Aluminium Bahrain (ALBA) will report its Q4 19 results on 13 February. We expect the company to post net profit for the quarter of BHD13.0mn. This compares with a net loss of BHD17.5mn in Q4 18 and a net profit of BHD10.7mn in Q3 19. We do not expect any cash dividend with this results announcement.
Improvement in gross profit primarily due to a 2% increase in net sales (8% increase in volume, 5% lower unit revenue). We do not expect any material change in the cost of sales (BHD257.1mn in Q4 20 versus BHD 257.9mn in Q3 19), but we do expect a 10% qoq decrease in the cost of raw materials (mainly alumina, which averaged US$306/tonne in Q4 19 versus US$340/tonne in Q3 19) and a 2% decline in the per-tonne cost of energy (mainly gas, due to the higher efficiency of the new power station PS5). These changes translate into a gross profit estimate of BHD36.7mn in Q4 19 compared with BHD29.2mn in Q3 19.
We expect higher opex and finance costs in Q4 19. According to our estimates, Alba’s operating expenses (excluding FX and/or revaluation gains/losses) will stand at cBHD15.4mn in Q4 19 versus BHD14.4mn in Q3 19, owing to an increase in distribution costs broadly in line with the qoq increase in volume. Moreover, we expect BHD7.7mn finance costs in Q4 19 (BHD1.8mn or 31% higher than Q3 19) following the full commissioning of Line-6. We expect that to result in pre-tax profits of BHD13.3mn in Q4 19 versus BHD11.0mn in Q3 19.
ALBA trades at 2020f PE of 21.1x and 2020f EV/EBITDA of 6.8x versus its five-year medians of 9.1x and 4.8x, respectively.
ALBA will hold a results conference call on Monday, 17 February, at 12:00 UK time, 16:00 Dubai time. The dial-in number is +973 1783 7990, no passcode is required.