Intrinsic value of Aluminum Corp. of China ADR - ACH

Previous Close

$17.20

  Intrinsic Value

$5.31

stock screener

  Rating & Target

str. sell

-69%

  Value-price divergence*

+197%

Previous close

$17.20

 
Intrinsic value

$5.31

 
Up/down potential

-69%

 
Rating

str. sell

 
Value-price divergence*

+197%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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 13.4

 

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
  727
  641
  791
  954
  1,130
  1,318
  1,518
  1,730
  1,953
  2,188
  2,434
  2,691
  2,959
  3,238
  3,528
  3,830
  4,145
  4,471
  4,810
  5,163
  5,529
  5,910
  6,306
  6,719
  7,148
  7,595
  8,061
  8,547
  9,054
  9,584
  10,136
Earnings before tax, $m
  240
  344
  354
  364
  373
  382
  390
  398
  405
  413
  420
  460
  467
  474
  481
  488
  495
  502
  510
  518
  527
  536
  545
  555
  566
  578
  590
  603
  617
  632
  648
Tax expense, $m
  58
  93
  96
  98
  101
  103
  105
  107
  109
  111
  113
  124
  126
  128
  130
  132
  134
  136
  138
  140
  142
  145
  147
  150
  153
  156
  159
  163
  167
  171
  175
Net income, $m
  58
  251
  259
  266
  272
  279
  285
  290
  296
  301
  306
  336
  341
  346
  351
  356
  361
  367
  372
  378
  384
  391
  398
  405
  413
  422
  431
  440
  451
  461
  473

