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UOB Student Research
January 29, 2011
Industry | Telecommunications
CFA Institute Research Challenge
Hosted by
CFA Society Bahrain
Bahrain Institute of Banking and Finance
Page | 2
Bahrain Institute of Banking and Finance Student Research
This report is published for educational purposes only by students competing in the CFA Institute Research Challenge
Date: 9/2/2017 Current Price: BD 0.278 Recommendation: SELL
(13.67% downside)
Ticker: ALBH (Bahrain Bourse) Target Price: BD0.240
Highlights:
Industrial Sector
Aluminium Bahrain
We initiate coverage with a SELL recommendation on ALBH with
a one-year target price of BD0.240 supported by several factors
which include:
Valuation: We derived ALBH’s price using the Discounted Free
Cash Flow to Firm Method and the Relative Valuation Method.
The target price suggests a 13.67% downside from ALBH’s current
market price of BD0.278.
Dividend cuts: We expect dividend cuts going forward given the
pressure on ALBH’s future cash flows from its borrowing for the
line 6 expansion.
Risks: Key risks that ALBH is facing include but are not limited to
market risk from fluctuation in aluminium prices and aluminium
premiums, rising costs and client concentration.
Recent news
Bechtel awarded EPCM deal by ALBH– 18/4/2016:
Bechtel Co. Ltd. who had worked with ALBH on the previous Line
5 Expansion will also be working with ALBH on the Line 6
Expansion Project, which is expected to boost production per
annum by 514,000 metric tonnes, thus increasing per annum
production capacity to 1.450 million metric tonnes.
US$1.5bn Syndicated Loan Closed– 16/10/2016:
The successful closing of the Syndicated Loan for the Line 6
Expansion Project, which is expected to start production in 2019,
was announced by ALBH.
ALBH Launches Project Titan Phase II–22/3/ 2016:
Project Titan II is undertaken to optimize operational costs and
boost ALBH’s production. The aim is to reduce costs by US$100
per metric tonne of aluminium and to also increase production
capacity to 1,000,000 metric tonnes per annum by the end of 2017.
GE & GAMA appointed as EPC & Siemens as PDS– August,
2016: GE & GAMA consortium were appointed as EPC for Power
Station (PS) 5& Siemens as PDS Contractor.
MARKET PROFILE
Closing Price BD 0.278
52 Week Price
Range
BD 0.260 – BD
0.354
Shares
Outstanding
1,420,000,000
Market Cap
(BHD)
394,760,000
Dividend Yield 3.96%
P/E Ratio 6.62x
P/B 0.38x
EV/EBITDA 4.20x
BVPS 0.67
ROE 7.89%
Valuation DCF Multiples Target
Price
BD0.240 BD0.320
Weight 70% 30%
Target
Price
BD0.240
0
200
400
600
800
1000
1200
1400
1600
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17
ALBH
BHSEASI
Page | 3
Business Description
Company
Established in 1968, is one of the world’s largest, modern aluminum smelters, and lies at
the heart of Bahrain’s strategy of economic diversification. Upon commencing operations
in 1971, it produced 120,000 metric tonnes per annum (mpta), but currently produces
over 971,000 mpta of the highest grade of aluminum. It caters to both regional and
international customers. Among other state-of-the-art facilities, the ALBH plant
comprises five reduction lines, two cast houses, three dedicated carbon plants, a water
desalination plant, 11 fume treatment plants, and a 2,249 MW ISO power plant that
consists of 4 power stations.
Shareholders
ALBH currently has about 3,551 shareholders, with Bahrain Mumtalakat Holding
Company B.S.C. (owned by the country’s Government via the Ministry of Finance)
holding 69.38% of the company’s share capital being their majority shareholder. Another
20.62% is owned by SABIC Investment Company, and the remaining 10% is owned by
the general public.
Product Mix
ALBH has a wide product range which benefits their diverse customer base. Its product’s
purity is greater than 99.86%. Its products include standard and T-ingots, extrusion
billets, rolling slab, propertzi ingots and molten aluminum.. Some of their other products
include anodes, power, water and calcined coke. Its production capacityfor standard
ingots is around 400,000 mpta,and that of high quality extrusion ingots is around 350,000
mpta.
Consumer Mix
ALBH exports to more than 25 countries around the world and to 3 different regions
other than the MENA region. Around 50% of the company’s production is sold in
Bahrain, mostly to GARMCO and MIDAL CABLES LIMITED. The rest of the MENA
region contributes to nearly 18% of ALBH’s revenues, with Asia contributing nearly
16%.
Strategy
With regards to its strategies going forward, ALBH has stated it will continue to focus on
safety initiatives and talent initiatives. It will also deliver on Phase II of Project Titan,
which is ALBH’s company-wide cost reduction program aimed at reducing cash cost by
$100 per metric tonne of aluminum and stepping up production capacity to 1,000,000
mtpa by the end of 2017. Moreover, ALBH seeks to increase value-added sales and,
crucially, finalize ECA financing for its ambitious Line 6 project by Q1 2017.
Corporate Governance
ALBH’s committed to following the Corporate Governance Code of Bahrain’s MOIC
code, the Corporate Governance Module “CBB Module” of the Central Bank of Bahrain,
and the local and international rules and regulations. ALBH’s BoD consists of 10
members, stemming from diverse backgrounds and expertise. 9 out of 10 are dependent
directors and 1 is an independent director who represents the 10% public ownership
Figure 2. 2015 Revenue by Product (Thousand
BHD)
Aluminium 749,203
Alumina Trading 11,171
Calcined Coke 6,312
Total sales revenue 766,686
Source: Company Releases
Figure 4, 2015 Revenue by Geographic
Location (Thousand BHD)
Bahrain 345,904
Asia 121,863
MENA Region 135,643
Europe 99,407
Americas 63,869
Total sales revenue 766,686
Source: Company Releases
69.38%
20.62%
10.00%
Figure 1. ALBH's Shareholding
Structure
Mumtalakat SABIC Public
Bahrain 45%
Asia16%
Rest of MENA18%
Europe13%
Americas8%
Figure 3, 2015 Revenue by Geographic Location
(Thousand BHD)
Source: Bahrain Bourse
Source: Bahrain Bourse
Page | 4
structure. Most of the Board Members have previously either worked in aluminum
industry or other industrial sectors, and finance. Please refer to appendices 11, 12 and 13.
The board is responsible for establishing and monitoring the company’s business
strategy, instituting key company policies, instigating the preparation of financial
statements, and empowering the management of the company. They have a number of
sub-committees which provide support and assistance in carrying out certain functions;
this includes the Board Audit Committee, the Board Nomination & Remuneration
Committee, and the Board Executive Committee.
Members of the board are elected every three years (the duration of the term) during the
shareholders meeting. Any re-appointment of a board member for 2 consecutive terms is
subject to extensive review before consideration.
Industry Overview and Competitive Positioning
Supply and Demand Overview As indicated by figure 5, the aluminum market has been in surplus for several years as
aluminum production (supply) exceeded consumption (demand). This, however, is
expected to have turned into a slight deficit in 2016 for the first time as production was
offset by a surge in consumption.
