Alumina (SEHK:2600): Examining Valuation After Strong 12-Month Share Price Gains

If you have been following Aluminum Corporation of China (SEHK:2600) lately, the stock’s recent performance may have prompted a closer look. There hasn’t been a specific headline driving the movement, but even in the absence of major news, significant shifts like these can spark investor curiosity. Investors may wonder if this is a glimpse of future momentum, or a sign the narrative is changing. Looking over the past year, Aluminum Corporation of China’s momentum has been anything but static. Shares have gained a hefty 77% in the past twelve months, supported further by a 49% rise in the past three months alone. Even against mixed annual revenue growth, net income has moved up, and the stock’s multi-year returns remain strong compared to many peers. This may hint that investors are reassessing both current risks and future rewards. Given this backdrop, the real question is whether the current price still offers value, or if the recent climb means the market has already accounted for all the good news.

Price-to-Earnings of 9.6x: Is it justified?

Aluminum Corporation of China is currently trading at a price-to-earnings (P/E) ratio of 9.6 times. This is above the peer average of 5.6x but below the Hong Kong Metals and Mining industry average of 13.6x. This suggests that while the stock is more expensive than some peers, it is still attractively priced within its broader sector context.

The price-to-earnings ratio measures how much investors are willing to pay for each dollar of the company’s earnings. In capital-intensive industries such as metals and mining, this ratio helps investors compare profitability against other companies and the wider market.

The current P/E suggests that investors may be expecting more resilient or higher-quality earnings from Aluminum Corporation of China relative to many of its immediate peers. However, it is trading at a discount when compared to the larger industry. This indicates some caution or skepticism remains regarding future growth.

Result: Fair Value of $23.82 (UNDERVALUED)

See our latest analysis for Aluminum Corporation of China.

However, slowing annual revenue and industry caution could challenge recent optimism if net income growth loses momentum or if broader market sentiment shifts.

Find out about the key risks to this Aluminum Corporation of China narrative.

Another View: What Does Our DCF Model Suggest?

Taking a step back from multiples, our SWS DCF model looks at Aluminum Corporation of China's future cash flows instead. This approach also signals the stock is undervalued. However, can any model truly capture all the moving parts?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding Aluminum Corporation of China to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Aluminum Corporation of China Narrative

If this outlook doesn’t match your perspective, or you’d like to dive deeper into the numbers yourself, you can shape your own view in just a few minutes. Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Aluminum Corporation of China.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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