Analysts confirm confident outlook for Rusal following strong 2Q17 performance

  • ‘Buy’ rating for Rusal reaffirmed by leading analysts
  • Rusal share price +57% YtD, with increased dividend pay-out for rest of 2017
  • 25% increase in aluminium prices driving performance

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Analysts from Renaissance Capital, Goldman Sachs and VTB Capital have reaffirmed their ‘Buy’ rating for Rusal, one of the world’s largest aluminium companies, following Friday’s 2Q17 interim results announcement from the Company.

Specifically, VTB opines:

Chinese success in capacity cuts commands higher forecasts. Aluminium prices are up more than 20% YTD, making it the second best performing base metal in 2017. The Chinese government has been successful in cutting excess capacity, so we now expect a global deficit of above 1mnt to appear in 2017F. Global inventories remain at just above two months of consumption, suggesting that the downside potential for aluminium prices is limited. We now expect LME spot to average USD 1,950/t in 2018F.

Rusal has experienced a positive 2017, with its share price up 57% YtD. For the three months through June 30, Rusal’s core earnings (or EBITDA) rose 48% to USD $510mn.

Increasing aluminium prices have been commonly cited as one of key reasons for Rusal’s strong performance; London aluminium prices are up 25 percent this year due to strong demand and expectations that top producer China will reduce output during the winter.

Rusal announced on Friday that it will pay a dividend of 1.97 cents per share for 2017, or $299mn in total, up 20% on the previous year.

Goldman Sachs have affirmed that they “view the stock as quality exposure to attractive aluminium market at undemanding valuation,” while Renaissance Capital believe that “updated forecasts suggest that 2H17 will be even stronger for Rusal.”

The news of Rusal’s strong performance will please the company’s investors, including majority shareholder En+ Group, who are reported to be planning an IPO in the near future.

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Analysts charts:

Renaissance Capital:

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Goldman Sachs:

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