Chinese projects restart In December 2015, 14 major Chinese producers agreed to restrain project restarts in
response to low prices. However, this only lasted for a few months before smelters broke
the agreement in order to pursue market share. The Chinese government recently
identified the aluminum industry as ‘severely over capacitated’, and noted that capacity
had to be capped. In early September 2016, following the Hangzhou G20 meetings,
China and the US issued a joint statement recognizing the overcapacity and committing
to working together to address it.Overall, while the supply glut may not be as severe if
the Chinese government is serious about implementing its capacity cap, the downward
pressure on prices will continue as the industry goes through consolidation, and may
significantly shift down cost curves.
Demand
The increase in aluminum consumption takes place against the backdrop of growing
global urbanization and industrialization. And while the developed countries have
reached a high point in their economic development, the developing countries continue to
grow rapidly. Besides underlying aluminum demand, it is believed there is significant
invisible inventory in China, which could distort demand figures and projections.
Smelters are increasingly taking in molten aluminum, which is in a non-exchange
deliverable format, to limit the need for re-melt ingot metals. It is unclear how much of
the metal is tied up in the invisible inventory, which makes forecasting demand growth
more challenging.
China’s Role in the Aluminum Industry China accounts for half of the world's volume of aluminum production and consumption -
no other country is anywhere near China on this measure. In September 2016, China’s
aluminum output reached the second-highest monthly figure ever – and the highest
production level in fifteen months – with the nation producing 2.75 million tonnes. In
2016 as a whole, China produced 31.6 million tonnes of aluminum. According to the
Source: Bloomberg
Source: Fastmarkets
Figure 5. Aluminium Supply/Demand
Figure 6. Chinese exports
Figure 7. Consumption and Production
Source: Bloomberg
Figure 8. Global Aluminium Production
Source: CNIA
Page | 5
International Aluminum Institute, China’s share of global output in December 2016 was
over 56%, a considerable rise from a decade earlier, when it stood at around 30%.
Outlook While the aluminum market will continue to be controlled by new Chinese capacity
additions, the supply glut may not be as severe as previously feared, if the Chinese
government is serious about tackling over capacity in the industry. Demand growth in the
short term continues to slow, while long term demand shows promising signs as demand
from both car manufacturing and the power sector grows. In general, 2016 was a positive
year for the industry after a few years of instability in the rate of aluminum per ton. The
rate at the end of the year reported as US$1714 per ton which reflected a positive increase
compared to the price throughout the year as the price range was approximately US$1466
– US$1500 per ton. The increase in demand and reduction of supply supported the
increase in the price of aluminum per ton throughout the year.
Competitive Positioning
One of the World’s Lowest Cost Producers The tax free nature of Bahrain as well as ALBH’s access to low-cost power help the
company reduce costs significantly. Aluminum production requires a large amount of
power and the power ALBH uses is generated on site via power stations using natural gas
bought from BAPCO. Another factor is the company’s location. It’s located near
customers both domestically and in the MENA region (Middle East & North Africa).
It’salso located near Bahrain’s sea port, further reducing transportation costs. Production
of products is located close to the smelter as well. All of these factorsreduce overall
transportation and shipping costs.
Location and Demand from the Downstream Industry
ALBH’s ideal location also allows for efficient delivery of products in the region, which
gives it an edge over its regional competitors. It receives a large downstream demand for
products which make a large part of its total sales’ volume. Approximately 50% of the
firm’s output is used to supply Bahrain’s downstream demand. The rest of the output is
exported to regional neighbours, as well as to Europe, North America, Asia, etc. Recent
growth in the MENA region (Figure 9) has further increased ALBH’S aluminum demand
even if global aluminum demand may have declined due to over-supply, as can
be seen in (Figure 12), and a subsequent fall in demand in the international market.
Figure 2 compares the average real GDP growth in the MENA and GCC regions.
Economies of scale
Large economies of scale are available to ALBH due to it being the fourth largest
individual aluminum smelter in the world by tonnage of capacity. This also results in
greater negotiating power for raw materials from high-volume supply contracts
(Alumina, Green Supply Coke).
Operational experience
ALBH’s possesses over 35years of operational experience which adds to their efficiency.
The expansion of ALBH’s potlines has led to the increase in production over the years.
The coming Line 6 Expansion is expected to further boost production making ALBH the
largest single-site smelter in the world.
Production of High Value-Added Products:
ALBH, one of very few smelters in the world possess their own on-site Calciner and
Carbon Plants, lets it control the quality of the calcinated coke it uses. 64% in 2015 of
Company 2012 2013 2014 2015
1 EGA
(UAE) 1,851 1,865 2,341 2,400
2 ALBH
(Bahrain) 890.2 912.7 931.4 960.7
3 Ma’aden
(KSA) - 190 652 750
4 Qatalum
(Qatar) 628 634.4 640.2 640
5 Sohar
(Oman) 360.1 354.1 363.5 377.2
Source: Company Releases and News Articles
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
2012 2013 2014 2015 2016e 2017e
Figure 9. Average Growth Rate
MENA Region
GCC
Source: IMF
Figure 10. GCC Players
Page | 6
ALBH’s total sales volumes were from value-added products versus 66% in 2014.
However,thisdropped to 56% in 2016 from 64% in 2015.
Regional Competition
ALBH faces competition from other GCC players as can be seen from Figure 10, we can
see that the highest producing aluminum player in the GCC is Emirates Global
Aluminum “EGA” which produces and has the capacity of approximately 2,400 thousand
tonnes of aluminum. ALBH ranks second in the GCC in terms of aluminum production
and capacity at approximately 960 thousand tonnes. Following ALBH are Ma’aden,
Qatalum and Sohar. Apart from Qatalum and Sohar whose production levels have
remained relatively constant, the rate of production for EGA, ALBH and Ma’aden have
shown an increase over the years.
Global Competition
As ALBH is the only aluminum producer in the Kingdom of Bahrain, we can assume that
the country’s total Aluminum production is the same as the company’s production.
Bahrain has ranked 10th worldwide in terms of aluminum production for both 2013, 2014
(following Brazil) and 2015 (following South Africa). From Figure 12, we can see that
China is the largest aluminum producer in the world, accounting for a reported
production of 31,672 thousand metric tonnes of aluminum in 2015 alone, which is almost
10 million more than what it had produced in 2014. The total world output has also
increased by around 10 million from its amount in 2014 leading to over-supply and
therefore lower profits for producers and lower demand for aluminum worldwide.
Investment Summary We issue a SELL recommendation for ALBH with a target price of BD0.240, reflecting a
downside of 13.67% from current price levels. The key factors that supports our
recommendation are outlined below:
Valuation
We derived our target price using two methodologies: discounted cash flow to firm and
the trading multiples. The DCF was given a weight of 70% and a weight of 30% was
given for the multiples valuation. Both of those approaches supported our sell
recommendation, as the target price derived using both approaches were below the
current market price, which gives us more comfort with our sell rating.
Deteriorating Financial Performance
ALBH’s financial performance is expected to deteriotate due to the high borrowings and
the high cost of Goods Sold from the spike in gas pries. In addition, low revenues due to
the oversupply in the aluminium market is expected to persist.
Dividend Cuts
We are expecting dividend cuts and we expect the company not to pay any dividends
during two years, which are 2017 and 2018. This will lead to a decline in the company’s
current dividend yield of around 4%, which is already at a low level compared to other
companies on Bahrain Bourse.The dividend is also expected to decrease to BD0.007 in
2016 from BD0.011 in 2015.
