Press Metal Aluminum – is the market wrong?

Press Metal Aluminium is the largest integrated aluminium producer in Southeast Asia. Over the past five years, the company has strengthened its market position by improving cost efficiencies, expanding into new high-growth markets, and enhancing its sustainability focus.

These strategic initiatives have contributed to its improving financial performance, as illustrated in the two middle charts. However, its performance trends also coincided with the uptrend in the aluminium price cycle.

https://i.postimg.cc/fbZhLbbw/Press-Metal-31-Jan-2025.png

As shown in the leftmost chart, Press Metal’s stock price is currently lower than its past three-year high. At the same time, it is positioned within the Gem quadrant, indicating strong business fundamentals.

This positioning suggests that the market may be anticipating a downtrend in aluminium prices, which could impact future earnings. Is the market wrong?

• If the market is right, the company's stock would be overvalued based on historical performance.

• If the market is wrong and aluminium prices remain strong and companies like Press Metal may continue to thrive.

This raises an important question: Is the company’s growth primarily driven by operational improvements, or is it largely influenced by rising aluminium prices?