Last year, my best Chasing Value recommendation was Aluminum Corp of China ADS (NYSE: ACH), which sailed from $22 per share to a 52-week high of $90.95. I will take credit for finding a winner, but I cannot in all honesty say that I thought it would more than quadruple -- that part was luck. (The original story was Chasing Value: Aluminum Corporation of China ADS, which I still think is worth a read today.)
If you acquired what is often referred to as Chalco (China Alu
I bought 300 shares of ACH at an average price of $43.08. I usually don't make long entries on beaten down stocks or sectors, but China stocks are due for a bounce and today's strong breakout offers the type of volume catalyst that could be good for a few points. I like the fact that price, OBV and RSI made higher lows (stochastics did not), and we have some room until we hit major resistance.
Aluminum Corporation of China Limited and its subsidiaries engage in bauxite mining, alumina refining, and aluminum smelting businesses in the People's Republic of China. The company's Alumina segment involves in mining and purchasing bauxite and other raw materials, refining bauxite into alumina, and selling alumina. This segment also produces and sells chemical alumina, including alumina hydrate, alumina chemicals, and gallium. Its Primary Aluminum segment engages in procuring alumina and other raw materials, supplemental materials, and electricity power smeltin...
by Zacks Chalco announced higher revenues but lower earnings in 2007, mainly due to production increases in primary aluminum products and alumina price declines. Although the gloomy outlook for the worldwide economy in 2008 will continue to pressure the price of alumina and aluminum, Chalco should continue to benefit from strong alumina and aluminum demand in China. We continue to view the company as having the best balanced value chain in China s aluminum industry. Moreover, the company plans to continue to aggressively increase its production capacity. Chalco s domestic acquisitions...
ACH with AA recently took 9% stake in Rio Tinto. BHP offer for Rio was announced today.
As much as serving Beijing's desire is to prevent one company from controlling over a quarter of the world's iron ore, the Rio deal fits Chinalco President Xiao Yaqing's ambitions to turn his aluminum-focused company into a diversified global giant.
Currently there are 24 ADR's of Chinese companies listed on the NYSE. I descided to get in the game to with a small amount. So buying only one chinese stock, I liked to pich the best one...
I looked up the P/E, ROE and bookvalue per share. I got rid of companies with a P/E over 11 (that left me with 4), removed companies with ROE lower than 15 (only 1 left!) and checked how the bookvalue related to the price.
ACH (Aluminium corp. of China) has a bookvalue per share of $49,60 and the price is currently $34,05 in my opinion the only good pick in the ADR's listed on NYSE.
ACH is a great company in and of itself, but I wouldn't buy at this point. Right now, they're way too expensive because of the Alcoa-Alcan deal, which makes it look as though the entire aluminum sector could be in play. I would wait for the dust to settle before adding to any positions in ACH, but after the price drops down a bit closer to normal, ACH is a great buy.
Just from a philosophical standpoint, why has this stock grown so much in the past couple days? Right now this stock is moving on momentum and not on improved outlook or fundamentals. This is a highly volatile stock and day trading it is likely going to get you burned. I still maintain that it's an excellent growth opportunity and a great long term hold but don't be too surprised that bad news from china could send it down to it's real trading value (about $30 a share). It could go up to 50 it could go down to 25 but don't get caught up in the china craze. Other stocks that are behaving lik...
The draw back I can see to ACH is china's political landscape. Once you get over that, ACH provides a great growth potential at a very cheap price. The foreign market is on fire and I think it will cool off in the future. However, the fundamentals behind ACH are very good, return on equity of 30%, a P/E (trailing) of 2.21, PEG of .69, debt/equity of .42. The only potential draw back is the lack of inside holdings (.77%) but this value is debatable and hard to judge since only 5.1% is owned by institutions. It also pays out 13% in dividends and seems to be relatively uncovered by analysts.
I like where this stock is going. I think the demand for alumina will increase throughout the rest of the year.
ACH is the world's No. 2 alumina maker, and it beat forecasts with a 44 percent rise in second half earnings. The firm intends to enhance its global competitiveness and focus on expanding capacity and acquisitions this year, aiding the country's hunt for resources to feed a hungry economy. Chalco, also China's largest aluminium maker, reported a net profit of 5.0 billion yuan (US$645.7 million) for the six months ended December, bringing yearly profit
I think most large cap China companies are heading north, raw materials is a great category to be in. Aluminum won't loose demand, long term price will rise, ACH is being privatized.... it's all looking pretty good to me :)
ACH P/E 7.82, paying nice dividends, raw material price are going up, China economy is doing well. ACH have a de facto monopoly on the Chinese aluminum market, it is also the 3rd largest aluminum producer in the world, current price does not justify its true value. ACH is a strong buy!
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ACH
ACH
About Aluminum Corp. of China Ltd.
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Last year, my best 
