Aluminium Company of Malaysia Bhd
Aluminium Company of Malaysia Berhad (Alcom) is a leading supplier of aluminium rolled products in the ASEAN region. The company is part of the US-based Novelis Group and is majority-owned by Novelis Inc., the world leader in aluminium rolling and can recycling with operations in 11 countries.   

Alcom produces a range of products for the transportation, building, electronic, and packaging industries. The company’s annual output capacity is about 30,000 tonnes, with almost half of its annual production exported to markets that include Thailand, Taiwan, Japan, Middle East, Egypt and Australia.

Earnings for the company, however, have not been exciting. Revenue ranged between RM254 million and RM297 million from FY March 2010 to 2014. Despite the steady turnover, EBITDA margins have been on a downtrend since FY2011, resulting in declining profits as well. The company posted net losses of RM3.0-3.5 million in FY2013 and 2014.

While its financial performance is unexciting, the stock may appeal to investors for its low price-to-book valuation and cash rich balance sheet, which could make it an attractive privatisation target.

At 70 sen, the stock is trading at a steep 63 sen or 47.4% discount to its book value of RM1.33. Alcom has net cash of RM45.3 million as at 30 June 2014, which translates to 34.2 sen per share — or 48.9% of the current share price.

Novelis Inc currently owns 59.16% of Alcom. Interestingly, if it opts to privatise the company, it will cost the Novelis close to nothing in cash. At current prices, acquiring the balance of shares it does not own will cost RM 28.8 million, which can be recouped from Alcom’s net cash of RM 45.3 million.

This article first appeared in The Edge Financial Daily, on October 20, 2014.