Aluminum Prices Dampened From Oversupply
Global aluminum price to stay low over the next upcoming five years. By that there will
be no trigger and it is forecasted that the aluminum prices will stay within the range of
$1600-$1800 per mt. Hence it will lead to a weak future performance even though line 6
will be launched in the beginning of 2019. In addition, aluminium premiums have
declined over the past year leading to lower realized revenues.
Country 2013 2014 2015
1 China 22,100 23,300 32,000
2 Russia 3,720 3,500 3,500
3 Canada 2,970 2,940 2,900
4 UAE 1,860 2,400 2,340
5 India 1,700 2,100 2,350
6 USA 1,946 1,720 1,600
7 Australia 1,780 1,680 1,650
8 Norway 1,100 1,200 1,320
9 Brazil 1,300 960 780
10 Bahrain 913 930 960
11 Iceland 800 810 820
12 South Africa 822 735 690
13 Qatar 600 610 640
14 Mozambique 570 560 NA
15 KSA 190 500 740
16 Germany 492 500 NA
17 Argentina 425 425 NA
18 Other
Countries
4,290 4,440 6,010
World Total 47,600 49,300 58,300
Source: U.S. Geological Survey, Mineral Commodity
Summaries, January 2015
Figure 12. Top Aluminium Producing
Countries
0.76%
25.50%
2.52%
2.52%
2.05%
3.15%
2.43%
15.03%
1.02%
0.91%
-0.03%
-1.67%
2.65%
3.77%
-10.00% 0.00% 10.00% 20.00% 30.00%
2013
2014
2015
Figure 11. GCC Producers' Growth Rate
Sohar
Qatalum
Ma'aden
ALBH
EGA
Source: Team estimates
0.32
0.21
0.24
0.276
- 0.10 0.20 0.30 0.40
Target Price usingMultiples
Target Price using DCF
Blended Target Price
Current Market Price
Figure 13. Target Price
Source: Team estimates
Page | 7
Competitive Global Market
ALBH faces many great competitors both from GCC like Saudi Arabia and UAE as
previously discussed in the competitive positioning section, in addition to glob plal yers
who may have more control in the market in terms of pricing aluminum, like China and
Russia.
Customer Concentration
Most of ALBH’s customers are from Bahrain (Around 45%), and given the current
economic conditions, this may affect the company’s revenue growth from its customers
in Bahrain.
Cost Of Raw Materials
Alumina is ALBH’s main raw material that they use. The price of Alumina is expected to
increase from $334.60 to $341.40 in 2017 according to industry analyts. Thus, if
alumina’s price increases, it means it will be more costly for ALBH to produce.
Financial Analysis
Revenues Affected By Low LME Aluminum Prices
Over the period from 2010 to 2015, ALBH’s revenues have been volatile reaching its
highest point in 2011 with revenues of BD 88332mn, and revenues declined subsequently
to a range within BD740mn-BD750mn over the next two years and recovered to BD
821.72mn in 2014 but has since been subsequently falling. In 2015, revenue fell by
almost 7.03% and is expected to fall even further to 12.68% in 2016. However, we expect
a sharp increase in 2019 (1,123,264), due to the completion of the line 6 project, which
will start production in that very year; this was calculated by using forecasted aluminum
prices for 2019 and accounting for the increase in ALBH’s production.
Rising Gas Prices Affecting Gross Profit
ALBH uses gas to produce their products around 950,000 metric tones of aluminum.
Thus meaning any increase in the gas price will affect their COGS. The National Oil and
Gas Authority increased gas prices in April 2015 to $2.50 per million metric British
thermal units from $2.25. Per year, the price of gas is expected to increase by almost
$0.25 per million metric British Thermal Units (mm btu) until it reaches $4 per mmbtu
in 2020. Therefore, ALBH’s COGS will also start increasing and reach BD 1.02bn by
2020. The higher gas price expected to have a yearly negative impact on ALBH of
around BD 11mn. By 2020, the gross profit is expected to reach BD 139.42mn. On the
other hand, in 2015, the gross profit margin was 13.17% compared to 11.15% in 2016.
This reflects the higher gas price in 2016.
Volatile Historical Earnings From Derivatives Has Ended
Historically, ALBH’s derivative contracts to hedge aluminum prices had a significant
impact on net profit each year. By the end of the year 2015, this contract expired. In
2010, the impact on ALBH’s net profit from this contract was negative BD 10.36mn
while in 2011, this turned to a positive BD 36.90mn being the main contributor to
ALBH’s net profit of B D211.90mn during the year. As it shows in the income statement
which can be found in the appendix, the gain of revaluation/settlement of derivative
financial instruments kept on decreasing till 2015 which reached around BD 264K.
Net Profit Affected By Interest Income And Low Aluminum Prices
In the year 2016, ALBH’s profit of the year is expected to reach around BD 36mn
compared a net profit of BD 59.96mn in 2015, This reflects a massive decrease of
0%
5%
10%
15%
20%
25%
30%
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000Sales
Gross profitmargin
Figure 14. Revenues
Source: Company reports, team estimates
35,700
13,264
898
32,348
36,063
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2016 E 2017E 2018E 2019E 2020E
BD'000 Figure 15. Forecasted Net Profit
Net Profit
Source: Team estimates
Page | 8
40.46%. Historically, the highest amount of net income the company had was in the year
2011 with BD 211.90mn. Although by the end of year 2002, the net profit of this
company is expected to reach BD 36.60mn, which is only a 1.02% increase from 2016
levels. Even though sales increase, net profit is not expected to grow due to the high
borrowing costs and high cost of goods sold.
Line 6 Financing Will Put Pressure On Cash Flow
For the forecasted periods, the interest is expected to increase due to the higher
borrowings for funding the line 6 project; the company has only borrowed $1.5 bn out of
the expected $3.5 bn. Thus the forecasted borrowings will increase and hence the interest
expense increase, which will lead to, a negative impact on the bottom line of the
company.
ROE Breakdown
In the forecasted period, ALBH is expected to have a low return on equity (ROE), ALBH
is expected to record an ROE of 3.67% in 2016 which is expected to decline further in
2017 and 2018 and recover to 3.49% in 2020. In the historical analyzed period, the ROE
in 2014 and 2015 was 13.29% and 7.89% respectively, which reflects a 5.40% percentage
decrease between those years. The DuPont analysis suggests three important factors that
sustain the future level of ROE, which are the net profit margin, total asset turnover and
the equity multiplier. During the forecasted period ALBH’s leverage increases, which
mean there will be a positive influence on the ROE, however, the factor, which
negatively affected the ROE, is the net profit margin. The net profit margin was low in
those years due to the high amounts of borrowings expected. The ROE decreases
throughout the years and is expected to reach 0.13% in 2018, comparable to 2015, which
was 7.82%.
Dividend
In 2011, the Dividend per share (DPS) was the highest at BD0.067. Subsequently, DPS
kept on decreasing and reached 11 fils in 2015. Following 2016, the DPS is forecasted to
decline even further in 2016 to BD 7 fils and we expect that ALBH will not pay
dividends during 2017 and 2018. This is mainly due to high capital expenditure required
for line 6 project in addition to high finance expenses whereas in the years 2019 and
2020, the DPS is expected be low at 6 fils. Figure 17 reflects the dividend per share
expected over the forecast period.
Valuation
We have used two approaches to value ALBH: the Discounted Cash Flow model (DCF),
and Relative Valuation.
