Citi analysts comment Alumina Ltd’s bottom line performance missed expectations, and by quite the margin too. They also point out that with a weaker AUD, the company’s cash costs are potentially a lot lower in 2020, which should assist the bottom line.
Incorporating a weaker AUD into the forward modeling has added some 16% to Citi’s estimates for 2020. No changes have occurred to dividend projections, which for the half proved in-line with expectations.
The broker’s DCF valuation has increased to $2.70 from $2.56. Neutral rating retained. Target price lifts to $2.30 from $2.10.
Target price is $2.30.Current Price is $2.13. Difference: $0.17 – (brackets indicate current price is over target). If AWC meets the Citi target it will return approximately 7% (excluding dividends, fees and charges – negative figures indicate an expected loss).