Intrinsic value of Aluminum Corp. of China ADR - ACH

Previous Close

$15.69

  Intrinsic Value

$2.15

stock screener

  Rating & Target

str. sell

-86%

Previous close

$15.69

 
Intrinsic value

$2.15

 
Up/down potential

-86%

 
Rating

str. sell

We calculate the intrinsic value of ACH stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 12.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  16.68
  16.70
  15.53
  14.48
  13.53
  12.68
  11.91
  11.22
  10.60
  10.04
  9.53
  9.08
  8.67
  8.30
  7.97
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.76
  5.68
  5.61
  5.55
Revenue, $m
  20,842
  24,323
  28,100
  32,168
  36,520
  41,149
  46,050
  51,216
  56,642
  62,327
  68,269
  74,467
  80,925
  87,645
  94,634
  101,899
  109,448
  117,294
  125,447
  133,922
  142,735
  151,902
  161,442
  171,374
  181,720
  192,502
  203,744
  215,471
  227,711
  240,491
  253,841
Variable operating expenses, $m
 
  23,320
  26,936
  30,831
  34,997
  39,429
  44,121
  49,066
  54,262
  59,704
  65,393
  71,293
  77,475
  83,909
  90,600
  97,555
  104,782
  112,293
  120,099
  128,213
  136,650
  145,426
  154,560
  164,068
  173,973
  184,295
  195,058
  206,286
  218,003
  230,238
  243,019
Fixed operating expenses, $m
 
  18
  19
  19
  20
  20
  21
  21
  22
  22
  23
  24
  24
  25
  25
  26
  27
  27
  28
  29
  29
  30
  31
  32
  33
  33
  34
  35
  36
  37
  38
Total operating expenses, $m
  19,999
  23,338
  26,955
  30,850
  35,017
  39,449
  44,142
  49,087
  54,284
  59,726
  65,416
  71,317
  77,499
  83,934
  90,625
  97,581
  104,809
  112,320
  120,127
  128,242
  136,679
  145,456
  154,591
  164,100
  174,006
  184,328
  195,092
  206,321
  218,039
  230,275
  243,057
Operating income, $m
  843
  984
  1,145
  1,318
  1,503
  1,700
  1,908
  2,128
  2,359
  2,601
  2,853
  3,151
  3,426
  3,712
  4,009
  4,318
  4,639
  4,973
  5,320
  5,681
  6,055
  6,446
  6,851
  7,274
  7,714
  8,173
  8,652
  9,151
  9,672
  10,216
  10,784
EBITDA, $m
  1,827
  2,144
  2,479
  2,840
  3,226
  3,637
  4,072
  4,531
  5,013
  5,518
  6,045
  6,596
  7,169
  7,766
  8,387
  9,032
  9,702
  10,399
  11,123
  11,876
  12,658
  13,472
  14,319
  15,202
  16,120
  17,078
  18,076
  19,118
  20,205
  21,340
  22,526
Interest expense (income), $m
  803
  611
  762
  925
  1,101
  1,290
  1,490
  1,702
  1,925
  2,160
  2,406
  2,663
  2,931
  3,211
  3,501
  3,804
  4,118
  4,445
  4,784
  5,137
  5,503
  5,885
  6,281
  6,694
  7,124
  7,571
  8,038
  8,524
  9,031
  9,561
  10,114
Earnings before tax, $m
  240
  373
  383
  393
  402
  410
  418
  426
  434
  441
  447
  488
  495
  501
  508
  514
  521
  528
  536
  544
  552
  561
  570
  580
  591
  602
  614
  627
  640
  655
  670
Tax expense, $m
  58
  101
  103
  106
  108
  111
  113
  115
  117
  119
  121
  132
  134
  135
  137
  139
  141
  143
  145
  147
  149
  151
  154
  157
  160
  163
  166
  169
  173
  177
  181
Net income, $m
  58
  272
  280
  287
  293
  300
  305
  311
  316
  322
  327
  356
  361
  366
  371
  375
  381
  386
  391
  397
  403
  410
  416
  424
  431
  440
  448
  458
  467
  478
  489

