2026-01-16 02:56Summary of Aluminum Corporation of China (Chalco) 2026 Business Outlook Call Company Overview - Company: Aluminum Corporation of China (Chalco) - Stock Code: 2600.HK Key Industry Insights - Alumina and Aluminum Prices: - Alumina prices have been weak since Q4 2025 due to surplus supply and increased bauxite supply [2][4] - Aluminum prices have remained strong since Q4 2025, benefiting from China's capacity cap policy and rising demand [2][5] Core Business Strategies - Focus on Aluminum Business: - In 2026, Chalco will concentrate on its aluminum business, aiming for a 100% utilization ratio [3] - The output of metallurgical alumina is expected to align closely with aluminum consumption, with profitable sales of chemical alumina anticipated [3] - Bauxite Production: - Chalco plans to increase its bauxite output from Guinea year-over-year in 2026 [3] Financial Performance and Projections - Cost Management: - Imported bauxite prices decreased quarter-over-quarter in Q1 2026, while domestic prices remained stable [4] - Labor costs increased in Q4 2025 due to salary and bonus recognition [4] - Profitability Outlook: - The profit from the alumina segment is expected to be lower quarter-over-quarter, while the aluminum segment is projected to be higher in Q4 2025E [2] - Chalco's expected net profit for Q4 2025 is estimated at RMB 2.9 billion, with an impairment loss of approximately RMB 2 billion anticipated [8] Market Valuation - Target Price: - The target price for Chalco's H-share is set at HK$15.94, based on a price-to-book ratio of 2.81x for 2026E, reflecting stronger-than-historical-average return on equity [9] Risks and Challenges - Downside Risks: - Potential risks include lower-than-expected aluminum and alumina prices, higher-than-expected costs, and increased impairment losses [10] Investment Recommendation - Rating: - Maintain a "Buy" rating, with Chalco identified as a top pick in the coverage [1][6] Additional Information - Market Capitalization: - Approximately HK$256.03 billion (US$32.83 billion) [6] - Expected Total Return: - 23.1%, with an expected dividend yield of 4.6% [6] This summary encapsulates the critical insights and projections from the 2026 Business Outlook Call for Aluminum Corporation of China, highlighting the company's strategic focus, financial outlook, and market positioning.