Summary of Aluminum Corp. of China (Chalco) Earnings Review Company Overview - **Company**: Aluminum Corp. of China (Chalco) - **Stock Ticker**: 2600.HK - **Market Cap**: HK$87.8 billion / $11.3 billion - **Enterprise Value**: HK$168.4 billion / $21.7 billion - **Industry**: Basic Materials Key Financial Highlights - **2024 Net Profit**: Rmb12.4 billion, representing an 85% year-over-year increase - **Earnings Per Share (EPS)**: Rmb0.723, up 84% year-over-year - **Recurring Net Profit**: Estimated at Rmb13.1 billion, up 99% year-over-year - **Dividend**: Proposed final dividend of Rmb0.135 per share, total annual dividend of Rmb0.217, implying a 30% payout ratio for 2024, compared to 21% for 2023 [1][30] Revenue and Cost Analysis - **Total Revenue for 2024**: Rmb237.1 billion, a 5% increase from Rmb225.3 billion in 2023 - **Cost of Goods Sold (COGS)**: Rmb201.5 billion, up 2% year-over-year - **Gross Profit**: Rmb35.5 billion, a 29% increase year-over-year - **Sales Volume**: Aluminum sales volume was 7.60 million tons, up 12% year-over-year, while alumina sales volume was 6.35 million tons, down 3% year-over-year [19][30] Segment Performance - **Aluminum Segment**: Gross profit declined by 15% year-over-year, primarily due to higher COGS - **Alumina Segment**: Gross profit increased by 236% year-over-year, attributed to lower-than-expected costs - **Energy and Trading Segment**: Gross profit decreased by 63% year-over-year due to lower revenue and higher COGS [19][20] Future Outlook and Estimates - **2025E Net Profit**: Expected to remain elevated at Rmb11.4 billion, with a stable aluminum output of 7.6 million tons and an increase in alumina output to 22 million tons [2][33] - **Alumina Price Forecast**: Expected to remain depressed at Rmb3,431 per ton for 2025 and Rmb3,464 per ton for 2026 [2][33] - **Aluminum Industry Spread**: Anticipated to sustain at Rmb4,830 per ton in 2025 and Rmb4,700 per ton in 2026 [2][33] Valuation and Investment Thesis - **Price Target**: HK$6.30 for 12 months, with a current price of HK$5.12, indicating a 23% upside potential - **Valuation Ratios**: Trading at a P/E of 6.2 for 2024, with a projected P/E of 7.2 for 2025 [1][36] - **Investment Rating**: Maintain Buy rating for Chalco-H and Neutral for Chalco-A due to fair valuation [34][35] Risks and Considerations - **Downside Risks**: Include lower aluminum and alumina pricing, potential removal of capacity caps in primary aluminum, slower-than-expected green demand, and higher supply from recycled aluminum [28][37] - **Upside Risks**: Include higher pricing driven by improved supply-demand balance and enhanced demand for green technologies [29][38] Cash Flow and Balance Sheet - **Operating Cash Flow**: Increased by 21% year-over-year to Rmb32.6 billion - **Free Cash Flow**: Grew by 59% year-over-year to Rmb25.2 billion - **Net Gearing**: Decreased to 64% from 100% at the end of 2023 [23][30] This summary encapsulates the key financial metrics, segment performance, future outlook, valuation, and associated risks for Aluminum Corp. of China, providing a comprehensive overview for potential investors.