Raiffeisen Recommends "Buy" For Alumil, Target Price Raised To RON1.9

04.13.2011 By Andrei Circhelan

Austrian financial group Raiffeisen expects the shares of Romanian aluminum systems maker Alumil Rom Industry (ALU.RO) to rise 34% within 12 months, to 1.9 lei (EUR1=RON4.114) per unit, and changed its recommendation from “hold” to “buy”.

Austrian financial group Raiffeisen expects the shares of Romanian aluminum systems maker Alumil Rom Industry (ALU.RO) to rise 34% within 12 months, to 1.9 lei (EUR1=RON4.114) per unit, and changed its recommendation from "hold" to "buy".

Alumil shares were trading Wednesday at RON1.42, down 1.76% on the day.

Raiffeisen adjusted the target price by 2%, saying the bottom had been reached.

Alumil sales slightly overshot Raiffeisen expectations last year but profitability underachieved, mainly because of the high cost of raw materials and higher provisions made to cover "doubtful receivables".

The company's sales decreased significantly over the past two years, according to a Raiffeisen report released Wednesday.

"While we do not expect a sharp and immediate recovery, we feel that the bottom has been reached and expect sales to at least stabilize in 2011," the document reads.

Alumil sales should rise 4% on the year in 2011, mainly because of increased volumes, while profitability should improve significantly. As such, net profit may triple, to RON2.1 million, from RON0.7 million in 2010.

Alumil Rom Industry is 55.9% owned by Greek group Alumil.