• Company profile. Aluminium Company of Malaysia Berhad (ALCOM) is involved in the manufacture of aluminium sheets and foil products. Since 1960, the group has established as aluminium manufacturer with more than 65% of its products being exported. The key products of the group are heavy gauge foil and fin stock, where ALCOM is supplying to most of the leading manufacturers in the air-conditioner market across Asia and Europe.

• Stellar results amid growing coated fin stock business . ALCOM registered a PBT of RM15.8m in FY17 vs. RM2.9m in FY16 on the back of an increase of shipment volume in coated fin business (+41% yoy) following the maximization of Coater Line 1 to its full production capacity. Also, the low metal premiums (Main Japanese Ports) have contributed positively towards the margins. Currently, ALCOM has a net cash position of RM57m, which represents 23.3% of its current market capitalization.

• Technical outlook. ALCOM trended sideways without significant volumes after the breakout of RM1.77 on the 9th of August. With the MACD Line crossing above zero following the 'Buy' signal formed last week, the momentum may be picking over the near term. Also, should there be a breakout above RM1.82, target will be pegged around RM1.93- 2.00, followed with a long term target of RM2.30. Support will be located around RM1.73-1.75 with a cut loss set below RM1.70.

Source: Hong Leong Investment Bank Research - 15 Aug 2017