This year, aluminum prices have been highly volatile due to the Russia-Ukraine war, logistical issues, increasing recessionary fears, and China’s zero-covid policy. However, the industry is a major contributor to the global economy, and the market is forecasted to reach $210 billion by 2027.

One of the world’s largest alumina producers, Aluminum Corporation of China Limited (ACHHY) operates through five segments: Alumina; Primary Aluminum; Trading; Energy; and Corporate and Other Operating.

ACHHY has gained 38.8% over the past month, closing its last trading session at $9.81. The stock has gained 8.5% over the past three months. It is currently trading 50.9% above its 52-week low price.

The company’s revenue and net income have grown at CAGRs of 11.9% and 187.9%, respectively, in the past three years.

Moreover, it pays reliable dividends. Its annual dividend of $0.12 translates to a 1.16% yield on the current share price. Its four-year dividend yield is 1.41%. ACHHY has seven consecutive years of dividend payment history.

Here is what could shape ACHHY’s performance in the near term:

Solid Financials

During the first three quarters of 2022 that ended September 30, 2022, ACHHY’s total operating revenue came in at RMB 206.07 billion ($29.33 billion), depicting a growth of 5.7% year-over-year.

Its net cash flows from operating activities grew 8.8% year-over-year to RMB 19.36 billion ($2.76 billion). Its investment income came in at RMB 557.43 million ($7.93 million) compared to negative RMB 402.60 million in the prior year period. Moreover, its non-operating income rose 17.6% year-over-year to RMB 75.72 million ($10.78 million).

Attractive Valuations

ACHHY’s forward EV/Sales of 0.51x is 65.7% lower than the industry average of 1.48x. Its forward EV/EBITDA of 5.92x is 18.7% lower than the industry average of 7.28x. The stock’s forward Price/Sales of 0.18x is 83.8% lower than the 1.13x industry average.

In addition, in terms of trailing 12-month Price/Cash flow, the stock is trading at 1.72x, which is 80% lower than the 8.64x industry average, while its trailing 12-month Price/Book multiple of 0.82 is 55% lower than the industry average of 1.83.

High Profitability

In terms of the trailing-12-month levered FCF margin, ACHHY’s 7.78% is 47.39% higher than the 5.28% industry average. Likewise, its 1.42% trailing-12-month Asset turnover ratio is 88.64% higher than the industry average of 0.75%.

Furthermore, the stock’s trailing-12-month cash from operations of $4.20 billion is significantly higher than the industry average of $363.02 million.

POWR Ratings Reflect Promising Outlook

ACHHY has an overall rating of B, which equates to a Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. ACHHY has an A grade in Value, consistent with its discounted valuation.

It’s A grade for Growth, in sync with its solid financial growth in the last reported quarter.

In the 6-stock Aluminum industry, ACHHY is ranked #2.

Click here for the additional POWR Ratings for ACHHY (Stability, Sentiment, Momentum, and Quality).

View all the top stocks in the Aluminum industry here.

Bottom Line

ACHHY registered a steady growth over the past few years. Moreover, it is trading above its 50-day moving average of $8.30. Given the company’s super-discounted valuation, I think this could be the right time to scoop up ACHHY shares.

How Does Aluminum Corporation of China Limited (ACHHY) Stack Up Against Its Peers?

While ACHHY has an overall POWR Rating of B, one might consider looking at its industry peer, Constellium SE (CSTM), which also has an overall B (Buy) rating.

ACHHY shares were trading at $11.15 per share on Monday afternoon, up $1.34 (+13.66%). Year-to-date, ACHHY has gained 23.89%, versus a -14.74% rise in the benchmark S&P 500 index during the same period.

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.

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