20% = RM2.3b ÷ RM12b (Based on the trailing twelve months to September 2025).
The 'return' is the income the business earned over the last year. One way to conceptualize this is that for each MYR1 of shareholders' capital it has, the company made MYR0.20 in profit.
Check out our latest analysis for Press Metal Aluminium Holdings Berhad
What Has ROE Got To Do With Earnings Growth?
We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes.
Press Metal Aluminium Holdings Berhad's Earnings Growth And 20% ROE
To start with, Press Metal Aluminium Holdings Berhad's ROE looks acceptable. Especially when compared to the industry average of 6.8% the company's ROE looks pretty impressive. This probably laid the ground for Press Metal Aluminium Holdings Berhad's significant 21% net income growth seen over the past five years. However, there could also be other causes behind this growth. For example, it is possible that the company's management has made some good strategic decisions, or that the company has a low payout ratio.
As a next step, we compared Press Metal Aluminium Holdings Berhad's net income growth with the industry, and pleasingly, we found that the growth seen by the company is higher than the average industry growth of 3.1%.
Story Continues
KLSE:PMETAL Past Earnings Growth December 11th 2025
Earnings growth is a huge factor in stock valuation. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Is Press Metal Aluminium Holdings Berhad fairly valued compared to other companies? These 3 valuation measures might help you decide.
Is Press Metal Aluminium Holdings Berhad Using Its Retained Earnings Effectively?
The three-year median payout ratio for Press Metal Aluminium Holdings Berhad is 38%, which is moderately low. The company is retaining the remaining 62%. So it seems that Press Metal Aluminium Holdings Berhad is reinvesting efficiently in a way that it sees impressive growth in its earnings (discussed above) and pays a dividend that's well covered.
Additionally, Press Metal Aluminium Holdings Berhad has paid dividends over a period of at least ten years which means that the company is pretty serious about sharing its profits with shareholders. Our latest analyst data shows that the future payout ratio of the company over the next three years is expected to be approximately 35%. Accordingly, forecasts suggest that Press Metal Aluminium Holdings Berhad's future ROE will be 20% which is again, similar to the current ROE.
Conclusion
Overall, we are quite pleased with Press Metal Aluminium Holdings Berhad's performance. Specifically, we like that the company is reinvesting a huge chunk of its profits at a high rate of return. This of course has caused the company to see substantial growth in its earnings. With that said, the latest industry analyst forecasts reveal that the company's earnings growth is expected to slow down. Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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- Press Metal Aluminium Holdings Berhad (KLSE:PMETAL) Ticks All The Boxes When It Comes To Earnings Growth
Nov 24, 2025
Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Press Metal Aluminium Holdings Berhad (KLSE:PMETAL). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.
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Press Metal Aluminium Holdings Berhad's Earnings Per Share Are Growing
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. We can see that in the last three years Press Metal Aluminium Holdings Berhad grew its EPS by 11% per year. That's a pretty good rate, if the company can sustain it.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Press Metal Aluminium Holdings Berhad maintained stable EBIT margins over the last year, all while growing revenue 5.6% to RM16b. That's encouraging news for the company!
The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.KLSE:PMETAL Earnings and Revenue History November 24th 2025
Check out our latest analysis for Press Metal Aluminium Holdings Berhad
In investing, as in life, the future matters more than the past. So why not check out this freeinteractive visualization of Press Metal Aluminium Holdings Berhad's forecast profits?
Are Press Metal Aluminium Holdings Berhad Insiders Aligned With All Shareholders?
Owing to the size of Press Metal Aluminium Holdings Berhad, we wouldn't expect insiders to hold a significant proportion of the company. But thanks to their investment in the company, it's pleasing to see that there are still incentives to align their actions with the shareholders. We note that their impressive stake in the company is worth RM12b. That equates to 23% of the company, making insiders powerful and aligned with other shareholders. Looking very optimistic for investors.
Story Continues
It means a lot to see insiders invested in the business, but shareholders may be wondering if remuneration policies are in their best interest. Our quick analysis into CEO remuneration would seem to indicate they are. The median total compensation for CEOs of companies similar in size to Press Metal Aluminium Holdings Berhad, with market caps over RM33b, is around RM6.1m.
Press Metal Aluminium Holdings Berhad's CEO took home a total compensation package of RM2.8m in the year prior to December 2024. First impressions seem to indicate a compensation policy that is favourable to shareholders. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of good governance, more generally.
Should You Add Press Metal Aluminium Holdings Berhad To Your Watchlist?
