Press Metal Aluminium Holdings Bhd’s proposed acquisition of a controlling stake in PMB Technology Bhd (PMBT) is expected to strengthen its downstream aluminium business by leveraging sustainable energy resources, according to RHB Investment Bank.
The research house maintained its “Buy” call on Press Metal with an unchanged target price of RM9.80, implying a 23% upside, citing compelling valuations and the group’s long-term growth strategy.
Press Metal recently announced plans to acquire an additional 35.6% stake in PMBT for RM465 million, raising its shareholding to 58.8% and making the silicon metal producer a subsidiary. The acquisition, priced at RM0.70 per share, represents a 5% discount to PMBT’s FY2025 book value and is expected to be completed in the third quarter of 2026.
RHB noted that while the transaction would normally trigger a mandatory general offer, Press Metal has obtained an exemption as the ultimate controlling shareholders of both companies remain unchanged.
The acquisition will be fully funded by cash, with Press Metal’s gearing expected to rise modestly to 0.43 times from 0.37 times following the consolidation of PMBT’s borrowings amounting to RM891.3 million.
According to RHB, the acquisition provides Press Metal with an opportunity to repurpose PMBT’s operations towards higher-margin silicon-aluminium alloy production by capitalising on its existing manufacturing facilities and renewable hydropower supply in the Sarawak Corridor of Renewable Energy (SCORE).
PMBT currently operates a silicon metal plant with an installed capacity of 72,000 tonnes per annum, supported by 129 megawatts of secured electricity supply. However, the company has fallen into losses due to weak silicon metal prices, recording a net loss of RM12.8 million in FY2025 and RM24.6 million in the first quarter of FY2026, compared with a profit of RM58 million in FY2024.
RHB said the proximity of PMBT’s facilities to Press Metal’s aluminium smelting operations creates opportunities to shift production towards silicon-aluminium alloys used in electric vehicle motor housings, engine blocks and structural castings, products that typically command better margins.
The research house noted that Press Metal aims to increase the contribution of value-added products to 50% to 60% of total sales volume in FY2026, making the acquisition strategically aligned with its downstream expansion plans.
Nevertheless, RHB cautioned that consolidating PMBT into the group would also expose Press Metal to any future losses incurred by the subsidiary. However, it estimates the impact would account for less than 2% of Press Metal’s FY2026 to FY2028 earnings, assuming its enlarged 58.8% stake.
Pending further guidance from management, RHB left its earnings forecasts unchanged and maintained its valuation, which is based on 25 times FY2027 earnings, incorporating an 8% ESG premium.
The research house added that Press Metal continues to benefit from favourable aluminium market dynamics, particularly a lower-than-average alumina-to-aluminium cost ratio, which supports stronger profit margins.
Key downside risks include a faster-than-expected recovery in global aluminium supply and a sharp decline in aluminium prices, RHB said.
