In view of the strong financial results, a Buy recommendation has been issued to aluminum and alumina producer Aluminum Corporation of China, Ltd. (ACH) by Zacks senior mining industry analyst Paul Cheung, CFA. Here's what his latest update had to say about it:
'Aluminum Corporation of China, Ltd. (Chalco), announced strong financial results for the first three quarters of 2007 mainly due to production increases of primary aluminum products. However, its profit margins declined in the third quarter due to a slip in aluminum and alumina prices.
'Based on our estimate for fiscal year 2007 earnings per ADR, the company is trading at 22.8x, which is higher than the industry mean. Using a P/E multiple of 30.0x our fiscal year 2008 earnings per ADR estimate, yields a target price of $81.00, which we believe reflects the company's growth prospects.
'The company should continue to benefit from strong alumina and aluminum demand in China, as the company has the best balanced value chain of China's aluminum industry.
'Moreover, it plans to continue to increase its production capacity aggressively. Given its overall positive prospects, we are maintaining our Buy recommendation on Chalco shares.'
Read the full analyst report on ACH.
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