Business Summary Alumina Limited (AWC) is an Australia-based company. AWC is engaged in investing in bauxite mining, alumina refining and selected aluminum smelting operations, through its 40% ownership of Alcoa World Alumina and Chemicals (AWAC). Bauxite Mines: AWAC owns bauxite mines operating in five countries, meeting the production needs of the AWAC refineries. AWACs mining operations produced 18.8 million BDT of bauxite in 1H 2017. Including AWACs equity interests in mining investments, total bauxite production attributable to AWAC in 1H 2017 was 21.0 million BDT. Alumina Refineries: AWAC operates seven alumina refineries, some of which are located in proximity to bauxite deposits. Pinjarra, Wagerup and Kwinana alumina refineries are located in WA. Other refineries are Point Comfort (Texas), Alumar (Brazil), and San Ciprian (Spain). Production of alumina was 6.1 Mt in 1H 2017 and alumina shipments were 6.4 Mt Aluminium Smelters: AWAC produces aluminum at the Portland smelter. The Portland Smelter has an annual capacity of 358,000 t of aluminium and is 240 kilometres west of Geelong. AWAC has a 55% controlling interest in the smelter and manages its operations. Ma'aden JV Investment: AWAC holds a 25.1% JV interest with Saudi Arabian Mining Company for the construction of a 4.0Mtpa initial capacity Greenfield mine and a 1.8Mtpa capacity refinery at Ras Al Khair in Saudi Arabia. During 1H 2017, the Maaden refinery produced 0.7 Mt compared to 0.7 Mt in 1H 2016 (AWAC's share of production is approximately 178,000 and 175,000 tonnes respectively for those periods). Latest Research Alcoa Result + Alumina Price Upgrades Buy Rated — We upgrade earnings on back on ongoing strength in alumina prices and raise our target price to A$3.20/share, previously A$2.60/share, and maintain our Buy rating. Although the Alcoa result missed expectations, (2Q Miss But No Major Surprises In The Quarter), alumina margins were >US$200/t and risks to our estimates are to the upside. For more information see research 20 July 2018. GICS - Materials Alumina Limited ASX Code: AWC Price: $2.82 12 Mth Target Price: $3.20 Rating: Buy Important Disclaimer - This may affect your legal rights: Because this document has been prepared without consideration of any specific client's financial situation, particular needs and investment objectives, a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the proper authority of such licensee, who has provided you with this report by arrangement with Bell Potter Securities Limited) should be consulted before any investment decision is made. While this document is based on the information from sources which are considered reliable, Bell Potter Securities Limited, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate. Nor does Bell Potter Securities Limited accept any responsibility to inform you of any matter that subsequently comes to its notice, which may affect any of the information contained in this document. This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. This is general investment advice only and does not constitute advice to any person. Disclosure of Interest: Bell Potter Securities Limited receives commission from dealing in securities and its authorised representatives, or introducers of business, may directly share in this commission. Bell Potter Securities and its associates may hold shares in the companies recommended. Snapshot Date Market Cap. Shares on issue 12 Month High 12 Month Low 31 July 2018 $8,121m 2,879.8m $2.96 $1.87 Rating Rating 12 Mth Target Price Capital Gain Gross Yield Implied Total Return Buy $3.20 13.5% 14.7% 28.2% Investment Fundamentals FYE 31 Dec 2017A 2018F 2019F 2020F Profit $m 473.0 958.0 821.0 837.0 Profit (norm)* $m 473.0 958.0 821.0 837.0 EPS* ¢ 16.0 33.0 29.0 29.0 EPS Growth % 300.0 106.2 -12.1 0.0 P/E* x 17.6 8.5 9.7 9.7 P/E Relative % 0.0 0.0 0.0 0.0 DPS ¢ 18.0 30.0 29.0 29.0 Yield % 6.4 10.6 10.3 10.3 Franking % 100.0 100.0 100.0 100.0 * Adjusted for goodwill and unusual items Source: Based on Citi estimates Share Price Chart Total Return on $10,000 Investment
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Alumina Limited ASX Code: AWC Price: $2.71 12 Mth … · Business Summary Alumina Limited (AWC) is an Australia-based company. AWC is engaged in investing in bauxite mining, alumina
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Business SummaryAlumina Limited (AWC) is an Australia-based company. AWC is engaged ininvesting in bauxite mining, alumina refining and selected aluminum smeltingoperations, through its 40% ownership of Alcoa World Alumina andChemicals (AWAC).