As previously touched on, Press Metal Aluminium Holdings Berhad is a growing business, which is encouraging. The growth of EPS may be the eye-catching headline for Press Metal Aluminium Holdings Berhad, but there's more to bring joy for shareholders. Boasting both modest CEO pay and considerable insider ownership, you'd argue this one is worthy of the watchlist, at least. Of course, just because Press Metal Aluminium Holdings Berhad is growing does not mean it is undervalued. If you're wondering about the valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.
There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of Malaysian companies which have demonstrated growth backed by significant insider holdings.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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- Press Metal Aluminium Holdings Berhad's (KLSE:PMETAL) investors will be pleased with their splendid 145% return over the last five years
Oct 13, 2025
When you buy a stock there is always a possibility that it could drop 100%. But on a lighter note, a good company can see its share price rise well over 100%. Long term Press Metal Aluminium Holdings Berhad (KLSE:PMETAL) shareholders would be well aware of this, since the stock is up 131% in five years. Also pleasing for shareholders was the 19% gain in the last three months.
So let's assess the underlying fundamentals over the last 5 years and see if they've moved in lock-step with shareholder returns.
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There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Over half a decade, Press Metal Aluminium Holdings Berhad managed to grow its earnings per share at 31% a year. This EPS growth is higher than the 18% average annual increase in the share price. So one could conclude that the broader market has become more cautious towards the stock.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).KLSE:PMETAL Earnings Per Share Growth October 13th 2025
It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of Press Metal Aluminium Holdings Berhad's earnings, revenue and cash flow.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Press Metal Aluminium Holdings Berhad's TSR for the last 5 years was 145%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
It's nice to see that Press Metal Aluminium Holdings Berhad shareholders have received a total shareholder return of 27% over the last year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 20% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. Before deciding if you like the current share price, check how Press Metal Aluminium Holdings Berhad scores on these 3 valuation metrics.
Story Continues
We will like Press Metal Aluminium Holdings Berhad better if we see some big insider buys. While we wait, check out this freelist of undervalued stocks (mostly small caps) with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Malaysian exchanges.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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- Private companies who hold 34% of Press Metal Aluminium Holdings Berhad (KLSE:PMETAL) gained 3.2%, insiders profited as well
Sep 28, 2025
Key Insights
The considerable ownership by private companies in Press Metal Aluminium Holdings Berhad indicates that they collectively have a greater say in management and business strategy 54% of the business is held by the top 4 shareholders Insiders own 23% of Press Metal Aluminium Holdings Berhad
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Every investor in Press Metal Aluminium Holdings Berhad (KLSE:PMETAL) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 34% to be precise, is private companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
While private companies were the group that benefitted the most from last week’s RM1.5b market cap gain, insiders too had a 23% share in those profits.
Let's delve deeper into each type of owner of Press Metal Aluminium Holdings Berhad, beginning with the chart below.
See our latest analysis for Press Metal Aluminium Holdings Berhad KLSE:PMETAL Ownership Breakdown September 28th 2025
What Does The Institutional Ownership Tell Us About Press Metal Aluminium Holdings Berhad?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
Press Metal Aluminium Holdings Berhad already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Press Metal Aluminium Holdings Berhad's historic earnings and revenue below, but keep in mind there's always more to the story.KLSE:PMETAL Earnings and Revenue Growth September 28th 2025
We note that hedge funds don't have a meaningful investment in Press Metal Aluminium Holdings Berhad. Our data shows that Alpha Milestone Sdn Bhd is the largest shareholder with 34% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.7% and 6.9%, of the shares outstanding, respectively. Poh Koon, who is the second-largest shareholder, also happens to hold the title of Senior Key Executive.
Story Continues
On looking further, we found that 54% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Press Metal Aluminium Holdings Berhad
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our information suggests that insiders maintain a significant holding in Press Metal Aluminium Holdings Berhad. Insiders own RM11b worth of shares in the RM48b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 22% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Private Company Ownership
We can see that Private Companies own 34%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important.
Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.
Ultimately the future is most important. You can access this freereport on analyst forecasts for the company.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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- Investors Will Want Press Metal Aluminium Holdings Berhad's (KLSE:PMETAL) Growth In ROCE To Persist
Sep 11, 2025
To find a multi-bagger stock, what are the underlying trends we should look for in a business? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. So when we looked at Press Metal Aluminium Holdings Berhad (KLSE:PMETAL) and its trend of ROCE, we really liked what we saw.
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Return On Capital Employed (ROCE): What Is It?
If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. To calculate this metric for Press Metal Aluminium Holdings Berhad, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.12 = RM1.9b ÷ (RM19b - RM2.6b) (Based on the trailing twelve months to June 2025).