Discounted Cash Flow Model
When we used the DCF model, the resulting target price for ALBH is BD0.210. In the
DCF, we used the Free Cash Flow to the Firm (FCFF) method. The key inputs to the
discounted cash flow model include:
Sales: We forecasted revenues by estimating the quantity sold and multiplying it by the
estimated aluminium prices over the next five years in addition to a premium. Aluminium
prices are expected to stay in the range of $1600-$1800 per mt according to the World
Bank and we expect the quantity sold to grow by around 3.5% with the exception of the
year 2019 when line 6 will launch. This causes the massive increase in quantity produced
to 1.5mn metric tonnes and hence a jump in revenues to around BD1.12bn in 2019.
Risk Free Rate 2.47%
Beta 0.94
Market Risk Premium 5.69%
Country Risk Premium 4.27%
Cost of equity 11.83%
Cost of Debt 5.00%
WACC 10.73%
0.067
0.028
0.036
0.015
0.011
0.007
-
0.006
0.006
- 0.050 0.100
2011
2012
2013
2014
2015
2016 E
2017E
2018E
2019E
2020E DPS
Figure 17. DPS
Figure 16. Dupont Analysis
Source: Team estimates
Figure 18. WACC Calculation
Source: Team estimates
Source: Team estimates
Page | 9
Capex: Due to the significant expansion (line 6 project), ALBH’s capital expenditures
will increase significantly over the coming 5 years. The company will need $3.5bn for the
project and this is expected to be financed by 90% debt and 10% equity.$1.5bn has
already been secured while the remaining cost of the project remains unfunded.
Therefore, we expect higher borrowings going foreward which will be used to fund the
expansion.
WACC: The cost of equity was calculated by the CAPM approach. The yield on the
ten-year Treasury bond was used as the risk free rate, which was 2.47%. The adjusted
beta of 0.94 was used which reflects ALBH’s price sensitivity to the index;this was
sourced from bloomberg. The market premium was set at 5.69% assumes the mature
market risks in addition to additional country risk premium for Bahrain’s based on its
credit rating. The cost of debt we used for this analysis is 5.0%, and this reflects the
current percentage paid on the line 6 expansion (3.25% plus an estimated margin). The
terminal growth rate was calculated to 2.50%. and this growth rate is in line with the
historical geowth rate in production, and also it is in line with the expected growth rate in
Bahrain’s Gross Domestic Product (GDP).
DCF Target price: Discounting ALBH’s future free cash flows to firm at the WACC
result in an enterprise value of BD257.40mn. After adjusting for cash and debt, the
resulting equity value is BD0.210 per share.
Relative Valuation
For the multiples approach, we have compared ALBH toglobal aluminum smelters based
on their P/E and EV/EVITDA multiples as shown in Appendix 6. The median P/E
amongst global aluminum smelters is 15.48x, and the median EV/EBITDA is 7.79x. The
average P/E is 17.89x, and the average EV/EBITDA is 9.39x. We have decided to use the
median instead of the mean because it minimizes the effect of outliers. The resulting
price based on the P/E multiple is BD0.210 and the resulting price using the EV/EBITDA
multiple is BD0.420. Assigning a weight of 50% to the P/E multiple and 50% to the
EV/EBITDA multiple gives us a target price of BD0.320.
Blended Target Price
We have given the DCF approach a weight of 70% and a weight of 30% to the relative
valuation approach. This leads to a target price of 0.240. This price suggests a downside
of 13.67% to the current market price of BD0.278.
Investment Risk
Please refer to figure 19, the investment risk matrix, which reflects the impact
and probability of each of the risks mentioned below:
Market Risk: Interest rate risk (R1): The Company is exposed to interest rate risk
from long term floating rate loans and receivables which include the Line 6 syndicated
loan which carries an interest rate of 325 basis points over LIBOR. Therefore, any term
receivable which carries a floating rate.
Market Risk: Commodity price risk (R2): The aluminum prices that Alba charges
are based on the prices quoted on the London Metal Exchange (LME) which can impact
the financial performance of the company considerably as revenues are highly dependent
on these factors.
Market Risk: LME aluminum premiums fluctuation (R3): A premium can be
seen as a delivery charge that comes on top of the aluminum price. Aluminum premiums
276
213
178
167
175
150
190
142
173
127
0 100 200 300
US Midwest
DDP Rotterdam
Figure 20. Physical premiums ($/t)
Q2 2016 Q1 2016 Q4 2015
Q3 2015 Q2 2015
Source: Team estimates
Figure 19. Investment Risk Matrix
Hig
h
R9
R7
Me
diu
m
R1R2
R3
R8
R10
R6
R12 R11
Low
R5
R4
Low Medium High
Pro
ba
bil
ity
Impact
Source: Company Presentation
Page | 10
fluctuate as they are driven by several factors including the market and have declined
over the past year as shown in figure 19, negatively affecting Alba’s top line.
Market Risk: Operational cost risk (R4): One of Alba’s competitive advantages is
its low pricing strategy compared to its peers, this is due to low operational cost that it
incurs. The company does not own most of the land it operates on, it is leased from the
government of Bahrain, relying on inexpensive rent arrangements contributes in the
creation of its competitive advantage, however, this reliance could prove to be expensive
in the long run or if the government decides to increase the rent.
Market Risk: Raw Material (R5): The Company relies on third-party suppliers for
certain raw materials, and any disruption in its supply chain or failure to renew these
contracts may have an adverse impact on Alba’s financial position.
Market Risk: Currency Exposure (R6): The Company has the highest exposure to
US Dollar and BHD but also has exposure to Euro, Swiss Francs and British pound.
Therefore, this subjects the company to currency risk if any of the currencies moves
significantly. The impact is not very severe except for the Euro as shown in figure 21.
Market Risk: Factors of production (R7): Alba’s main source of gas is BAPCO an
entity that is fully owned by the government of Bahrain, in 2015 they have announced a
pricing scheme that will gradually increase the price of natural gas each year until the
price reaches US$ 4.00 per MMBTU on 1 April 2021. This will increase the production
costs and any interruption in its supply could impact Alba negatively.
Economic Risk: Taxation (R8): As the economic instability increases and the
country’s budget deficit rises, the probability of the government introducing corporate tax
is gaining more weight, VAT is expected to be introduced in 2018, although it is still
uncertain how this will affect Alba it will increase the cost of conducting business.
Economic Risk: Current economic condition (R9) : Economic growth has slowed
down in Bahrain as a result of the fall in the oil prices from 4.5% in 2014 to 2.9% in
2015. According to the IMF, real GDP is expected to further decline to 2.1% in 2016 and
1.7% in 2017. As a recovery procedure, Bahrain introduced recently modified subsidy
cuts as strategy to help the government cope with what is estimated to be the largest
budget deficit in the GCC region. This affected Alba as gas price subsidies were
removed, thereby increasing their production costs.
Political Risk: Regional environment (R10): A significant portion of Alba's
revenues are contributed by Bahrain and the MENA region, a region that’s been
experiencing political instability and increasing security concerns. Increasing future
uncertainty in the area may risk business growth in the region.
Business Risk: Client concentration (R11): While Alba strives to increase the
diversity of its customer base portfolio, Alba does not disclose the percentage
concentration by individual customers, but the latest available information, which was
released in 2010 shows that GARMCO (16%) and Midal cables (24%) together
represented 40% of total revenues which is relatively a high margin and could put the
company at risk in its revenue generation.
