RUSAL: Smelted Lightning

We initiate coverage of RUSAL, the world’s leading aluminium producer, with a BUY rating and a HKD5.3/share target price. RUSAL is a geared exposure to the cyclical commodity, aluminium, for which we see upside potential driven by curtailments of both illegal and polluting facilities in China. We expect EPS to grow at a +19% CAGR in 2016-19 on stronger aluminium prices, a rising share of HVA products, and persistent RUB weakness. RUSAL has one of the world’s lowest production costs and (soon...