Alcoa Corp (AA.N): Sizing Up With S32 Assets; Accretive On Citi’s Bullish Price Deck.

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Alcoa Corp (AA.N): Sizing Up With S32 Assets; Accretive On Citi’s Bullish Price Deck.

Alcoa Corp (AA.N)

30 June 2026 Citi Research

Our target price is a rounded £3.2 based on DCF and multiples valuation. Our DCF valuation uses a 9.0% real, after-tax,

unlevered discount rate and terminal growth rate of 2%. Our long-term equilibrium commodity prices and other key

assumptions are based on our commodities team’s latest forecasts. Our multiples analysis focuses on 6.0x EV/EBITDA

multiples (in-line with peer average). We derive our 12-month target price from a 50:50 weighting of div adj. NPV and earnings

multiples analysis.

Risks

We see the following key risks to the achievement of our target price:

South32’s earnings are linked to prices in world commodity markets, which have been subject to substantial volatility

recently. These prices are in turn influenced by economic, new government regulations and geopolitical factors, notably the

Chinese economy. A slowdown in Chinese economic growth would therefore adversely impact prices and consequently

South32’s revenue. South32’s diversification across aluminium, alumina, manganese, nickel, silver and coal has the potential

to mitigate this risk.

The majority of South32’s revenues are in US dollars but with mines and processing plants in a number of countries, the

influence of other currencies such as the A$, Brazilian real, South African rand on the operating cost base is equally significant.

Fluctuations in these currencies can therefore heavily impact South32’s earnings.

If the impact on the company from any of these factors proves to be greater than we anticipate, the stock will likely have

difficulty achieving our target price. However, should they be less than anticipated, the stock could trade above our target

price.