Business Risk: Liquidity risk (R12): Liquidity risk arises from either an inability to
sell enough financial assets or at a fair value. In 2016 a $100m worth Liquidity fund was
launched that aims to increase the liquidity of the securities traded on Bahrain Bourse. As
evident in the current trend the climb in the average value of traded shares of 2016 is due
to the vested fund making this market reasonably attractive to investors. Increased trading
activity in the exchange reduces liquidity risk slightly.
Currency
Increase
currency
rate to
BD
Effect on
results BD
'000
Euro 10% 353
Swiss
Franc 10% -53
British
Pound 10% -19
281
Source: Company filings
Figure 21. Currency Impact 2015
Page | 11
APPENDIX
1. Income Statement
BD'000 2011 2012 2013 2014 2015 2016 E 2017E 2018E 2019E 2020E
Sales 883,317 743,725 749,338 821,715 766,686 669,486 681,329 717,520 1,123,264 1,156,259 Cost of Sales (662,259) (638,515) (640,751) (673,947) (663,428) (594,867) (599,176) (631,003) (987,823) (1,016,840)
Gross Profit 221,058 105,210 108,587 147,768 103,258 74,620 82,154 86,517 135,441 139,420
Other Income 7,641 39,378 7,304 1,865 3,701 2,415 2,415 2,415 2,415 2,415 Gain on Foregin Exchange Translation
394 (1,346) 211 671 728 1,201 - - - -
Administrative Expense (24,820) (27,347) (30,609) (29,546) (32,417) (24,761) (23,224) (24,457) (38,288) (39,412) Selling and Distribution Expenses
(21,835) (17,838) (17,574) (19,885) (12,187) (15,122) (12,870) (13,554) (21,219) (21,842)
Finance Costs (7,233) (7,182) (5,823) (4,449) (3,176) (2,442) (35,000) (49,812) (45,792) (44,307) Directors' Fees (200) (190) (190) (190) (210) (210) (210) (210) (210) (210) Gain of revaluation/settlement of derivative financial instruments (net)
36,898 5,860 17,871 211 264 - - - - -
Profit of the Year 211,903 96,545 79,777 96,445 59,961 35,700 13,264 898 32,348 36,063
Basic and Diluted Earnings per Share (Fils)
0.15 0.07 0.06 0.07 0.04 0.03 0.01 0.00 0.02 0.03
Number of Shares 1,415,16
1 1,412,50
8 1,410,76
7 1,411,57
5 1,410,51
1 1,410,15
8 1,410,15
8 1,410,15
8 1,410,15
8 1,410,158
EBITDA 253,180 137,598 138,235 177,852 113,834 106,496 161,355 194,160 251,095 248,410 EBIT 174,403 60,025 60,404 98,433 40,059 34,737 46,059 48,506 75,935 78,166
Income Statement
Page | 12
2. Balance Sheet
BD'000 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Non Current Assets
Property, plant and equipment
992,149 946,807 901,779 868,318 837,757 811,377 1,309,250 1,653,984 1,989,044 1,933,227 1,878,975
Long term receivables 17,192 13,753 10,314 6,877 3,439 - - - - - - Other Assets - - - - 4,704 4,512 4,368 4,368 4,368 4,368 4,368
1,009,341 960,560 912,093 875,195 845,900 815,889 1,313,618 1,658,352 1,993,412 1,937,595 1,883,343
Current Assets
Inventories 152,308 158,020 143,564 144,930 152,469 146,404 140,707 132,225 139,248 217,991 224,394 Current Portion of long term receivable
3,438 3,438 3,438 3,438 3,438 3,439 1,719
Trade and other receivables
99,342 83,285 108,299 85,375 92,888 100,698 101,400 89,487 94,240 147,532 151,865
Other Asset - - - 4,800 - - - - - - - Derivative financial instruments
2,352 - 104 - - - - - - - -
Bank balances and cash
59,812 99,487 61,605 64,540 67,198 116,009 202,367 196,723 172,843 178,586 221,136
317,252 344,230 317,010 303,083 315,993 366,550 446,193 418,435 406,332 544,109 597,396
TOTAL ASSETS 1,326,593 1,304,790 1,229,103 1,178,278 1,161,893 1,182,439 1,759,811 2,076,787 2,399,744 2,481,703 2,480,739
Share Capital 142,000 142,000 142,000 142,000 142,000 142,000 142,000 142,000 142,000 142,000 142,000
Treasury Sales -
3,735 -
5,029 -
4,087 -
5,157 -
3,696 -
4,905 -
4,940 -
4,905 -
4,905 -
4,905 -
4,905 Satutory Reserves 68,629 71,000 71,000 71,000 71,000 71,000 71,000 71,000 71,000 71,000 71,000 Capital Reserve 249 249 249 249 249 249 249 249 249 249 249 Retained Earnings 429,245 544,064 600,683 629,381 687,387 731,698 754,629 764,420 765,318 789,579 816,626 Proposed Dividend 62,294 56,509 19,773 30,978 21,200 7,768 9,238 - - 8,087 9,016
Total Equity 698,682 808,793 829,618 868,451 918,140 947,810 972,176 972,764 973,662 1,006,010 1,033,986
Non Current Liabilities
-
82,738 -
20,265 Borrowings 243,738 167,140 77,096 84,402 64,137 33,024 598,524 914,024 1,229,524 1,134,916 1,099,996 Derivative financial instruments
102,742 34,324 23,996 5,313 - - - - - - -
Employees' End of Service Benefits
972 940 915 930 1,265 1,349 1,370 1,370 1,370 1,370 1,370
347,452 202,404 102,007 90,645 65,402 34,373 599,894 915,394 1,230,894 1,136,286 1,101,366
Current Liabilities
Borrowings 145,367 149,733 160,303 116,432 72,351 56,373 65,153 65,153 65,153 135,841 135,841 Account Payables 84,765 100,130 106,585 97,960 101,378 143,844 122,588 123,476 130,035 203,567 209,547 Short term loans 6,813 13,084 17,160 - - - - - - - - Derlvative Financial Instruments
43,514 30,646 13,430 4,790 4,622 39
280,459 293,593 297,478 219,182 178,351 200,256 187,741 188,629 195,188 339,407 345,387
Total Liabilities 627,911 495,997 399,485 309,827 243,753 234,629 787,635 1,104,023 1,426,082 1,475,693 1,446,753
Total Liabilities and Equity
1,326,593 1,304,790 1,229,103 1,178,278 1,161,893 1,182,439 1,759,811 2,076,787 2,399,744 2,481,703 2,480,739
Page | 13
3. Cash Flow Statement
BD'000 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E Operating Activities
Profit for The Year 211,903 96,545 79,777 96,445 59,961 35,700 13,264 898 32,348 36,063 Adjustments for:
Depreciation 78,777 77,573 77,831 79,419 73,775 71,759 115,296 145,654 175,160 170,245 Amortisation of other asset - - - 96 192 - -
- -
Provision for employees' end of service benefits (net)
789 814 844 1,403 1,476 - - - - -
Provision for impairment of inventories - net
-
339 252 177 - - - - -
Provision for impairment of receivables - net
-
(51) (4) 197 - - - - -
