← Back to Investments

HULAMIN LIMITED

HLM JSE Listed
Market Cap
R765 Million

Investment Analysis: Hulamin Limited (JSE: HLM)

Date: 14 January 2026 Analyst Role: Senior Equity Analyst, JSE Subject: Comprehensive Review of Hulamin Limited

Step 1: Data Gathering & Source Verification

I have accessed the primary financial disclosures and regulatory announcements to establish the baseline for this analysis.

  • Reporting Period 1 (Interim): Unaudited Condensed Consolidated Interim Results for the six months ended 30 June 2025 (Released 25 August 2025).

  • Source File: Interim Results SENS Announcement

  • Reporting Period 2 (Annual): Audited Annual Financial Statements for the year ended 31 December 2024 (Released March 2025).

  • Source File: FY2024 Annual Results

  • Key SENS Announcements (L12M):

  • Trading Statements: Earnings guidance updates issued in August 2025 warning of lower comparative earnings.
  • Operational Update: Progress on the "Wide Can Body" expansion project and closure of the "Containers" division.

Step 2: Metric Extraction

Currency Note: Metrics calculated using the closing share price of R2.36 (14 Jan 2026).

  • Market Cap: R765 Million

  • Context: Small-cap industrial counter.

  • Dividend Yield (L12M): 0.0%

  • Status: N/A. No dividends declared in the last 12 months. Hulamin has not paid a dividend since 2019, prioritizing debt reduction and capital expenditure.

  • Liquidity Check: FAIL (High Risk)

  • Metric: Average daily value traded is often <R200,000.

  • Risk: Extreme. The stock suffers from very low liquidity. Institutional interest is minimal, leaving retail investors with significant "slippage" risk if they need to exit a position quickly.

  • P/E Ratio: ~16.8x (Volatile)

  • Calculation: Based on Interim 2025 HEPS of 14cps and volatile FY24 earnings.

  • Context: The P/E is unreliable due to the "Metal Price Lag" (MPL)—an accounting quirk where the fluctuating price of aluminium distorts reported earnings. The company is effectively trading on asset value, not earnings reliability.

  • Net Asset Value (NAV): ~R11.68 per share (Derived from R3.78bn Equity / ~324m shares)

  • Price-to-Book: 0.20x (Trading at an 80% Discount to NAV).
  • Significance: This is the most critical metric. The market is valuing the company's machinery, land, and inventory at 20 cents on the Rand, implying deep skepticism about the company's ability to generate a return on those assets.

Step 3: Operational & Strategic Analysis

Business Overview Hulamin is the largest aluminium semi-fabricator in Sub-Saharan Africa. It processes primary aluminium (sourced locally from South32) into rolled products (beverage can bodies, automotive sheeting) and extrusions.

  • Strategic Shift: The company has exited the low-margin "Containers" business to focus on the high-specification Rolled Products market, specifically aiming to displace imports of aluminium can bodies in South Africa.

Performance Trend (Interim June 2025 vs June 2024)

  • Revenue: Expanding. Revenue increased to R7.1 billion (+8%), driven by higher aluminium prices and improved sales mix.
  • Profitability: Contracting. Operating Profit fell significantly to R164 million (from R454m). This was largely due to a negative swing in the "Metal Price Lag" and rising energy costs which squeezed margins.
  • Volumes: Stable. Rolled products volumes grew slightly (+2%) to 89k tons, indicating that the factory is stabilizing after previous operational disruptions (fires/floods).

Sector Context

  • Macro Factor (Input Costs): Hulamin is an energy-intensive business. Eskom tariff hikes directly impact profitability. Additionally, port congestion (Transnet) delays the export of their products, leading to working capital traps where cash is tied up in stock sitting at the Durban port.

Step 4: The Verdict

Bull Case: The "Deep Value" Asset Play At 0.2x Book Value, Hulamin is priced for liquidation. The company has invested heavily in new capacity (Wide Can Body plant) which is now coming online. If they can run this plant efficiently, they become the dominant local supplier for the beverage industry (Coke, SAB). Any normalization of earnings could see the stock re-rate to 0.5x NAV, which would be a 100% upside from current levels.

Bear Case: The "Value Trap" Hulamin has been "cheap" for years and has consistently disappointed investors. It has no pricing power (global aluminium prices dictate revenue) but faces spiraling local costs (SA inflation). The lack of a dividend means you are paid nothing to wait for a turnaround that is perpetually "just around the corner."

Fair Value Estimate R4.50 – R5.50

  • Methodology: Applying a conservative 50% discount to the Tangible NAV of R11.68. Even with a massive risk haircut, the stock is mathematically undervalued.

Final Rating: SPECULATIVE BUY

  • Rationale: This is not a "quality" investment; it is a "cigar butt" investment (one last puff of value). The risk is high, but the price is so low relative to assets that the risk/reward is favorable for patient, high-risk capital.
AI Generated Analysis Last Updated: 2026-01-14