|ARANK company in Selangor|
|The center bottom, aluminium extrusions; the right is the aluminium billets. (Diameter ranging from 3 inches to 11 inches and longest length up to 6 meters)|
|The process and machineries involved in aluminium|
ARANK currently exporting about 30% of its production. Its export markets include Africa, Europe, South Asia and South East Asia.
Why is aluminium important in our daily life. Below are some points:
- Strong and durable providing a range of long lasting design options
- Corrosion resistant qualities and resistant to weathering under a range of harsh environmental conditions.
- Hassle-free maintenance – won't swell, crack, split or warp. Free from Termites infestion threat.
- Non-combustible material which is safe even in high temperature environment , does not burn or release toxic fumes.
- Environmentally sustainable material and infinitely recyclable.
- Aesthetic and uniform surface finish quality
1. Fundamental Analysis
|Revenue and Net Profit from 2013 to 2017*|
In the Annual Report 2016, Mr Chairman Dato’ Shahrir Bin Abdul Jalil mentioned about the risks or factors faced by ARANK, which were aluminium price, currencies and also natural gas pricing. All of these are concerns faced in the year of 2016, however the company still able to curb the situation. As mentioned by the Managing Director, Mr Tan Wan Lay, ARANK was able to achieve the satisfactory results by improving the efficiency and recover by controlling the production overhead and transportation costs. The upgrades that had been done in 2016 was improving the homogenise furnaces to increase efficiency in the usage of electricity through the production process as well as an additional one unit of dust control system to ensure cleaner discharge into the environment.
|ARANK also sell their products to LBALUM|
When i check through the google map, both of the factories are actually near to each other, that's why they are able to purchase and sell their products to each other. Other investment firms which are holding ARANK are City Data Limited, Fairway Assets Investment Limited, Mablewood International Holding Limited, Mayer Capital Holding Ltd.
|Distance between LBALUM and ARANK factories in Googlemaps|
Q2 2017 Result
|Quarterly Revenue and Net Profit|
|ARANK Weekly Chart from 2014 till 2017|
|ARANK Daily Chart|
|ARANK Daily Chart as of 10.35am 30 March 2017|
3. Projection Analysis
A) Donald Trump: Make America Great Again
|US President Donald Trump - Dont Play Play|
B) Global Aluminium Price
C) Peer Comparison
|Aluminium Peer Comparison|
|PMETAL Daily Chart|
|LBALUM Daily Chart|
|ALCOM Daily Chart|
D) Calculating Target Price
ARANK had announced 2 quarters of QR, with the cumulative EPS of 7.03 sen. If ARANK continue to maintain the EPS until the end of the year, the projected EPS will be 14.06 sen.
If EPS = 14.06 sen, with the projected PE of 10, the share price is 1.46, round up to 1.50
If EPS = 14.06 sen, with the projected PE of 14, the share price is 1.96, round up to 2.00
Of course, we might also need to monitor:
1. Global aluminium price - the higher the better, however it will be an obstacle for the management to make some critical decision
2. USD/MYR - maintain as it is, the higher it goes, the higher the processing cost however, benefit from forex gain
3. Donald Trump - Make America Great Again, more and more facilities will be built in US
4. PMETAL - If the dragonhead continues to perform better, then the the rest should follow, and not to forget about ARANK.
5. The QR of ARANK - Q1, Q2, Q3 is lower but will spike up in Q4, will the trend continues? If it continues, we can expect the share price to break new high also
- The management had taken firm steps by improving the plant operation's efficiency as well as disposing the loss-making HongLee Group and expected to gain RM2 Mil from its disposal.
- Aluminium together with steel are the most important commodities for the country's development and building infrastructure.
- Net cash per share of 0.09
- The management had taken prudent action by upgrading the plant facilities as well as dispose off its subsidiary HongLee at RM2 Mil.
- If we observe the trend, the Q1, Q2 and Q3's net profit will be dropping, spiking up in Q4. The yoy net profits are better than previous years.
- The current support for ARANK is 1.09 with the resistance of 1.24.
- With the current PE of around 8 with high EPS and ROE if compared with its peers PMETAL, ALCOM and LBALUM.
- If we annualized the EPS and take the average PE among aluminium counters, the TP for ARANK is 2.00
- A few things to take note, global aluminium price, USD/MYR, US Donald Trump's policy, PMETAL's movement and also the QR for ARANK.
: How Aluminium is Made: https://www.youtube.com/watch?v=fa6KEwWY9HU&t=1s