Gain on revaluation of derivative financial instruments
(78,934) (27,648) (27,219) (5,481) (4,583) - - - - -
Loss on disposal of property, plant and equipment
162 36 (1,391) 1,549 1,114 - - - - -
Write off of propery, plant and equipment- net book value
81 16 124 -
- - - - -
Write off impairment provision of inventories
-
(62) (179)
- - - - -
Interest Income (392) (389) (249) (188) (142) - - - - - Interest on Borrowings 6,563 6,121 4,759 3,733 2,749 2,442 35,000 49,812 45,792 44,307 Cost of Employees' Stock Incentive Plan - net
645 765 680 (92) - - - - - -
219,594 153,833 135,382 176,953 134,916 109,901 163,560 196,364 253,300 250,615
Working Capital Changes:
Inventories (5,712) 14,456 (1,643) (7,612) 5,888 5,697 8,482 (7,023) (78,742) (6,403) Account receivable and prepayments
16,057 (25,014) 5,815 (7,509) (8,007) (702) 11,913 (4,753) (53,291) (4,334)
Trade and other payables 15,621 6,547 (8,553) 3,608 42,586 (21,256) 888 6,559 73,532 5,980
Cash from operations 245,560 149,822 131,001 165,440 175,383 93,640 184,843 191,146 194,799 245,858 Employees' end of service benefits paid
(821) (839) (829) (1,068) (1,392)
Net cash flows from operating activities
244,739 148,983 130,172 164,372 173,991 93,640 184,843 191,146 194,799 245,858
Investing Activities
-5.99%
Purchase of property, plant and equipment
(34,447) (32,724) (57,512) (50,550) (48,575) (569,632) (460,030) (480,714) (119,343) (115,994)
Procceds from disposal of property, plant and equipment
769 127 14,409 143 66
Other Asset 3,011 - (4,800) - -
Interest Received 392 389 249 188 142
Net cash flows ued in investing activities
(30,275) (32,208) (47,654) (50,219) (48,367) (569,632) (460,030) (480,714) (119,343) (115,994)
Financing Activities
Repayment of long term receivable
3,439 3,439 3,437 3,438 3,438 (1,720) (1,719) - - -
Movement in short term loans
6,271 4,076 - - -
Interest on borrowings paid (6,819) (6,213) (4,831) (3,923) (2,869) (2,442) (35,000) (49,812) (45,792) (44,307)
Page | 14
Dividends paid (100,471) (76,271) (39,488) (47,998) (28,963) (7,768) (9,238) - - (8,087) purchase of treasury shares (3,125) (805) (2,652) (2,020) (1,933)
Margin Deposits 932 - - - - - - - - - Proceeds from resale of treasury shares
1,159 591 516 3,354 605
Purchase of shares for employees' stock incentive plan
- - - - -
Purchase of shares subsequent to the Initial public Offering
- - - - - - - - - -
Repayment of contributions from shareholders
- - - - - - - - - -
Debt availed/(repaid) (72,232) (79,474) (36,565) (64,346) (47,091) 574,280 315,500 315,500 (23,921) (34,920)
Net cash flows used in financing activities
(170,846) (154,657) (79,583) (111,495) (76,813) 562,350 269,543 265,688 (69,713) (87,314)
INCREASE IN BANK BALANCES AND CASH
43,618 (37,882) 2,935 2,658 48,811 86,358 (5,644) (23,880) 5,743 42,550
Bank Balances and cash at 1 January
55,869 99,487 61,605 64,540 67,198 116,009 202,367 196,723 172,843 178,586
BANK BALANCES AND CASH AT 31 DECEMEBER
99,487 61,605 64,540 67,198 116,009 202,367 196,723 172,843 178,586 221,136
Page | 15
4. DCF Valuation
FCFF BD'000 2016E 2017E 2018E 2019E 2020E
Cash flow from operations 93,640 184,843 191,146 194,799 245,858 Less: capex (from cash flow purchase of ppe) (569,632) (460,030) (480,714) (119,343) (115,994) FCFF (475,992) (275,187) (289,568) 75,456 129,864 Terminal Value
1,617,695
PV of terminal value
1,076,119
Sum of discounted FCFF -
475,991.63 -
248,524.52 -
236,173.89 55,579.65 86,387.81 N
1.00 2.00 3.00 4.00
EV 257,396.15 Add: Cash 110,159.00
Less:debt -
75,326.00 Equity Value 292,229.15 - -
Alba's target price 0.21
- - -
1.
2. Porter’s Five Force
Page | 16
5. WACC Calculation
WACC Risk free rate 2.47% 10-year treasury bond
Beta 0.94 Bloomberg
Market risk premium 5.69% Aswath Damodaran
Country risk premium 4.27% Aswath Damodaran
Cost of equity 11.83% Cost of debt 5.00%
Terminal Growth Rate 2.50%
Total Debt 75,326 Total Equity 391,920.00
Weight of debt 16.1% Weight of equity 83.9%
WACC 10.73%
Page | 17
6. Relative Valuation
Ticker Name Mkt Cap (BHD) Country
EV/EBITDA T12M P/E
AA US Equity ALCOA CORP 2528.03 UNITED STATES 3.25 28.35
AMAG AV Equity AMAG AUSTRIA METALL AG 514.85 AUSTRIA 10.12 28.00
KALU US Equity KAISER ALUMINUM CORP 537.49 UNITED STATES 8.38 17.36
PRESS MK Equity PRESS METAL BERHAD 651.93 MALAYSIA 8.97 6.69
MIDAS SP Equity MIDAS HOLDINGS LTD 106.42 SINGAPORE 15.54 20.98
AML PW Equity ALUMETAL SA 94.49 POLAND 7.59 13.00
5702 JP Equity DAIKI ALUMINIUM INDUSTRY
CO 78.83 JAPAN 7.98 7.96
98 HK Equity XINGFA ALUMINIUM
HOLDINGS 70.68 CHINA 3.42 4.52
6AM BU Equity ALCOMET AD-SHUMEN 67.00 BULGARIA 6.76 21.00
HLM SJ Equity HULAMIN LTD 60.13 SOUTH AFRICA 5.07 11.33
018470 KS Equity CHOIL ALUMINUM CO LTD 33.74 SOUTH KOREA 20.86 3.03
CAA AU Equity CAPRAL LTD 22.25 AUSTRALIA 4.01 13.60
ERS US Equity EMPIRE RESOURCES INC 19.45 UNITED STATES 17.89 34.34
069460 KS Equity DAEHO AL CO LTD 14.46 SOUTH KOREA 24.51 29.21
LBA MK Equity LB ALUMINIUM BHD 14.06 MALAYSIA 4.31 7.52
ALC MK Equity ALUMINIUM CO OF MALAYSIA
BHD 10.74 MALAYSIA 3.74 22.82
AALU JR Equity ARAB ALUMINIUM INDUSTRY 6.99 JORDAN 11.02 45.03
HAIL IN Equity HIND ALUMINIUM INDUSTRIES
LT 3.63 INDIA 5.52 7.26
Median
7.79 15.48
Mean
9.39 17.89
MAX
24.51 45.03
MIN
3.25 3.03
Trailing EBITDA 72,465.00 Enterprise Value 564,217.18 Add Cash Less Debt 599,050.18
0.42
Weight
Price based on P/E 0.21 50% 0.10
Price based on EV/EBITDA 0.42 50% 0.21
Target Price using Multiples 0.32
Target Price using DCF 0.21
Blended Target Price 0.24
Page | 18
7. Revenue Forecast
BD'000 2016E 2017E 2018E 2019E 2020E
Qty. sold (k) Metric Ton 972.80
992.26
1,012.10
1,500.00
1,530.00
Price of aluminum (USD) 1,575.00
1,626.20
1,679.00
1,773.50
1,789.80
Price of aluminum (BHD) 593.78
613.08
632.98
668.61
674.75