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,582
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  27,499
  27,925
  32,262
  36,932
  41,929
  47,244
  52,870
  58,801
  65,032
  71,558
  78,380
  85,496
  92,910
  100,626
  108,650
  116,991
  125,658
  134,666
  144,026
  153,757
  163,875
  174,400
  185,352
  196,756
  208,634
  221,013
  233,920
  247,384
  261,436
  276,109
  291,436
Adjusted assets (=assets-cash), $m
  23,917
  27,925
  32,262
  36,932
  41,929
  47,244
  52,870
  58,801
  65,032
  71,558
  78,380
  85,496
  92,910
  100,626
  108,650
  116,991
  125,658
  134,666
  144,026
  153,757
  163,875
  174,400
  185,352
  196,756
  208,634
  221,013
  233,920
  247,384
  261,436
  276,109
  291,436
Revenue / Adjusted assets
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
Average production assets, $m
  14,940
  17,439
  20,148
  23,064
  26,185
  29,504
  33,018
  36,722
  40,613
  44,689
  48,949
  53,393
  58,023
  62,842
  67,853
  73,061
  78,475
  84,100
  89,946
  96,022
  102,341
  108,914
  115,754
  122,875
  130,293
  138,024
  146,084
  154,493
  163,269
  172,432
  182,004
Working capital, $m
  -2,390
  3,648
  4,215
  4,825
  5,478
  6,172
  6,907
  7,682
  8,496
  9,349
  10,240
  11,170
  12,139
  13,147
  14,195
  15,285
  16,417
  17,594
  18,817
  20,088
  21,410
  22,785
  24,216
  25,706
  27,258
  28,875
  30,562
  32,321
  34,157
  36,074
  38,076
Total debt, $m
  16,060
  15,548
  18,883
  22,475
  26,317
  30,405
  34,731
  39,292
  44,083
  49,102
  54,348
  59,821
  65,522
  71,455
  77,626
  84,040
  90,705
  97,632
  104,830
  112,313
  120,094
  128,187
  136,610
  145,379
  154,513
  164,033
  173,958
  184,312
  195,118
  206,402
  218,188
Total liabilities, $m
  21,986
  21,474
  24,809
  28,401
  32,243
  36,331
  40,657
  45,218
  50,009
  55,028
  60,274
  65,747
  71,448
  77,381
  83,552
  89,966
  96,631
  103,558
  110,756
  118,239
  126,020
  134,113
  142,536
  151,305
  160,439
  169,959
  179,884
  190,238
  201,044
  212,328
  224,114
Total equity, $m
  5,513
  6,451
  7,452
  8,531
  9,686
  10,913
  12,213
  13,583
  15,022
  16,530
  18,106
  19,750
  21,462
  23,245
  25,098
  27,025
  29,027
  31,108
  33,270
  35,518
  37,855
  40,286
  42,816
  45,451
  48,194
  51,054
  54,035
  57,146
  60,392
  63,781
  67,322
Total liabilities and equity, $m
  27,499
  27,925
  32,261
  36,932
  41,929
  47,244
  52,870
  58,801
  65,031
  71,558
  78,380
  85,497
  92,910
  100,626
  108,650
  116,991
  125,658
  134,666
  144,026
  153,757
  163,875
  174,399
  185,352
  196,756
  208,633
  221,013
  233,919
  247,384
  261,436
  276,109
  291,436
Debt-to-equity ratio
  2.913
  2.410
  2.530
  2.630
  2.720
  2.790
  2.840
  2.890
  2.930
  2.970
  3.000
  3.030
  3.050
  3.070
  3.090
  3.110
  3.120
  3.140
  3.150
  3.160
  3.170
  3.180
  3.190
  3.200
  3.210
  3.210
  3.220
  3.230
  3.230
  3.240
  3.240
Adjusted equity ratio
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  58
  272
  280
  287
  293
  300
  305
  311
  316
  322
  327
  356
  361
  366
  371
  375
  381
  386
  391
  397
  403
  410
  416
  424
  431
  440
  448
  458
  467
  478
  489
Depreciation, amort., depletion, $m
  984
  1,159
  1,334
  1,522
  1,723
  1,937
  2,164
  2,403
  2,654
  2,917
  3,192
  3,445
  3,743
  4,054
  4,378
  4,714
  5,063
  5,426
  5,803
  6,195
  6,603
  7,027
  7,468
  7,927
  8,406
  8,905
  9,425
  9,967
  10,533
  11,125
  11,742
Funds from operations, $m
  1,427
  1,431
  1,614
  1,809
  2,017
  2,237
  2,470
  2,714
  2,971
  3,239
