RHB has maintained a “BUY” recommendation on Press Metal Bhd at a trading price of RM8.50, 53% upside and 1% yield.
RHB said that Budget 2022’s introduction of a one-off windfall tax is unlikely to have a pertinent impact on Press Metal going into 2022, given the ongoing Pioneer Status tax holiday for its primary smelting hub in Samalaju (960ktpa).
It said that its estimates are therefore maintained, with our back-of-the-envelope calculations indicating an FY22F EPS impact of <2%. All in, we believe that the windfall tax impact may, at most, translate into a 2% impact to PMAH’s FY22F EPS,” it said.
RHB said that as such, it makes no changes to its earnings estimates and SOP-derived TP of MYR8.50 – the latter having accounted for a 6% ESG premium mainly reflecting the group’s environmental and governance credentials.
On the key downside risks include a sharp deterioration in global economic conditions, unfavourable commodity price movements, and setbacks in commissioning its Phase 3 Samalaju smelter and Bintan alumina refinery.