Trump’s policies a real threat for Hulamin
US protectionism and rand strength among the dangers — but quality of its products seen as a definite strength
Hulamin would seem to be facing some serious problems. Its rating has collapsed to a 4 p:e and its market cap is barely a third of shareholders’ equity. Still, Evan Walker of 36One Asset Management springs to the aluminium company’s defence, saying: "It has excellent management and is cheap. We like the business and are big holders." Warren Jervis of Old Mutual Investment Group disagrees: "I do not like its business model. It is unlikely ever to deliver a decent return on capital employed [ROCE]" At 8%, Hulamin’s ROCE in 2017 was far from inspiring when set against the ROCE of 23.7% produced by another capital-intensive company, Afrox, in its past year. For the group, its past year to December should have been a good one. At 215,000t, key rolled products output was at a record level — as was total production of 233,000t, which includes extruded products sold mainly in SA. But with upwards of two-thirds of its rolled products output exported, Hulamin was hit hard by the strengthening...
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