While alumina spot prices have softened in the past week, they remain at a “lofty” $559/t, the broker notes. Tailwinds are expected to continue in the second half with 50% of Alunorte production curtailed and China set to restock ahead of winter shutdowns.
It’s a perfect storm for Alumina (the company), the broker suggests, with Alcoa margins at historical highs, costs set to reduce on operational leverage and forex moving favourably. The only immediate risk lies with the union dispute in WA which is yet to be resolved.
Outperform and $3.10 target retained.
Target price is $3.10.Current Price is $2.75. Difference: $0.35 – (brackets indicate current price is over target). If AWC meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).