Source: World Bank Aluminium forecasts Revenue (BHD) Plus Premium
646,939.24
681,329.30
717,519.94
1,123,263.96
1,156,259.48
Revenue (USD) 687,372.94
742,162.27
794,397.08
1,203,497.10
1,269,820.68
Page | 19
8. Ratios
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Liquidity Ratios
Current Ratio 1.12 1.02 1.38 1.77 1.83 2.38 2.22 2.08 1.60 1.73
Quick Ratio 1.04 0.58 0.51 0.92 1.10 1.63 1.52 1.37 0.96 1.08
Activity Ratios
Receivable Turnover 10.61 6.87 8.78 8.85 7.61 6.60 7.61 7.61 7.61 7.61
Days of sales Outstanding 34.41 53.15 41.59 41.26 47.94 55.28 47.94 47.94 47.94 47.94
Inventory Turnover 4.19 4.45 4.42 4.42 4.53 4.23 4.53 4.53 4.53 4.53
Days in inventory 87.09 82.07 82.56 82.58 80.55 86.34 80.55 80.55 80.55 80.55
Payables Turnover Ratio 6.61 5.99 6.54 6.65 4.61 4.85 4.85 4.85 4.85 4.85
Days Payable 55.19 60.93 55.80 54.90 79.14 75.22 75.22 75.22 75.22 75.22
Cash conversion cycle 66.32 74.29 68.34 68.93 49.35 66.40 53.27 53.27 53.27 53.27
Profibility Ratio
Gross Profit Margin 25% 14% 14% 18% 13% 11% 12% 12% 12% 12%
EBITDA margin 30% 29% 19% 18% 15% 16% 24% 27% 22% 21%
EBIT Margin 20% 20% 8% 8% 5% 5% 7% 7% 7% 7%
Return on Assets 16% 8% 7% 8% 5% 2% 1% 0% 1% 1%
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Dupont Analysis
Net Profit Margin 23.99% 12.98% 10.65% 11.74% 7.82% 5.33% 1.95% 0.13% 2.88% 3.12%
Total Assets turnover 109.21% 89.65% 86.28% 89.50% 80.89% 38.04% 32.81% 29.90% 45.26% 46.61%
Equity Multiplier 161.33% 148.15% 135.68% 126.55% 124.75% 181.02% 213.49% 246.47% 246.69% 239.92%
Return on Equity 42.27% 17.24% 12.46% 13.29% 7.89% 3.67% 1.36% 0.09% 3.22% 3.49%
Solvency Ratio
Debt-to-Equity Ratio 0.56 0.39 0.29 0.23 0.09 0.68 1.01 1.33 1.26 1.20
Interest Coverage Ratio 24 8 10 22 13 14 1 1 2 2
Dividends
Dividend Per Share (BHD) 0.067 0.028 0.036 0.015 0.011 0.007 0.000 0.000 0.006 0.006
Divdend Payout Ratio (BHD) 45% 41% 64% 22% 26% 26% 0% 0% 25% 25%
Valuation Ratios
P/E 12 6 9 7 9 11 30 437 12 11
P/B 0.92 0.74 0.86 0.78 0.55 0.40 0.40 0.40 0.39 0.38
BVPS 0.57 0.59 0.62 0.65 0.67 0.69 0.69 0.69 0.71 0.73
Dividend Yield 8.00% 6.43% 6.86% 5.29% 2.93% 2.36% 0.00% 0.00% 2.06% 2.30%
Page | 20
9. Porter’s five forces
Threat of Substitutes:
Aluminium is considered a low cost substitute for many other metals, Therefore, there is a low threat
from other substitutes.
Rivalry Among Competitors:
There are a high number of aluminium producers worldwide and the surge in aluminium production
has led to oversupply (Chinese production is skyrocketing) which has consequently led to a fall
in the price of aluminium.
Bargaining Power of Suppliers:
ALBH's suppliers, like Alumina, GSC, etc., are few which means that the firm can't easily change
suppliers. This gives the suppliers more bargaining power and influence over ALBH.
Bargaining Power of Consumers:
ALBH produces primary aluminium & products like ingots, etc., and with the current low prices, there is less reason for consumers to bargain with ALBH.
Threat of New Entry:
It is difficult for firms to enter the industrial sector as it requires significant investment, time and experience to become a threat to larger firms.
Page | 21
10. SWOT Analysis
Strengths:
1. High quality standards (above 99% purity) & delivery of products according to customer specifications & requirements leading to customer loyalty.
2. Known for dedication to the environmental & safety regulations.
3. Generates its own power supply.
Weaknesses:
1. Plants in need of renovation in order to match production speed.
2. Higher production costs due to increased demand.
3. Heavy reliance on domestic market which increases risk of large losses. Underprepared to deal with an economic crisis.
4. R&D not highly developed leading to third-party suppliers for new technological advances in machinery
Threats:
1. Market fluctuations affects ALBH's prices for products & Chinese over-production.
2. May incurr higher costs due to new environmental regulations & greater wages for labor.
Opportunities:
1. High demand in the MENA Region & growing international consumer base.
2. Completion of the Line 6 Expansion project may give it a larger global influence.
Page | 22
11 11. Board of Directors
Member Career Tenure
ShaikhDaij Bin Salman
Bin Daij Al Khalifa
(Chairman)
Appointed on 27 February 2014, & is also the Chairman of the Executive
Committee and the Nomination and Remuneration Committee.
He holds the following directorship positions: Chairman of Arab
Shipbuilding and Repair Yard Company (ASRY Bahrain), and ASRY
Marketing Services Ltd. (ASRMAR) U.K. which ended in 2015, Vice
Chairman of United Arab Shipping Company, Dubai-U.A.E. until June 30,
2015, and Board Member of Bahrain Convention and Exhibition Authority
which ended in 2015, etc.
3 Years
Yousif A. Taqi
(Director)
Appointed as a member in 2008. He’s also currently the Chairman of the
Board Audit Committee, the Chairman of Manara Developments
Company B.S.C., Amar Holding Company B.S.C. (c), North Star Holding,
and Board Member for Tadhamon Capital, and Pan Arabian Gourmet.
9 Years
Fahad Nasser Al-Hazzani
(Director)
Appointed as a member on 27 February 2014. He has held several
positions in Gulf Petrochemical Industries Co. (GPIC) from 1980-2002.
He was a Procurement Specialist at Yokogawa Middle East Bahrain from
September 2003-July 2004.
3 Years
Fahad S. Al Sheaibi
(Director)
Appointed on 27 February 2014 & holds the position of Executive Vice
President Corporate Human Resources at Saudi Basic Industries Company
(SABIC), the Vice Chairman of the Board of Directors of Saudi Arabian
Fertilizer Company (SAFCO) & also Board of Trustees in ASHRM
(Arabian Society for HR Management).
3 Years
Osama Mohammed Al
Arrayedh
(Director)
Appointed in 2006 & is a member of the Board Audit Committee.
