This article first appeared in The Edge Malaysia Weekly on November 13, 2023 - November 19, 2023
PMB Technology Bhd has been quietly expanding its jobs portfolio in the esoteric area of aluminium fabricated products beyond its home base in Sarawak over the past two decades.
Its expertise includes being a specialist contractor in aluminium curtain wall and cladding works for buildings and infrastructure — from conceptual design to complete installation and commissioning. Few may know that its units helped develop architectural façades of iconic buildings such as the floating “sky park” perched atop Marina Bay Sands in Singapore and the Al-Bidda “twisting tornado” Tower in Doha, Qatar. Other global projects it has participated in include the Altira Macau, Centre 66 Hang Lung Plaza in Wuxi, China, the Jinguang Centre in Shanghai as well as the Hong Kong Convention & Exhibition Centre, according to its website.
PMB’s manufacturing capacity expansion in 2020 helped it reap the benefits of the ensuing global commodity boom, during which the company’s share price enjoyed a good run.
During the three-year evaluation period for The Edge Billion Ringgit Club (BRC) awards, from March 31, 2020, to March 31, 2023, PMB’s share price saw an eye-watering adjusted total return of 99.1% on average each year — at least double that of its parent Press Metal Aluminium Holdings Bhd, which owned 21.48% of PMB as at April 3, according to its 2022 annual report.
PMB’s share price gains were on the back of an impressive 43.5% annual increase in revenue to RM1.18 billion in the financial year ended Dec 31, 2022 (FY2022), from RM399.75 million in FY2019. Its bottom line had an even higher compound annual growth rate of 58.4% during the period, to RM110.36 million from RM27.77 million.
The performance supported a run in its stock price from just 55 sen at the height of the pandemic on March 31, 2020, to a peak of RM5.20 in February 2023, before paring gains to RM4.31 on March 31, 2023, which gave the company a market capitalisation of RM5.49 billion.
PMB saw global demand for one of its core products, silicon metal, supported by demand from the automotive industry as well as the solar energy industry, which has been booming because of the global energy transition push.
While supply from China slowed during its zero-Covid policy, PMB completed Phase 2 of its furnace installation in 2020, which boosted annual capacity to 72,000 tonnes. Its other expertise includes modular aluminium system formwork and manufacturing access equipment such as ladders and scaffolding.
This year, PMB has seen some impact from the normalisation of commodity prices amid concerns about a looming global economic slowdown. Having said that, there is still a silver lining with the aluminium industry seen as a potential beneficiary of the world energy transition. This stems from demand for aluminium alloy for engineering structures, polysilicon for solar cells and semiconductor chips, and silicones for a multitude of industry and commercial products.
In 1HFY2023, PMB’s net profit fell 85.93% year on year to RM11.85 million, from RM84.25 million, on the back of a 30% decline in silicon metal prices during the period. Revenue fell 11.27% to RM498.78 million from RM562.15 million.
The group is set to capture a bigger slice of the market, however, as Phase 3 of its metallic silicon plant is expected to be completed in 3Q2023, which will give it a 50% increase in capacity to 108,000 tonnes a year.
PMB says this will help it secure large quantities of raw materials at lower prices, to remain competitive in its procurement process. It is also optimistic about achieving greater economies of scale in production.
“The group remains cautiously optimistic that the outlook for the silicon market would improve,” it said, following the announcement of its 1HFY2023 results, pointing to the solar sector as a “promising growth engine” for silicon metal demand in the medium to long term.
PMB is a beneficiary of government policies globally aimed at reversing the reliance on imports from China and diversifying the source of supply, including by governments in Europe, India and the US.
“Since the passing of the Inflation Reduction Act [in the US], a total of 155GW of new production capacity has been announced across the solar supply chain. Under the Production Linked Incentive Scheme in India, a total of 48GW of domestic production projects has been approved,” says PMB.
“With the pace of solar installations projected to surge, significant capacity expansions are in the pipeline. This opens up new opportunities for reliable alternative suppliers in the solar value chain.”
A first-time winner of the BRC award this year, PMB’s next showing will be closely watched as it seeks to outgrow the aluminium price boom with a bigger footprint to catch the years-long energy transition journey ahead.
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