KUALA LUMPUR (March 27): With aluminium prices on the rise, ACE Market-bound AMS Advanced Material Bhd managing director Keh Teng Yang said the impact on the group’s profitability remains limited due to its contract-based business model.
London Metal Exchange (LME) aluminium price has climbed above US$3,400 (RM13,634) per tonne this year, fuelled by the war in Iran. At the time of writing, it has declined slightly to US$3,254 per tonne. Year to date, the metal has gained about 8%.
“We negotiate pricing before placing orders. It’s a pass-through model, where any increase in aluminium prices is passed on to our clients,” said Keh.
AMS Advanced Material is mainly involved in the trading of semi-finished aluminium and copper products as well as the processing of semi-finished aluminium products.
The company sells to manufacturers, contractors and fabricators in industries including aerospace, semiconductor and automotive.
He added that about 25% of the business involves stocking, which allows the company to benefit from short-term price increases.
“When prices rise, we do see some upside from our inventory. For instance, with prices moving from US$3,000 to US$3,400, there is a small gain from the inventory we hold,” he explained.
However, Keh noted that it also means that the business is exposed to downside risks when prices fall.
“Having said that, we are also [exposed] if prices go down. Nevertheless, our model is robust in the sense that fluctuations in LME prices do not significantly impact our bottom line [because we are able to benefit from short-term price increases],” he added.
AMS Advanced Material plans to venture into metal scrap recycling business
Meanwhile, he also shared the company’s plans to venture into the aluminium scrap recycling business as part of its business growth.
Through this business, AMS Advanced Material plans to collect scrap aluminium from its existing customers and process it into saleable form for the export market, thereby providing an additional income stream for the company through its subsidiary AMS Ecogreen.
Keh said that the company is in the midst of obtaining the “second-hand dealer licence”, which will allow AMS Advanced Material to start metal scrap collection.
“We need to make sure that we get the licence and meet all the compliance requirements to embark [on this venture].”
According to its prospectus, the scrap recycling operations will take place in Johor, and it expects the processing capacity to be approximately 17 tonnes per month. The company intends to commence the recycling operation in the first half of 2026, pending the licence approval. It has yet to identify premises for the operation.
AMS Advanced Material launched its ACE Market initial public offering, priced at 29 sen per share, on Friday. It aims to raise RM46 million upon its listing on April 23.