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
  30,327
  35,037
  40,110
  45,536
  51,309
  57,419
  63,860
  70,627
  77,715
  85,123
  92,852
  100,904
  109,283
  117,998
  127,056
  136,469
  146,252
  156,418
  166,986
  177,974
  189,404
  201,299
  213,684
  226,584
  240,027
  254,045
  268,668
  283,929
  299,864
  316,509
Adjusted assets (=assets-cash), $m
  23,917
  30,327
  35,037
  40,110
  45,536
  51,309
  57,419
  63,860
  70,627
  77,715
  85,123
  92,852
  100,904
  109,283
  117,998
  127,056
  136,469
  146,252
  156,418
  166,986
  177,974
  189,404
  201,299
  213,684
  226,584
  240,027
  254,045
  268,668
  283,929
  299,864
  316,509
Revenue / Adjusted assets
  0.871
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
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
  17,972
  21,683
  25,680
  29,957
  34,505
  39,320
  44,396
  49,728
  55,313
  61,151
  67,242
  73,586
  80,189
  87,056
  94,194
  101,612
  109,320
  117,331
  125,659
  134,318
  143,325
  152,698
  162,457
  172,622
  183,216
  194,261
  205,784
  217,810
  230,367
  243,483
Total liabilities, $m
  21,986
  23,898
  27,609
  31,606
  35,883
  40,431
  45,246
  50,322
  55,654
  61,239
  67,077
  73,168
  79,512
  86,115
  92,982
  100,120
  107,538
  115,246
  123,257
  131,585
  140,244
  149,251
  158,624
  168,383
  178,548
  189,142
  200,187
  211,710
  223,736
  236,293
  249,409
Total equity, $m
  5,513
  6,429
  7,428
  8,503
  9,654
  10,877
  12,173
  13,538
  14,973
  16,476
  18,046
  19,685
  21,392
  23,168
  25,016
  26,936
  28,931
  31,005
  33,161
  35,401
  37,730
  40,154
  42,675
  45,301
  48,036
  50,886
  53,858
  56,958
  60,193
  63,571
  67,100
Total liabilities and equity, $m
  27,499
  30,327
  35,037
  40,109
  45,537
  51,308
  57,419
  63,860
  70,627
  77,715
  85,123
  92,853
  100,904
  109,283
  117,998
  127,056
  136,469
  146,251
  156,418
  166,986
  177,974
  189,405
  201,299
  213,684
  226,584
  240,028
  254,045
  268,668
  283,929
  299,864
  316,509
Debt-to-equity ratio
  2.913
  2.800
  2.920
  3.020
  3.100
  3.170
  3.230
  3.280
  3.320
  3.360
  3.390
  3.420
  3.440
  3.460
  3.480
  3.500
  3.510
  3.530
  3.540
  3.550
  3.560
  3.570
  3.580
  3.590
  3.590
  3.600
  3.610
  3.610
  3.620
  3.620
  3.630
Adjusted equity ratio
  0.231
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  58
  251
  259
  266
  272
  279
  285
  290
  296
  301
  306
  336
  341
  346
  351
  356
  361
  367
  372
  378
  384
  391
  398
  405
  413
  422
  431
  440
  451
  461
  473
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
  1,410
  1,592
  1,788
  1,996
  2,216
  2,449
  2,694
  2,950
  3,218
  3,498
  3,781
  4,084
  4,400
  4,728
  5,070
  5,424
  5,792
  6,175
  6,573
  6,987
  7,418
  7,866
  8,333
  8,819
  9,327
  9,856
  10,408
  10,984
  11,586
  12,215
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
  888
  1,026
  1,177
  1,343
  1,522
  1,714
  1,919
  2,136
  2,366
  2,607
  2,851
  3,116
  3,392
  3,680
  3,980
  4,292
  4,616
  4,952
  5,302
  5,665
  6,043
  6,435
  6,843
  7,268
  7,709
  8,169
  8,649
  9,148
  9,669
  10,212
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
  -2,576
  -2,808
  -3,039
  -3,266
  -3,487
  -3,703
  -3,915
  -4,124
  -4,331
  -4,536
  -4,751
  -4,959
  -5,170
  -5,385
  -5,607
  -5,835
  -6,072
  -6,320
  -6,578
  -6,849
  -7,133
  -7,432
  -7,746
  -8,078
  -8,427
  -8,796
  -9,185
  -9,595
  -10,028
  -10,484
Issuance/(repayment) of debt, $m
  -479
  3,410
  3,711
  3,997
  4,276
  4,549
  4,815
  5,076
  5,332
  5,586
  5,838
  6,090
  6,345
  6,603
  6,867
  7,138
  7,418
  7,708
  8,011
  8,327
  8,659
  9,007
  9,373
  9,759
  10,165
  10,594
  11,046
  11,523
  12,026
  12,557
  13,117
Issuance/(repurchase) of shares, $m
  0
  665
  740
  810
  878
  945
  1,011
  1,075
  1,139
  1,202
  1,264
  1,302
  1,366
  1,431
  1,497
  1,564
  1,635
  1,707
  1,783
  1,862
  1,945
  2,032
  2,124
  2,220
  2,321
  2,428
  2,541
  2,660
  2,785
  2,917
  3,056
Cash from financing (excl. dividends), $m  
  -530
  4,075
  4,451
  4,807
  5,154
  5,494
  5,826
  6,151
  6,471
  6,788
  7,102
  7,392
  7,711
  8,034
  8,364
  8,702
  9,053
  9,415
  9,794
  10,189
  10,604
  11,039
  11,497
  11,979
  12,486
  13,022
  13,587
  14,183
  14,811
  15,474
  16,173
Total cash flow (excl. dividends), $m
  442
  1,500
  1,644
  1,768
  1,889
  2,007
  2,122
  2,235
  2,347
  2,457
  2,566
  2,641
  2,752
  2,864
  2,978
  3,096
  3,217
  3,343
  3,474
  3,612
  3,755
  3,906
  4,065
  4,233
  4,409
  4,595
  4,791
  4,998
  5,216
  5,446
  5,689
Retained Cash Flow (-), $m
  268
  -916
  -998
  -1,075
  -1,150
  -1,224
  -1,295
  -1,366
  -1,435
  -1,503
  -1,571
  -1,639
  -1,707
  -1,776
  -1,847
  -1,920
  -1,996
  -2,074
  -2,155
  -2,240
  -2,330
  -2,423
  -2,522
  -2,625
  -2,735
  -2,850
  -2,972
  -3,100
  -3,235
  -3,378
  -3,529
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
 
  583
  645
  692
  738
  783
  827
  870
  912
  954
  995
  1,003
  1,045
  1,087
  1,131
  1,175
  1,222
  1,269
  1,319
  1,371
  1,426
  1,483
  1,544
  1,607
  1,674
  1,745
  1,819
  1,898
  1,980
  2,068
  2,160
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
 
  535
  538
  520
  495
  463
  428
  389
  348
  306
  266
  219
  184
  152
  123
  98
  76
  58
  44
  32
  23
  16
  11
  7
  5
  3
  2
  1
  1
  0
  0
Current shareholders' claim on cash, %
  100
  95.3
  91.0
  87.1
  83.5
  80.3
  77.4
  74.7
  72.2
  69.9
  67.7
  65.8
  64.0
  62.3
  60.7
  59.1
  57.7
  56.3
  55.0
  53.8
  52.6
  51.5
  50.4
  49.3
  48.3
  47.3
  46.4
  45.5
  44.6
  43.7
  42.8