Therefore, Press Metal Aluminium Holdings Berhad has an ROCE of 12%. On its own, that's a standard return, however it's much better than the 7.1% generated by the Metals and Mining industry.
Check out our latest analysis for Press Metal Aluminium Holdings Berhad KLSE:PMETAL Return on Capital Employed September 11th 2025
Above you can see how the current ROCE for Press Metal Aluminium Holdings Berhad compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Press Metal Aluminium Holdings Berhad for free.
What Does the ROCE Trend For Press Metal Aluminium Holdings Berhad Tell Us?
The trends we've noticed at Press Metal Aluminium Holdings Berhad are quite reassuring. The data shows that returns on capital have increased substantially over the last five years to 12%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 85%. So we're very much inspired by what we're seeing at Press Metal Aluminium Holdings Berhad thanks to its ability to profitably reinvest capital.
Our Take On Press Metal Aluminium Holdings Berhad's ROCE
To sum it up, Press Metal Aluminium Holdings Berhad has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. Since the stock has returned a staggering 130% to shareholders over the last five years, it looks like investors are recognizing these changes. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.
Story Continues
While Press Metal Aluminium Holdings Berhad looks impressive, no company is worth an infinite price. The intrinsic value infographic for PMETAL helps visualize whether it is currently trading for a fair price.
While Press Metal Aluminium Holdings Berhad isn't earning the highest return, check out this freelist of companies that are earning high returns on equity with solid balance sheets.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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- Press Metal Aluminium Holdings Berhad Second Quarter 2025 Earnings: EPS: RM0.059 (vs RM0.061 in 2Q 2024)
Aug 25, 2025
Press Metal Aluminium Holdings Berhad (KLSE:PMETAL) Second Quarter 2025 Results
Key Financial Results
Revenue: RM4.19b (up 5.9% from 2Q 2024). Net income: RM483.6m (down 4.4% from 2Q 2024). Profit margin: 12% (down from 13% in 2Q 2024). The decrease in margin was driven by higher expenses. EPS: RM0.059 (down from RM0.061 in 2Q 2024).
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All figures shown in the chart above are for the trailing 12 month (TTM) period
Press Metal Aluminium Holdings Berhad Earnings Insights
Looking ahead, revenue is forecast to grow 2.2% p.a. on average during the next 3 years, compared to a 3.0% growth forecast for the Metals and Mining industry in Malaysia.
Performance of the Malaysian Metals and Mining industry.
The company's shares are up 2.7% from a week ago.
Balance Sheet Analysis
While it's very important to consider the profit and loss statement, you can also learn a lot about a company by looking at its balance sheet. We have a graphic representation of Press Metal Aluminium Holdings Berhad's balance sheet and an in-depth analysis of the company's financial position.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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- Is Press Metal Aluminium Holdings Berhad's (KLSE:PMETAL) Latest Stock Performance Being Led By Its Strong Fundamentals?
Jun 30, 2025
Most readers would already know that Press Metal Aluminium Holdings Berhad's (KLSE:PMETAL) stock increased by 2.5% over the past week. Given that the market rewards strong financials in the long-term, we wonder if that is the case in this instance. Specifically, we decided to study Press Metal Aluminium Holdings Berhad's ROE in this article.
ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders.
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How To Calculate Return On Equity?
The formula for return on equity is:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for Press Metal Aluminium Holdings Berhad is:
20% = RM2.2b ÷ RM11b (Based on the trailing twelve months to March 2025).
The 'return' is the income the business earned over the last year. One way to conceptualize this is that for each MYR1 of shareholders' capital it has, the company made MYR0.20 in profit.
View our latest analysis for Press Metal Aluminium Holdings Berhad
What Is The Relationship Between ROE And Earnings Growth?
So far, we've learned that ROE is a measure of a company's profitability. Depending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company’s earnings growth potential. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes.
Press Metal Aluminium Holdings Berhad's Earnings Growth And 20% ROE
At first glance, Press Metal Aluminium Holdings Berhad seems to have a decent ROE. Further, the company's ROE compares quite favorably to the industry average of 6.2%. Probably as a result of this, Press Metal Aluminium Holdings Berhad was able to see an impressive net income growth of 24% over the last five years. However, there could also be other causes behind this growth. For instance, the company has a low payout ratio or is being managed efficiently.
As a next step, we compared Press Metal Aluminium Holdings Berhad's net income growth with the industry, and pleasingly, we found that the growth seen by the company is higher than the average industry growth of 11%.
