Saturday, 2 May 2015
PMETAL - Tough Like a Steel?
China has removed export taxes on bars and rods of primary aluminium and aluminium-alloy effective 1 May . It will definately dampen further global aluminium prices. Although there are news that stated PMETAL is able to cushion the situation well (would not want to describe how steel industry works and PMETAL's strength), I would prefer to go to the simple analysis on their Financial Health and the probabilities:
Price: RM2.83, PMETAL trading @ 7.5x.
Rolling 4 Quarters EPS : 4.92 + 15.68 + 11.57 + 5.48 = 37.65
P/E = 2.83/37.65 = 7.51x
From here it looks good. But let's put a more stringent measurement here:
Normally their EPS is around 5 per Quarter, we take out the extremely good EPS 15.68 and 11.57 and replace it with let's say 5.
Forecast Rolling 4 Quarters EPS for FYE 2016 : 4.92 + 5 + 5 + 5.48 = 20.40
P/E = 2.83/20.40 = 13.8x
PMETAL 10 year average P/E is about 13x. Dividend yield about 2% plus. Means after discounting the 2 Quarters EPS for year 2016, we are looking at a Fully Valued situation, From FA perspective, the margin just acceptable.
A sharing from a friend on the TA's Perspective:
3rd Time potential rebound? Generally I would say for long term players, do consider to avoid. We would not able to gauge the domino effect that might happen after this. Technical wise, you can always trade via technical rebound or maybe dead cat bounce. Getting the spread in between.
To go in or not, you decide.
Disclaimer and Declaration
The full content of the article is for educational purposes only and should not be used as investment recommendations. We are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss. Examples of specific shares may be citied for illustration purposes.