Shares of Chinese Aluminum Giant Chalco Fall After Disappointing Earnings

Dow Jones10-30

By Kimberley Kao

Shares of one China's largest aluminum producers, known as Chalco, took a dive after it posted disappointing third-quarter earnings.

Aluminum Corp. of China Ltd.'s Hong Kong-listed shares were last down 10% on Wednesday, while its Shanghai-listed shares were last 8.0% lower.

The Chinese state-owned company, one of the top aluminum and alumina producers by output, posted a 3.3% rise in net profit to 2.00 billion yuan, equivalent to US$280.4 million. After excluding extraordinary gains and losses, profits were 9.1% lower compared to a year ago.

Revenue rose 16% to 63.06 billion yuan over the period.

Gross profit also fell from the second quarter, which Citi Research analysts attributed mainly to "depreciation adjustments in aluminum smelting assets, adjustments related to power surcharge, and adjustment in bauxite reserves."

Net profit for the first nine months of the year rose 68% to 9.02 billion yuan, but that fell short of Citi's forecast by 31%.

Citi believes the miss will likely spur short-term profit taking, pressuring the stock, it said in a report. However, it keeps a buy call on Chalco, noting bring spots in the sequential rise in aluminum production and sales in the third quarter. Free cash flow also remained strong.

Citi trims its target price for H-shares to HK$8.89 from HK$9.09.

Hong Kong-listed shares of Chalco are still up about 27% so far this year, while its China stock is up 36%.

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

October 29, 2024 23:56 ET (03:56 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

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