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Based on the latest financial and corporate announcements for LB Aluminium Berhad (LBALUM, 9326.KL), here are the key positive factors:
✅ Key Positive News and Financial Highlights
1. Strong Earnings Growth (Quarterly)
The most significant recent positive news comes from the financial performance:
Net Profit Surge: For the first quarter of the Financial Year 2026 (ended July 31, 2025), the company reported a 30.9% increase in net profit (attributable to shareholders) compared to the same quarter in the preceding year.
Earnings Per Share (EPS) Improvement: Basic EPS for the quarter grew from 0.02 sen to 0.027 sen.
Growing Profit Margin: The company's net profit margin (TTM) is showing an improvement, indicating better cost management or favorable pricing power compared to the previous year.
This indicates that, despite a challenging global environment, the company's core aluminium manufacturing and trading business is performing well and gaining profitability.
2. Attractive Dividend and Strong Balance Sheet
The company's stable financial position supports its valuation case:
Affirmed Dividend: LB Aluminium has consistently affirmed a first and final single-tier dividend of 2.50 sen per ordinary share for the recent financial years, leading to a strong current Dividend Yield of around 5.56%. This makes it an appealing choice for income-focused investors.
Acquisition of Industrial Land (Mid-2025): The company announced the acquisition of industrial land in Banting, Malaysia. While this involves spending capital, it is a positive sign of future expansion and investment in operational capacity.
Low Valuation Metrics: The stock still trades at a very low Price-to-Book (P/B) ratio of ≈0.44x and a low Price-to-Earnings (P/E) ratio of ≈5.0x (much lower than the market average). This signals that the stock is currently undervalued relative to its assets and recent earnings, representing potential upside if the market recognizes the improved earnings.
⚠️ A Note of Caution (Mixed Signals)
While the fundamentals are strong, the market sentiment remains cautious, as evidenced by:
Technical Indicators: Some recent technical analysis signals (like short-term moving averages) are still issuing a "Sell" or "Strong Sell" signal, suggesting weak short-term price momentum despite the good earnings.
Industry Headwinds: As an aluminium player, it is exposed to volatility in global aluminium prices and the pace of the construction/infrastructure sector in Malaysia and other markets.
In summary, the most positive news is the sustained improvement and strong year-on-year growth in profitability, coupled with a very high dividend yield.
Would you like me to compare LB Aluminium's current P/E and P/B ratios against a couple of its listed competitors in the Malaysian metals/aluminium sector for a clearer valuation picture?
