finance and investment club at uc davis investology 101 kevin yip-fund manager john pelissier-...
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Finance and Investment Club at UC Davis
Investology 101Kevin Yip-Fund Manager
John Pelissier- Senior AnalystMagda Besser- Senior Analyst
Phillip Krieg- AnalystJens Nordgaard- Analyst
Aluminum Corporation of China
Company ProfileCompany Profile
Industry Analysis
Key Statistics
Technical Analysis
SWOT Analysis
Recommendation
• State-owned enterprise headquartered in Beijing
• 2 main business segments– Alumina
• 44.3% of Total Revenue (2006)• Sold to external aluminum smelters
– Primary Aluminum• 54.5% of Total Revenue• Sold as key raw material for aluminum
fabrication
• Mining Bauxite Ore– China Sixth Largest Supply of Bauxite
Ore
Company Profile
Industry Analysis
Key Statistics
Technical Analysis
SWOT Analysis
Recommendation
Aluminum•Final Product of 3-stage production process
•Made from Alumina (Oxidized form)
•Sourced from Bauxite (Aluminum Ore)
•Aluminum Corp. of China handles all three stages
Industry Analysis
Company Profile
Industry Analysis
Key Statistics
Technical Analysis
SWOT Analysis
Recommendation
Who uses Aluminum?• Transportation Industry
• Automobiles• Aerospace Industry
• Construction Industry• Structural Framing (Commercial, Res.)• Doors, Roofs (Residential)
• Containers and Packaging• Shipping Containers
Aluminum Shipments by End Products
Industry AnalysisCompany Profile
Industry Analysis
Key Statistics
Technical Analysis
SWOT Analysis
Recommendation
• Second largest alumina producer globally• Third largest primary aluminum producer • Market Cap : 3.72B• Profit Margin (ttm): -9.62%• Market Share: 20.4% of total
– Largest competitor Alcoa: 70.4%
Industry Analysis
Company Profile
Industry Analysis
Key Statistics
Technical Analysis
SWOT Analysis
Recommendation
6 month chart
ACH - Aluminum Corp. of China
AA - Alcoa
XME- SPDR S&P Metals and Mining ETF
Key StatisticsCompany Profile
Industry Analysis
Key Statistics
Technical Analysis
SWOT Analysis
Recommendation
•Market Cap: 3.7 Billion
•Avg Vol: 637,889
•EV: 3.69 Billion
•Beta: 2.09
Company Profile
Industry Analysis
Key Statistics
Technical Analysis
SWOT Analysis
Recommendation
Industry ComparisonsACH Industry
Return on Equity 30.79 3.71Return on Assets 17.58 3.12Return on Investment 25.72 3.46%EBITDA margin 33.76 22.62Total Debt to equity 45.35 41.4LT Debt to Equity 19.66 39.2
Company Profile
Industry Analysis
Key Statistics
Technical Analysis
SWOT Analysis
Recommendation
Comparable AnalysisAlcoa ACH
EV 13.2 B 3.67 BEBITDA 1.42 B 9.6 BDiluted EPS 0.33 0.02Mkt Cap 12.7 B 15.3 BPrice/Book 1 2EPS growth (3yr) -41.5 -89.5Prcie/Sales 0.6 1.7Price/Cash Flow 13.8 70.9EV/EBITDA 9.32 3.78Forward P/E 22.1 27
Technical Analysis
Company Profile
Industry Analysis
Key Statistics
Technical Analysis
SWOT Analysis
Recommendation
SWOT Analysis - Strengths
•Second Largest alumina producer and third largest aluminum producer in the world•Aluminum is the third most abundant element on the planet• Government Backed? •Competitive advantages of operating in China
Company Profile
Industry Analysis
Key Statistics
Technical Analysis
SWOT Analysis
Recommendation
SWOT Analysis - Weaknesses
• Aluminum suffers in a down economy
•Rising oil prices force production costs upwards
•Expensive to move into new markets
Company Profile
Industry Analysis
Key Statistics
Technical Analysis
SWOT Analysis
Recommendation
SWOT Analysis - Opportunities
• The Company's products are applied in nearly every industry
• International Expansion• Continued Expansion into the
mining and manufacturing of other minerals
Company Profile
Industry Analysis
Key Statistics
Technical Analysis
SWOT Analysis
Recommendation
SWOT Analysis - Threats
•Main Competition is Alcoa (AA)•Rising oil prices •Global Recessions
Company Profile
Industry Analysis
Key Statistics
Technical Analysis
SWOT Analysis
Recommendation
Recommendation•Diluted EPS - 0.02
•EPS Growth (3yr) - -89.5%
•Forward P/E - 27x
•Market Share
Company Profile
Industry Analysis
Key Statistics
Technical Analysis
SWOT Analysis
Recommendation
Alcoa70%
ACH20%
Other10%
•Short Term - Buy
•Long Term - Sell