Currently, Mr. Al Arrayedh is the Undersecretary for Industry Affairs. Mr.
Al Arrayedh has been a Board Member in the Gulf Organization for
Industrial Consultancy since 2008.
11 Years
Dr. Mohamed Kameshki
(Director)
Appointed on 27 February 2014, & is also the Managing Director of
MiniMax Business Consulting, is serving on the BoD of Bahrain Flour
Mills Company, Mawteni Trading Company, and Saleh Abdulla
Kameshki& Sons B.S.C. He’s also a technical advisor to the BoD of
Arabian Taxi.
3 Years
Khalid Al-Garni
(Director)
Appointed on the 4th of May 2015, is a member the Board Audit
Committee of ALBH, & is the General Manager for Finance at Saudi
Basic Industries Corporation (SABIC). He’s also a member of the Board
Audit Committee at Yambol National Petrochemical Co. (YANSAB), and
was appointed a Shareholder representative at Gulf Petrochemical
Industries Company (GPIC).
2 Years
Abdul Aziz Al Humaid
(Director)
Appointed in March 2009, and has also served on the Board Audit
Committee and the Human Resources Committee. He’s currently the
Board Chairman of National Industrial Gases Company (GAS), a Board
Member of the Royal Commission Colleges and Institutes for Jubail and
Yanbu, the Gulf Aluminum Rolling Mill Company (GARMCO), & the
Executive Vice President of SABIC Metals since November 2009.
8 Years
SuhaKarzoon
(Director)
Appointed on the 10th of June 2015,joined Mumtalakat in September 2014
& currently holds the role of Chief Financial Officer, overseeing the
Finance, Treasury and External Portfolio functions.
2 Years
MutlaqHamad Al
Murished
(Director, Not Current)
Was appointed from 1st May 2003 up until 31st December 2014; and was
also a member of the Executive Committee. His current position is as
Chief Executive of National Industrialization Company (TASNEE)-Saudi
Arabia from January 2015.
11 Years
Source: Official Site
Page | 23
3. SWOT Analysis:
4. Board of Direct12. 12. Executive Management:
Member Title Career Tenure
Timothy “Tim” J.
Murray
Chief
Executive
Officer
Has been with ALBH since 2007 as a GM of
Finance, & CEO of ALBH since October 2012. He
has also held the roles of Chief Finance & Supply
Officer, Chief Financial Officer, and Chief
Marketing Officer.
10 Years
Ali Al Baqali Chief
Financial
Officer
He was the Manager of Procurement &
Warehousing. As a CFO since June 2013, he
manages the following departments – Financial
Accounting & Controlling, Strategic Supply &
Planning, Legal, Procurement & Warehousing and
Calciner& Marine.
18 Years
Khalid Abdul Latif Chief
Marketing
Officer
He joined ALBH in 1989 & was appointed as CMO
on September 30, 2015, & will deal with ALBH’s
global marketing strategies.
28 Years
Amin Sultan Chief
Operations
Officer
Joined ALBH in 1997. Took part in ALBH’s
organization restructuring process in 2010,
implementation of Lean & Six Sigma tools during
STAR project 2011/2012 and finally, the cost saving
Titan project. Currently leading Titan Phase II and
energy conservation Tesla projects.
20 Years
Source: Official Site
Page | 24
13. Other Management
Member Title Member Title Member Title
Abdulla Habib Ahmed Ali
Director Reduction
Lines & Services Karim El Rahimy
Manager of Project
Controls Line 6
Project
Hani Ali Saleh Abbas
Acting Manager
Line 6 Project -
Reduction
Hassan Noor
Director Carbon &
Services Khalid Ahmed
Shareef
Manager Operation
Support Services HishamYousifAlkooheji
Acting Manager
Customer Services
& Marketing
Operations
Shawqi Al Hashimi
Director Line 6
Smelter Project
and Engineering
Khalil Ebrahim
Mohammed
Manager Reduction
Line 4 KhaledMersal
Acting Manager
Line 6 Project -
Power
WaleedTamimi
Director of
Administration Mathew
Tharakan
Manager Power
Maintenance Khalil EbrahimSuhail
Acting Manager
Line 6 Project -
Casthouse
Abdul Rasool Ahmed Abdul
Rasool
Sr. Manager
Casthouse Mohamed Khalid
Juma
Manager Sales MENA MasoodToorani
Acting Manager,
Carbon 1&2
Operations &
Maintenance
Boris Santosi
Sr. Manager Sales
- Europe Mohammed A.
Rahim Zainal
Manager Reduction
Line 5 Haitham Salman
Ahmed Yusuf Al-Saegh
Acting Manager
Reduction
Maintenance
Graeme John Legg
Sr. Manager,
Power Special
Projects
Mustafa A.
Rahman
Manager Procurement
& Warehousing Jordan Samuel
Screen
Manager Line 6 –
Contracts &
Procurement
Mohamed Khalil EbrahimSaeed Sr. Manager SHE,
Security and Fire NezarHameed Ali
Manager Line 6
Project - Safety FaeqAbdulrahim
Acting Manager
Strategic Supply &
Planning
NabeelEbrahim Al Jallabi
Sr. Manager
Reduction Lines 1-
3
Patrick Hudson
Manager Sales and
Marketing - Americas Hussain Al-Malali Manager Customer
Technical Support
Raghavendra K.S.R
Sr. Manager
Process Control &
Development
Paul Otteson
Manager Line 6
Feasibility Study Ahmed Bahar
Acting Manager
Operational
Excellence
A. Rahim Mohd
Carbon Project
Manager Line 6 Rawdha Salman
Alaradi
Manager Training Hamad Al Shaibeh Manager HR
Ahmed Abdulqader Mohamed
Yusuf
Manager Financial
Accounting and
Controlling
Robert Byrne
Manager Project
Construction Line 6
Project
Yogesh Kumar
Manager Sales
Asia & Pacific
Bryan Harris
Chief Internal
Auditor & Risk
Management
Officer
S. Hussain S.
Fadhel
Manager Carbon 3 Gopichand J. Talreja
Manager
Engineering &
Infrastructure
ElineHilal
Manager Investor
Relations &
Corporate Affairs
StephanusGroble
r
Manager Legal TalibHussain Al Ansari
Manager
Workshop &
Maintenance
Services
EskandarAbdulnabiMarhoonAls
ari
Manager Power
Operations Syed Afaque
Ahmed Hashmi
Manager IT Fuad A.
HussainAlasfoor
Manager
Calciner& Marine
Source: Official Site
Page | 25
14. Investment Risk:
Pro
bab
ility
Hig
h
R9
R7
Med
ium
R1 R2 R3
R8 R10 R6
R12 R11
Low
R5 R4
Low
Medium
High
Impact
Page | 26
15. Event Analysis
0
200
400
600
800
1000
1200
1400
1600
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Jan
-12
Ap
r-1
2
Jul-
12
Oct
-12
Jan
-13
Ap
r-1
3
Jul-
13
Oct
-13
Jan
-14
Ap
r-1
4
Jul-
14
Oct
-14
Jan
-15
Ap
r-1
5
Jul-
15
Oct
-15
Jan
-16
Ap
r-1
6
Jul-
16
Oct
-16
Jan
-17
Alba Bahrain Bourse
China currency devaluation
liquidity fund
oversupply of aluminum
oil price crash
2015 Results
2012 results