Aluminum Corporation of China Limited, together with its subsidiaries, engages in the manufacture and distribution of alumina, and primary aluminum and energy products in China. It operates through Alumina, Primary Aluminum, Energy, and Trading segments. The Alumina segment is involved in the mining and purchasing of bauxite and other raw materials; refining of bauxite into alumina; sale of alumina; and production and sale of chemical alumina and metal gallium. The Primary Aluminum segment procures alumina and other raw materials, supplemental materials, and electricity power; and produces and sells primary aluminum, as well as carbon products, aluminum alloy products, and other aluminum products. The Energy segment engages in the research and development, production, and operation of energy products, including coal mining; generates and sells electricity to regional power grid corporations using thermal power, wind power, and solar power sources; and manufacture of energy related equipment. The Trading segment trades in alumina, primary aluminum, aluminum fabrication products, other non-ferrous metal products, coal products, raw materials, and supplemental materials; and provides logistics and transport services to internal manufacturing plants and external customers. The company also manufactures, acquires, and distributes bauxite mines, limestone ore, aluminum magnesium ore, and related nonferrous metal products. The company was founded in 2001 and is based in Beijing, the People's Republic of China.

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

Valuation Ratios
P/E Ratio 4419.7
Price to Sales 12.3
Price to Book 46.5
Price to Tangible Book
Price to Cash Flow 153.9
Price to Free Cash Flow 337.3
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 2.2%
Ret/ On Assets - 3 Yr. Avg. 2%
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 9.4%
EBITDA Margin - 3 Yr. Avg. 6.3%
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 4.4% 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 780.995 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 $13.4 billion.

RELATED COMPANIES Price Int.Val. Rating
AA Alcoa 37.76 7.56  str.sell
KALU Kaiser Aluminu 94.72 10.98  str.sell
RIO Rio Tinto ADR 44.64 6.23  str.sell

COMPANY NEWS

▶ Analyzing Chinas Aluminum Production Data   [May-24-17 10:33AM  Market Realist]
▶ 7 Stocks Beating the Market   [Apr-05-17 04:27PM  GuruFocus.com]
▶ 7 Stocks That Are Outperforming the Market   [Mar-22-17 05:44PM  GuruFocus.com]
▶ Aluminum Stocks Surge on Reports of a Chinese Output Cut   [Mar-01-17 04:09PM  at Motley Fool]
▶ 6 Companies That Beat the S&P 500 Index   [Jan-05-17 03:35PM  GuruFocus.com]
▶ What Could Trumps Presidency Mean for Alcoa and Aluminum?   [Dec-16-16 09:05AM  Market Realist]
▶ What Do Chinas Aluminum Demand Indicators Suggest?   [Dec-15-16 10:35AM  Market Realist]
▶ What Do Chinas Demand Indicators Mean for Alcoa Stock?   [Nov-28-16 08:05AM  Market Realist]
▶ 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]
▶ What Challenges Could Alcoas Post-Split Upstream Business Face?   [Sep-21-16 10:05AM  at Market Realist]
▶ 10 China Stocks With Earnings Growth   [Aug-30-16 05:48PM  at Barrons.com]
▶ Alcoa: Doing a Solid   [Jul-12-16 10:06AM  at Barrons.com]
▶ ALUMINUM CORP OF CHINA LTD Financials   [01:04PM  EDGAR Online Financials]
▶ (AA) Who are Alcoa's Main Competitors?   [Apr-16-16 04:48PM  at Investopedia]
▶ Is Jacobs Engineering Group Inc (JEC) A Good Stock To Buy?   [Dec-01  05:19PM  at Insider Monkey]
▶ Do Hedge Funds Love Health Net, Inc. (HNT)?   [03:31PM  at Insider Monkey]
▶ Goldman: Beijing's Support For Metals At Best Relief Rally   [Nov-26  09:59PM  at Barrons.com]
▶ The 7 Biggest Chinese Mining Companies   [Sep-16  01:15PM  at Investopedia]
▶ China's A-Shares, Cheap Enough To Buy?   [09:58AM  at Barrons.com]
Stock chart of ACH 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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.