2026-04-01 09:59Summary of Aluminum Corporation of China (Chalco) 4Q25 Earnings Call Company Overview - Company: Aluminum Corporation of China (Chalco) - Ticker: 2600.HK - Date of Call: March 29, 2026 Key Financial Metrics - Net Profit for 2025: Rmb12.7 billion, +2% YoY, accounting for 90% of Citi's estimate and 87% of Bloomberg consensus [1] - Impairment Losses: Rmb3.6 billion in 2025, up from Rmb2.6 billion in 2024, impacting net profit [1][2] - Recurring Net Income: Rmb16.3 billion, -2% YoY [1] - 4Q25 Net Income: Rmb1.8 billion, -47% YoY and -53% QoQ; implied recurring profit of Rmb4.8 billion, -19% YoY and +23% QoQ [1] - Dividends: Proposed final dividend of Rmb0.147/share, total dividend for 2025 at Rmb0.270/share, up from Rmb0.219/share in 2024 [1] Segment Performance - Revenue Breakdown for 2025: - Alumina: Rmb62 billion (15% of total revenue) - Aluminum: Rmb146 billion (35% of total revenue) - Trading: Rmb142 billion (35% of total revenue) - Energy: Rmb8 billion (2% of total revenue) [1] - Profit Before Tax (PBT): - Alumina: Rmb4.8 billion, -59% YoY - Aluminum: Rmb20.6 billion, +130% YoY - Energy: Rmb862 million, -13% YoY - Trading: Rmb1.274 billion, -32% YoY [1] Market Conditions - Aluminum Prices: - Average SHFE aluminum price in 2025: Rmb20,699/ton, +4% YoY - Average spot alumina price in 2025: Rmb3,211/ton, -21% YoY [6] - 4Q25 Prices: SHFE aluminum price at Rmb21,511/ton, +5% YoY; spot alumina price at Rmb2,831/ton, -47% YoY [6] Cash Flow and Gearing - Operating Cash Flow: Rmb34.1 billion, +4% YoY; Capex at Rmb9.2 billion, -11% YoY; Free Cash Flow (FCF) at Rmb24.8 billion, +11% YoY [7] - Net Gearing: 21% in 4Q25, down from 30% in 4Q24 [7] Future Guidance and Risks - 2026 Guidance: Anticipation of lower impairment losses YoY, but some impairment is expected [2] - Risks: - Lower-than-expected aluminum and alumina prices - Higher-than-expected costs - Higher-than-expected impairment losses - Potential loosening of supply cut policies by the Chinese government if aluminum prices overshoot [12] Valuation - Target Price: HK$15.94/share, implying a 47.5% expected return and a 5.7% expected dividend yield [4][11] Conclusion Chalco's financial performance in 2025 showed resilience in core earnings despite significant impairment losses. The aluminum segment demonstrated strong growth, while the alumina sector faced challenges. Future guidance indicates cautious optimism, with attention needed on market conditions and potential risks impacting performance.