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MarketScreener Homepage  >  Equities  >  SHANGHAI STOCK EXCHANGE  >  Aluminum Corporation of China Limited    601600   CNE1000000T0

ALUMINUM CORPORATION OF CHINA LIMITED

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Chalco first half profit falls on higher costs, lower aluminum prices

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08/27/2019 | 09:16am EDT

BEIJING (Reuters) - Aluminum Corp of China Ltd, known as Chalco, said on Tuesday its net profit fell by 14.1% year-on-year in the first half of 2019 as higher costs offset an increase in revenue.

Beijing-based Chalco, a unit of state-owned aluminum producer Chinalco, said net income came in at 705.8 million yuan ($99.51 million) in January-June, down from a restated figure of 821.6 million a year earlier, it said in a statement to the Shanghai Stock Exchange.

Overall revenue rose 15.2% to 94.9 billion yuan despite a 10% drop in the primary aluminum segment as trading revenue increased by 22.7%.

In the second quarter alone, Chalco's net profit was 260.8 million yuan, according to Reuters calculations, down 52.7% from a year earlier, while revenue was up 11.3% year on year.

"Due to the trade friction between China and the United States, global economic growth slowed down, the manufacturing industry was depressed and the consumption market was sluggish," weighing on aluminum prices, Chalco said in remarks accompanying its first-half earnings.

It noted benchmark three-month London aluminum had averaged 16.3% lower year on year at $1,849 a tonne in the reporting period, while prices for raw material alumina, which Chalco also produces, had fallen after the United States lifted sanctions on Rusal and Norsk Hydro's Alunorte alumina plant in Brazil restarted.

Meanwhile, Chalco's operating costs increased by 16.7% year on year to 88.5 billion yuan in the first six months of 2019, partly due to higher freight costs after importing 1.85 million tonnes more coal, which is used to generate electricity for the energy-intensive aluminum smelting process.

The company also faced higher management expenses after missing out on the special payments for "zombie" enterprises, or unprofitable and indebted state-run firms, that it received a year earlier.

Chalco's privately held rival, China Hongqiao Group boosted first-half profit by 37.3% year on year to 2.48 billion yuan but said its 2019 aluminum production would be up to 300,000 tonnes lower than previously guided due to recent flooding.

Chalco did not provide first-half production data on Tuesday but said product output "grew steadily".

(Reporting by Tom Daly; editing by David Evans)

By Tom Daly

Stocks mentioned in the article
ChangeLast1st jan.
ALUMINA LIMITED -0.41% 2.45 End-of-day quote.6.96%
ALUMINUM CORPORATION OF CHINA LIMITED 0.26% 3.81 End-of-day quote.7.32%
CHINA HONGQIAO GROUP LTD 1.10% 5.51 End-of-day quote.24.38%
CITIC RESOURCES HOLDINGS LIMITED 2.08% 0.49 End-of-day quote.-19.67%
EURO / BRAZILIAN REAL (EUR/BRL) 0.90% 4.5219 Delayed Quote.1.14%
LME ALUMINIUM CASH -1.03% 1774 End-of-day quote.-4.52%
NORSK HYDRO ASA 1.78% 34.22 Delayed Quote.-14.97%
UNITED COMPANY RUSAL PLC 0.59% 3.4 End-of-day quote.29.77%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) 0.01% 7.0455 Delayed Quote.2.58%
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Financials (CNY)
Sales 2019 183 B
EBIT 2019 6 846 M
Net income 2019 1 460 M
Debt 2019 80 317 M
Yield 2019 -
P/E ratio 2019 43,7x
P/E ratio 2020 27,0x
EV / Sales2019 0,80x
EV / Sales2020 0,76x
Capitalization 66 126 M
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Mean consensus HOLD
Number of Analysts 13
Average target price 3,95  CNY
Last Close Price 3,81  CNY
Spread / Highest target 60,1%
Spread / Average Target 3,75%
Spread / Lowest Target -39,4%
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Dong Liang Lu President & Executive Director
De Hui Yu Chairman
Zhan Kui Zhang Chief Financial Officer & Secretary
Hong Ao Non-Executive Director
Ying Gang Jiang Executive Director & Senior Vice President
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