Sept. 9 （Bloomberg） -- United Co. Rusal, the largest maker of aluminum, may gain 21 percent in Hong Kong trading in the next 12 months as the company posts stronger earnings, according to Alfa Bank, Russia’s biggest private lender.
Earnings before interest, taxes, depreciation and amortization will gain 27 percent from 2010 to 2012 as the company returns to full capacity, prices rise faster than costs and margins grow by $70 a metric ton, Alfa said. On Aug. 31, Rusal posted second-quarter net income of $1.02 billion, after a $230 million loss a year before on higher sales and margins.
“Our 2010 and 2011 forecasts are above consensus, reflecting the strong 2010 first-half performance and positive surprise on operating costs due to lower electricity prices,” Alfa said. Rusal may climb to HK$10 a share, the bank said, from HK$8.25 at the close in Hong Kong today and compared with an initial public offering in the city in January of HK$10.80.
Rusal, run by Russian billionaire Oleg Deripaska, expects aluminum prices to jump next year as investors flock to newly created funds owning the metal and demand from industry rises.
Alfa, based in Moscow, rated Rusal stock “equal-weight,” noting risks including a possible drop in aluminum prices should Chinese power charges slide in line with falling coal costs. The company also remains reliant on financial support from the Russian government and creditors, according to the report.
Aluminum for three month delivery in London averaged $2,161 a ton in the first half, from $1,465 a ton a year earlier.
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