  3,519
  3,801
  4,104
  4,420
  4,748
  5,089
  5,443
  5,812
  6,194
  6,592
  7,006
  7,436
  7,884
  8,351
  8,837
  9,344
  9,873
  10,425
  11,001
  11,603
  12,231
Change in working capital, $m
  -239
  522
  567
  610
  653
  694
  735
  775
  814
  853
  891
  930
  969
  1,008
  1,048
  1,090
  1,132
  1,177
  1,223
  1,271
  1,322
  1,375
  1,431
  1,490
  1,552
  1,617
  1,686
  1,759
  1,836
  1,917
  2,002
Cash from operations, $m
  1,666
  909
  1,047
  1,198
  1,364
  1,543
  1,735
  1,939
  2,157
  2,386
  2,627
  2,871
  3,136
  3,412
  3,700
  3,999
  4,311
  4,635
  4,971
  5,321
  5,684
  6,061
  6,453
  6,861
  7,285
  7,727
  8,187
  8,666
  9,165
  9,686
  10,229
Maintenance CAPEX, $m
  0
  -964
  -1,125
  -1,300
  -1,488
  -1,689
  -1,903
  -2,130
  -2,369
  -2,620
  -2,883
  -3,158
  -3,445
  -3,743
  -4,054
  -4,378
  -4,714
  -5,063
  -5,426
  -5,803
  -6,195
  -6,603
  -7,027
  -7,468
  -7,927
  -8,406
  -8,905
  -9,425
  -9,967
  -10,533
  -11,125
New CAPEX, $m
  -906
  -2,500
  -2,708
  -2,917
  -3,120
  -3,319
  -3,514
  -3,704
  -3,891
  -4,076
  -4,260
  -4,444
  -4,630
  -4,818
  -5,011
  -5,209
  -5,413
  -5,625
  -5,846
  -6,077
  -6,319
  -6,573
  -6,840
  -7,121
  -7,418
  -7,731
  -8,061
  -8,409
  -8,776
  -9,163
  -9,572
Cash from investing activities, $m
  -723
  -3,464
  -3,833
  -4,217
  -4,608
  -5,008
  -5,417
  -5,834
  -6,260
  -6,696
  -7,143
  -7,602
  -8,075
  -8,561
  -9,065
  -9,587
  -10,127
  -10,688
  -11,272
  -11,880
  -12,514
  -13,176
  -13,867
  -14,589
  -15,345
  -16,137
  -16,966
  -17,834
  -18,743
  -19,696
  -20,697
Free cash flow, $m
  943
  -2,554
  -2,786
  -3,018
  -3,245
  -3,466
  -3,682
  -3,895
  -4,104
  -4,310
  -4,516
  -4,731
  -4,939
  -5,150
  -5,365
  -5,587
  -5,816
  -6,053
  -6,301
  -6,559
  -6,830
  -7,114
  -7,413
  -7,728
  -8,060
  -8,410
  -8,779
  -9,168
  -9,578
  -10,011
  -10,468
Issuance/(repayment) of debt, $m
  -416
  3,070
  3,335
  3,592
  3,842
  4,087
  4,327
  4,561
  4,791
  5,019
  5,246
  5,473
  5,701
  5,933
  6,170
  6,414
  6,665
  6,927
  7,199
  7,483
  7,781
  8,094
  8,423
  8,769
  9,134
  9,519
  9,925
  10,354
  10,806
  11,283
  11,786
Issuance/(repurchase) of shares, $m
  0
  665
  722
  792
  861
  928
  994
  1,059
  1,123
  1,186
  1,249
  1,288
  1,352
  1,417
  1,483
  1,551
  1,622
  1,695
  1,771
  1,851
  1,934
  2,022
  2,114
  2,211
  2,313
  2,420
  2,533
  2,653
  2,779
  2,911
  3,051
Cash from financing (excl. dividends), $m  
  -530
  3,735
  4,057
  4,384
  4,703
  5,015
  5,321
  5,620
  5,914
  6,205
  6,495
  6,761
  7,053
  7,350
  7,653
  7,965
  8,287
  8,622
  8,970
  9,334
  9,715
  10,116
  10,537
  10,980
  11,447
  11,939
  12,458
  13,007
  13,585
  14,194
  14,837
Total cash flow (excl. dividends), $m
  442
  1,181
  1,271
  1,366
  1,459
  1,550
  1,638
  1,725
  1,811
  1,895
  1,979
  2,029
  2,114
  2,200
  2,288
  2,378
  2,471
  2,568
  2,669
  2,775
  2,885
  3,001
  3,123
  3,251
  3,387
  3,530
  3,680
  3,839
  4,007
  4,184
  4,370
Retained Cash Flow (-), $m
  268
  -938
  -1,002
  -1,079
  -1,154
  -1,228
  -1,300
  -1,370
  -1,439
  -1,508
  -1,576
  -1,644
  -1,713
  -1,782
  -1,854
  -1,927
  -2,002
  -2,081
  -2,162
  -2,248
  -2,337
  -2,431
  -2,530
  -2,634
  -2,744
  -2,860
  -2,982
  -3,110
  -3,246
  -3,389
  -3,541
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  244
  269
  287
  304
  322
  339
  355
  371
  387
  403
  385
  401
  418
  434
  452
  469
  488
  507
  527
  548
  570
  593
  617
  643
  670
  699
  729
  761
  794
  830
Discount rate, %
 
