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| quote: | Originally posted by philliez
Hey Krypton, I've been holding ACH for a while after I did a little research and its looking pretty good. I don't know nearly as much as you though, why dont you check it out and give me your expert analysis  |
Aluminum Corporation of China ADR Rep 25 Class H Ord Shs (ACH)
Aluminum Corp. of China Ltd. (Chalco) is engaged in bauxite mining, alumina refining and aluminum smelting. Principal products are alumina, primary aluminum, gallium and carbon.
The stock has had a huge run up in price. But I think its at its peak.
This is strangely in reciprocal of aluminum spot prices which have fallen as ACH goes up. I don't know how they will sustain the recent trend of growth when aluminum prices are falling.
Also they have cut their spot prices at which they sell their aluminum. Not good...
| quote: |
SEP 14, 2007 6:28AM
Chalco cuts alumina spot price by 10 percent
Financial Times
Author: Lin Aluminum Corp of China Ltd (Chalco) said it has cut it spot price for alumina, the chief precursor to finished aluminum, by 10 percent to 3,500 yuan per ton to reflect anticipated demand conditions, said a spokesperson from the Chinese firm. "It's purely a market-based decision. Demand expectations drove our move," said Zhang Qing. China's largest aluminum and alumina producer said in August that it expects the price of aluminum and alumina to hold steady for the rest of the year after a price drop in the first half. Chairman and chief executive Xiao Yaqing said at the time that alumina will stabilize at between 3,500-4,000 yuan a ton in the second half, with the price of aluminum seen at between 19,000-22,000 yuan a ton. |
I think you have found a good growth company. The fundamentals aren't spectacular. I graded them a C.
Looking at the price ratios (second group down), you'll see that the P/E Ratio, Price/Sales Ratio, Price/Book Value Ratio, and Price/Cash Flow Ratio are higher than the industry and S%P averages. This is an indication that the stock prices overpriced compared to its industry and market. That is very bearish (meaning an expectation in a drop in share price).
I think the price is grossly overvalued as indicated by the price ratios and my valuation spreadsheet. I think you should get out now while the price is high. I believe the stock price is at least 20% overvalued, and is really worth just about $30.
Additionally, there balance sheet shows they have a lot of liabilities. The short-term liabilities are a killer. Do you want to be buying debt or equity? Debt just sucks. But that is what you get with high-growth companys, especially asian ones. This is because these high-growth companies tend to heavily finance their growth which means if they have high debt and high capital appreciation, they are financing their growth thru' debt. Not a good thing. ACH isn't bankruptly in debt, they just show a debt that I don't like to see.
You'll see in the balance sheet that the most liquid assets, inventory and cash, are just enough to cover their short-term (less than 1yr) liabilities. That's not even mentioning the long-term (greater than 1yr) liabilities.
ADDITIONALLY, Alcoa (AA) which owned about a 7% in ACH since 2001, has decided to sell their entire stake. That's HUGE! Even Alcoa thinks the stock is overpriced, so they sold. You should do the same thing! Even worse for ACH is only 7% of the stock is owned by institutional investors (the big guys). 50% is more the level I like to see. And even worser than that, insiders like the company officers own only 1% of the stock. If the stock was doing great, the insiders and institutions would own a lot more than a measly 8% of the total shares outstanding.
| quote: | SEP 14, 2007 5:13AM
Alcoa International to Sell USD1.64bn Chalco H-shares
Comtex News Network
BEIJING, Sep 14, 2007 (SinoCast via COMTEX) -- Alcoa intends to sell $1.64 billion of shares it owns of Aluminum Corp. of China [Chalco], according to a term sheet seen by Dow Jones Newswires. Alcoa could sell its entire 6.86% stake for as much as $2B to $2.1B, earning a profit of around $1.9B, if it exercises an option. Alcoa will reportedly sell the shares (listed on the Hong Kong exchange) for HK$17.26 to HK$18.27, a 10.4% to 15.4% discount to Wednesday's close of HK$20.40. "Alcoa is taking profit from Chalco shares, and the sale indicates that it is concerned about the commodities cycle, after the credit crunch in the U.S.," commented Liu Yang of Atlantis Investment Management in Hong Kong. Some analysts expect broad profit-taking in Chalco shares, but a Hong Kong-based DBS analyst said, "... any pullback will present a buying opportunity." Alcoa originally bought Chalco shares in its 2001 IPO at HK$1.37/share. Alcoa was untraded as of 8:00 a.m. in Wednesday's pre-market, after gaining 0.4% to $34.20 on Tuesday. ADRs of Chalco are down 10.8% to $59.00 in thin pre-market trading, erasing Tuesday's 8.9% jump to $66.18. |
| quote: | SEP 14, 2007 8:09PM
IN BRIEF (Page 3)
Financial Times
Stake sale Alcoa International (Asia) Ltd, a wholly owned subsidiary of Alcoa, said it has sold its equity holdings in Aluminum Corp of China Ltd (Chalco) through a placement of shares for approximately HK$15.3 billion or HK$17.34 per share. Alcoa had been a significant investor in Chalco since its initial public offering in 2001, holding about 7 percent of its shares. |
Notice when Alcoa bought a 7% stake in 2001 the price was only like $5-6. Now its in the $60's. It's reached its peak. Profit now. Higher volume is contributing higher volatility indicating indirection. This is bearish towards my opinion that the buyers have run out of steam. But not enough yet to have made the price fall more than 10%. Right now would be the perfect time to profit and go.
Final thought...Alcoa knows what they're doing. I know what I'm doing. SELL SELL SELL ACH WHILE YOU STILL CAN!! and short it!
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Last edited by Krypton on Sep-20-2007 at 04:55
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