2026-01-09 05:13Summary of Aluminum Corporation of China (Chalco) Conference Call Company Overview - Company: Aluminum Corporation of China (2600.HK) - Industry: Aluminum production and mining - Core Competitiveness: Ownership of stable and reliable bauxite resources, ensuring sustainable development. As of 2024, it is the world's largest alumina and primary aluminum producer by capacity [23][24]. Key Financial Updates - Net Profit Forecast: Revised for 2025E/26E/27E by +2%/+4%/+7% to Rmb14.0 billion, Rmb19.1 billion, and Rmb21.9 billion respectively, driven by higher aluminum price forecasts [1][2]. - Target Price (TP): Increased to HK$15.94 from HK$12.41, based on a price-to-book (PB) ratio of 2.81x for 2026E, reflecting a stronger-than-historical-average return on equity (ROE) [3][25]. - Expected Returns: Anticipated share price increase of 18.4% and a total return of 23.0%, including a dividend yield of 4.6% [4]. Earnings Summary - 2023A: Net Profit of Rmb6.717 billion, EPS of Rmb0.391 - 2024A: Net Profit of Rmb12.400 billion, EPS of Rmb0.723 - 2025E: Net Profit of Rmb14.011 billion, EPS of Rmb0.817 - 2026E: Net Profit of Rmb19.070 billion, EPS of Rmb1.112 - 2027E: Net Profit of Rmb21.876 billion, EPS of Rmb1.275 [6][8]. Market Dynamics - Aluminum Prices: Expected to remain high due to supply control and demand growth, particularly in the context of China's carbon-neutral goals [24]. - Cost Structure: Anticipated cost of sales for aluminum and alumina is projected to remain stable, with gross profit margins improving over the forecast period [9]. Risks - Downside Risks: Include lower-than-expected aluminum and alumina prices, higher-than-expected costs, and potential government policy changes regarding supply cuts [26]. Investment Strategy - Recommendation: Rated as a "Buy" due to expected benefits from China's carbon-neutral initiatives and favorable market conditions for aluminum prices [24][25]. Additional Insights - Earnings Sensitivity: The company's earnings are sensitive to fluctuations in aluminum and alumina prices, with significant impacts on net profit projections based on price changes [11]. - Valuation Metrics: The target price reflects a valuation that is 2.25 standard deviations above the historical average, indicating confidence in future earnings growth [3][25]. This summary encapsulates the key points from the conference call regarding Aluminum Corporation of China, highlighting financial forecasts, market dynamics, and investment strategies.