  9.10
  9.56
  10.03
  10.53
  11.06
  11.61
  12.19
  12.80
  13.44
  14.12
  14.82
  15.56
  16.34
  17.16
  18.02
  18.92
  19.86
  20.86
  21.90
  23.00
  24.15
  25.35
  26.62
  27.95
  29.35
  30.82
  32.36
  33.97
  35.67
  37.46
PV of cash for distribution, $m
 
  223
  224
  215
  204
  190
  175
  159
  142
  124
  108
  84
  71
  58
  47
  38
  29
  22
  17
  12
  9
  6
  4
  3
  2
  1
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  94.8
  90.1
  86.0
  82.2
  78.7
  75.6
  72.7
  70.0
  67.6
  65.3
  63.3
  61.3
  59.5
  57.8
  56.3
  54.7
  53.3
  52.0
  50.7
  49.4
  48.3
  47.1
  46.0
  45.0
  44.0
  43.0
  42.1
  41.1
  40.3
  39.4

Aluminum Corporation of China Limited (Chalco) is an aluminum producer with operations in bauxite and coal mining, alumina refining and primary aluminum smelting. The Company operates through alumina segment, including the mining and purchasing of bauxite and other raw materials, and production and sale of alumina, as well as alumina-related products; primary aluminum segment includes the procurement of alumina, other raw materials, supplemental materials and electricity power, the production and sale of primary aluminum and aluminum-related products; trading segment is engaged in the trading of alumina, primary aluminum, other non-ferrous metal products, and crude fuels; energy segment includes coal mining and power generation, including conventional coal-fire power generation and renewable energy generation, such as wind power and photovoltaic power, and corporate and other operating segment includes corporate and other aluminum-related research, development, and other activities.

FINANCIAL RATIOS  of  Aluminum Corp. of China ADR (ACH)

Valuation Ratios
P/E Ratio 4031.7
Price to Sales 11.2
Price to Book 42.4
Price to Tangible Book
Price to Cash Flow 140.4
Price to Free Cash Flow 307.7
Growth Rates
Sales Growth Rate 16.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -32.9%
Cap. Spend. - 3 Yr. Gr. Rate -6%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 126.2%
Total Debt to Equity 291.3%
Interest Coverage 1
Management Effectiveness
Return On Assets 2.4%
Ret/ On Assets - 3 Yr. Avg. 2.3%
Return On Total Capital 0.3%
Ret/ On T. Cap. - 3 Yr. Avg. -3.5%
Return On Equity 1%
Return On Equity - 3 Yr. Avg. -14.4%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 7.3%
Gross Margin - 3 Yr. Avg. 3.3%
EBITDA Margin 9.7%
EBITDA Margin - 3 Yr. Avg. 6.5%
Operating Margin 4%
Oper. Margin - 3 Yr. Avg. 0.2%
Pre-Tax Margin 1.2%
Pre-Tax Margin - 3 Yr. Avg. -3.3%
Net Profit Margin 0.3%
Net Profit Margin - 3 Yr. Avg. -3.7%
Effective Tax Rate 24.2%
Eff/ Tax Rate - 3 Yr. Avg. -49.2%
Payout Ratio 0%

ACH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ACH stock intrinsic value calculation we used $20842 million for the last fiscal year's total revenue generated by Aluminum Corp. of China ADR. The default revenue input number comes from 2016 income statement of Aluminum Corp. of China ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ACH stock valuation model: a) initial revenue growth rate of 16.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 9.1%, whose default value for ACH is calculated based on our internal credit rating of Aluminum Corp. of China ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Aluminum Corp. of China ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ACH stock the variable cost ratio is equal to 95.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $18 million in the base year in the intrinsic value calculation for ACH stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.9% for Aluminum Corp. of China ADR.

Corporate tax rate of 27% is the nominal tax rate for Aluminum Corp. of China ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ACH stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ACH are equal to 71.7%.

Life of production assets of 15.5 years is the average useful life of capital assets used in Aluminum Corp. of China ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ACH is equal to 15%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $5513 million for Aluminum Corp. of China ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 767.273 million for Aluminum Corp. of China ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Aluminum Corp. of China ADR at the current share price and the inputted number of shares is $12.0 billion.

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COMPANY NEWS

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▶ Alcoas Aluminum Production: What Investors Can Expect   [Nov-21-16 03:04PM  at Market Realist]
▶ Can Higher Chinese Aluminum Exports Spoil Alcoas Party?   [Nov-09-16 10:14AM  at Market Realist]
▶ 3 Top Aluminum Stocks to Buy in 2016   [Oct-05-16 11:22AM  at Motley Fool]
▶ Chinalco to Take Mining Unit Private, Pay 32% Premium   [Sep-24-16 01:49AM  at Bloomberg]
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▶ 10 China Stocks With Earnings Growth   [Aug-30-16 05:48PM  at Barrons.com]
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▶ ALUMINUM CORP OF CHINA LTD Financials   [01:04PM  EDGAR Online Financials]
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Financial statements of ACH
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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