Alumina posted a solid March quarter result, Macquarie suggests, with production, sales and the share of AWAC earnings all in line with expectations. Distributions from the AWAC joint venture with Alcoa were 7% higher than forecast and AWAC is looking to cut capex to offset weaker alumina prices.
Downside risk for alumina prices is nevertheless increasing, Macquarie warns, with spot currently -21% below the broker’s 2020 forecast. Were the broker to run spot prices in its valuation, forecast earnings would fall -57% and -66% in 2020-21.
Downgrade to Neutral from Outperform. Target falls to $1.50 from $1.90.
Sector: Materials.
Target price is $1.50.Current Price is $1.51. Difference: ($0.01) – (brackets indicate current price is over target). If AWC meets the Macquarie target it will return approximately -1% (excluding dividends, fees and charges – negative figures indicate an expected loss).
