Alumina Limited

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Alumina Limited (ASX: AWC) owns a 40% stake in the series of operating entities forming Alcoa World Alumina and Chemicals (AWAC). AWAC possessed interests in bauxite mining, alumina refining and aluminium smelting. The remaining 60% interest in AWAC is owned by Alcoa Corporation.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~52.76% of the total shareholding. Allan Gray Australia Pty Ltd and CITIC Resources Australia Pty. Ltd hold a maximum stake in the company at ~15.25% and ~9.61%, respectively.

1.4 Key Metrics:

During 1HFY22, the company recorded a current ratio of 12.75x against 11.14x in 1HFY21. In addition, it posted an asset-to-equity ratio of 1.00x as compared to the industry median of 1.63x. Below is captured the trend of the return on equity and asset-to-equity ratio since 1HFY20. 

Section 2: Business Updates, Financial Highlights, and Operational Summary

2.1 Business Updates:

2.2 Insights of 1HFY22: The higher alumina prices in 1HFY22 due to continuing supply disruptions aided business strength:

Section 3: Key Risks and Outlook:

Market Outlook: Below picture showcases an overview of the alumina market outlook:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is August 24, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer

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