MARKET TALK: Alumina Ltd Raised To Hold Despite EPS Cut -Citi

13th Jul 2010 00:15

2315 GMT [Dow Jones] STOCK CALL: Alumina Ltd. (AWC.AU) moved up from Sell to Hold by Citi analyst Clarke Wilkins, but overall tone of note somewhat negative and play is "only for aluminum bulls". EPS downgraded from A$1.80 to A$1.70, meaning AWC trading on 14x 2011 expected earnings, well above 8x for diversifieds; however, on NPV basis sees discount of 20% to A$1.90/share value, replacement value up to A$2.70/share. Key consideration: "China's attempt to reduce the energy intensiveness of the economy and closing of old, inefficient and high polluting aluminum capacity is positive for the market", so while Rio Tinto (RIO.AU) is preferred aluminum exposure, AWC's Sell rating no longer justified. Stock last at A$1.545. ([email protected]) Contact us in Singapore. 65 64154 140; [email protected] (END) Dow Jones Newswires July 13, 2010 19:15 ET (23:15 GMT)