P.A. Resources in position for strong earnings growth
PETALING JAYA: P.A. Resources Bhd , the country’s leading aluminium extruders and fabricators, is well-positioned for multi-year earnings growth, according to Rakuten Trade.

The research house said the growth would be driven by its recently secured RM1.08bil contract from First Solar, its new plant that would more than double the group’s extrusion capacity, facilitating customer and product diversification, and potential margin expansion from operational efficiencies.

The company successfully completed its recent extrusion capacity expansion from 2,600 tonnes to at least 3,200 tonnes per month recently.

This additional capacity is expected to see full utilisation by April 2024, which is timely as the company works on the RM1.08bil solar contract. As such, the brokerage said it is especially confident of the company’s earnings growth for financial year 2025 (FY25).

“We remain optimistic on the company’s prospects given First Solar plans to double its manufacturing capacity by 2026 to address its outstanding backlog of 80 gigawatts until 2030.

“Given its initiatives to establish a robust track record with a multinational customer, upgrade existing production lines and add new production lines over the years, we foresee possible margin expansion beyond the conservative 7% in guidance from the company at net level, simply from economies of scale.

“This is a very commendable margin given the nature of its manufacturing business,” the research house noted.

Separately, it said P.A. Resources is currently in a net cash position with RM46mil and has healthy cash flow generation capabilities to fund future capital expenditure via a combination of internal funds and bank borrowings.

In view of the company’s ongoing expansion, the brokerage anticipates a net gearing ratio of 0.27 times by FY25 and expects the company to pay dividends of 0.7 sen and 1.1 sen for FY24 and FY25, respectively, which translates into yields of 2% and 3.2%.

That said, Rakuten anticipates a greater dividend payout ratio once the company’s robust earnings outlook materialises.
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P.A. Resources Bhd, the country’s leading aluminium extruders and fabricators, is well-positioned for multi-year earnings growth, according to Rakuten Trade.