Bauxite Mines: AWAC owns bauxite mines operating in five countries,meeting the production needs of the AWAC refineries. AWACs miningoperations produced 18.8 million BDT of bauxite in 1H 2017. IncludingAWACs equity interests in mining investments, total bauxite productionattributable to AWAC in 1H 2017 was 21.0 million BDT.
Alumina Refineries: AWAC operates seven alumina refineries, some ofwhich are located in proximity to bauxite deposits. Pinjarra, Wagerup andKwinana alumina refineries are located in WA. Other refineries are PointComfort (Texas), Alumar (Brazil), and San Ciprian (Spain). Production ofalumina was 6.1 Mt in 1H 2017 and alumina shipments were 6.4 Mt
Aluminium Smelters: AWAC produces aluminum at the Portland smelter.The Portland Smelter has an annual capacity of 358,000 t of aluminium andis 240 kilometres west of Geelong. AWAC has a 55% controlling interest inthe smelter and manages its operations.
Ma'aden JV Investment: AWAC holds a 25.1% JV interest with SaudiArabian Mining Company for the construction of a 4.0Mtpa initial capacityGreenfield mine and a 1.8Mtpa capacity refinery at Ras Al Khair in SaudiArabia. During 1H 2017, the Maaden refinery produced 0.7 Mt compared to0.7 Mt in 1H 2016 (AWAC's share of production is approximately 178,000 and175,000 tonnes respectively for those periods).
Latest ResearchAlcoa Result + Alumina Price Upgrades
Buy Rated — We upgrade earnings on back on ongoing strength inalumina prices and raise our target price to A$3.20/share, previouslyA$2.60/share, and maintain our Buy rating. Although the Alcoa resultmissed expectations, (2Q Miss But No Major Surprises In The Quarter),alumina margins were >US$200/t and risks to our estimates are to theupside.
Important Disclaimer - This may affect your legal rights: Because this document has been prepared without consideration of any specific client's financial situation, particular needs and investmentobjectives, a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the proper authority of such licensee, who has provided you with this report by arrangement withBell Potter Securities Limited) should be consulted before any investment decision is made. While this document is based on the information from sources which are considered reliable, Bell PotterSecurities Limited, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate.Nor does Bell Potter Securities Limited accept any responsibility to inform you of any matter that subsequently comes to its notice, which may affect any of the information contained in this document.This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. This is generalinvestment advice only and does not constitute advice to any person.Disclosure of Interest: Bell Potter Securities Limited receives commission from dealing in securities and its authorised representatives, or introducers of business, may directly share in thiscommission. Bell Potter Securities and its associates may hold shares in the companies recommended.
Snapshot
DateMarket Cap.Shares on issue12 Month High12 Month Low
31 July 2018$8,121m2,879.8m$2.96$1.87
RatingRating12 Mth Target Price
Capital GainGross Yield
Implied Total Return
Buy$3.2013.5%14.7%28.2%
Investment FundamentalsFYE 31 Dec 2017A 2018F 2019F 2020F
* Source: Morningstar. This chart shows the spread of recommendations from thosebroker analyst's in Australia with research coverage of this stock.
Principals & DirectorsPrincipals
Company Secretary Mr Stephen Craig Foster
Directors
Mr William Peter Day(Non-Executive Director,Non-ExecutiveChairman)Ms Deborah M O'Toole(Non-Executive Director)Mr Chen Zeng(Non-Executive Director)Ms Emma Rachel Stein(Non-Executive Director)Mr John Andrew Bevan(Non-Executive Director)Mr Michael Peter Ferraro(Chief Executive Officer,Managing Director)
To access further Research or for information regarding our recommendations and ratings please seewww.bellpotter.com.au