Story Continues
KLSE:PMETAL Past Earnings Growth June 30th 2025
The basis for attaching value to a company is, to a great extent, tied to its earnings growth. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. What is PMETAL worth today? The intrinsic value infographic in our free research report helps visualize whether PMETAL is currently mispriced by the market.
Is Press Metal Aluminium Holdings Berhad Making Efficient Use Of Its Profits?
Press Metal Aluminium Holdings Berhad's three-year median payout ratio is a pretty moderate 38%, meaning the company retains 62% of its income. So it seems that Press Metal Aluminium Holdings Berhad is reinvesting efficiently in a way that it sees impressive growth in its earnings (discussed above) and pays a dividend that's well covered.
Additionally, Press Metal Aluminium Holdings Berhad has paid dividends over a period of at least ten years which means that the company is pretty serious about sharing its profits with shareholders. Upon studying the latest analysts' consensus data, we found that the company is expected to keep paying out approximately 36% of its profits over the next three years. Therefore, the company's future ROE is also not expected to change by much with analysts predicting an ROE of 20%.
Conclusion
In total, we are pretty happy with Press Metal Aluminium Holdings Berhad's performance. In particular, it's great to see that the company is investing heavily into its business and along with a high rate of return, that has resulted in a sizeable growth in its earnings. Having said that, the company's earnings growth is expected to slow down, as forecasted in the current analyst estimates. Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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- Calculating The Intrinsic Value Of Press Metal Aluminium Holdings Berhad (KLSE:PMETAL)
Mar 25, 2024
Key Insights
Using the 2 Stage Free Cash Flow to Equity, Press Metal Aluminium Holdings Berhad fair value estimate is RM5.19 Current share price of RM4.61 suggests Press Metal Aluminium Holdings Berhad is potentially trading close to its fair value Analyst price target for PMETAL is RM5.16 which is similar to our fair value estimate
Does the March share price for Press Metal Aluminium Holdings Berhad (KLSE:PMETAL) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by taking the expected future cash flows and discounting them to their present value. We will take advantage of the Discounted Cash Flow (DCF) model for this purpose. Don't get put off by the jargon, the math behind it is actually quite straightforward.
We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model.
View our latest analysis for Press Metal Aluminium Holdings Berhad
What's The Estimated Valuation?
We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
Story continues
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value:
10-year free cash flow (FCF) estimate
2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Levered FCF (MYR, Millions) RM1.54b RM2.23b RM1.90b RM3.09b RM3.56b RM3.92b RM4.24b RM4.53b RM4.80b RM5.04b Growth Rate Estimate Source Analyst x4 Analyst x5 Analyst x4 Analyst x2 Analyst x2 Est @ 10.19% Est @ 8.19% Est @ 6.80% Est @ 5.82% Est @ 5.14% Present Value (MYR, Millions) Discounted @ 11% RM1.4k RM1.8k RM1.4k RM2.0k RM2.1k RM2.1k RM2.0k RM2.0k RM1.9k RM1.8k
("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = RM18b
After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (3.5%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 11%.
Terminal Value (TV)= FCF2033 × (1 + g) ÷ (r – g) = RM5.0b× (1 + 3.5%) ÷ (11%– 3.5%) = RM69b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= RM69b÷ ( 1 + 11%)10= RM24b
The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is RM43b. The last step is to then divide the equity value by the number of shares outstanding. Compared to the current share price of RM4.6, the company appears about fair value at a 11% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. dcf
Important Assumptions
We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Press Metal Aluminium Holdings Berhad as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 11%, which is based on a levered beta of 1.184. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
SWOT Analysis for Press Metal Aluminium Holdings Berhad
Strength
Debt is well covered by earnings and cashflows.
Dividends are covered by earnings and cash flows.
Weakness
Earnings declined over the past year.
Dividend is low compared to the top 25% of dividend payers in the Metals and Mining market.
Opportunity
Annual earnings are forecast to grow faster than the Malaysian market.
Current share price is below our estimate of fair value.
Threat
Revenue is forecast to grow slower than 20% per year.
Next Steps:
Valuation is only one side of the coin in terms of building your investment thesis, and it ideally won't be the sole piece of analysis you scrutinize for a company. It's not possible to obtain a foolproof valuation with a DCF model. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. For Press Metal Aluminium Holdings Berhad, we've compiled three relevant aspects you should explore:
Risks: For example, we've discovered 1 warning sign for Press Metal Aluminium Holdings Berhad that you should be aware of before investing here. Future Earnings: How does PMETAL's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
PS. Simply Wall St updates its DCF calculation for every Malaysian stock every day, so if you want to find the intrinsic value of any other stock just search here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
