THE chairman of Alumina, Don Morley, believes that, on a replacement basis, the group's 40 per cent per cent share of the Alcoa-managed global alumina joint venture known as AWAC could be valued at more than $11 billion. The only problem for shareholders is that Alumina's market value is less than $4 billion.
But the managing director, John Bevan, believes the valuation gap - one that exposes Alumina to a cheap takeover bid from Alcoa - could narrow as the group's earnings and dividend flow rebound in line with the greatly improved price for aluminium, the metal to which the alumina price is linked.
Speaking after the annual meeting in Melbourne yesterday, Mr Bevan said that in the short-term the market was waiting to see earnings re-emerge before re-rating the group's share price. "That is part of the reason that the share price is as it is. Those earnings will start to emerge in the back half of this year."