UBS: Aluminum Corporation of China — Q1 Hits Record High, In Line with Expectations
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Aluminum Corporation of China (Chalco) has released preliminary first-quarter 2026 results, forecasting a net profit attributable to shareholders of RMB5.3-5.6 billion. This represents a robust 50-58% year-over-year increase, achieving 21-22% of UBS's full-year estimate of RMB25.3 billion and 27-28% of the Wind market consensus of RMB19.9 billion. The quarterly profit sets a new historical record, aligning closely with UBS's prior projection of RMB5.0-5.5 billion. The company did not adjust its full-year outlook or operational guidance.
UBS anticipates a modestly positive market reaction to the earnings release, primarily driven by the record-breaking quarterly performance. Currently, Chalco's H-shares are trading at 7.4 times 12-month forward price-to-earnings, positioned above the trailing five-year historical average of 6.3 times but below the historical peak of 9.4 times. Despite the slightly elevated valuation multiple, UBS views the strong fundamental execution and record earnings as clear evidence of ongoing operational stability and earnings resilience.
As China's largest aluminum producer, Chalco boasts an annual production capacity of 21 million tonnes of alumina and 7.8 million tonnes of electrolytic aluminum as of 2024. UBS reiterates its Buy rating on the stock with a 12-month target price of HK$17.50, compared to the current price of HK$12.40. UBS forecasts EPS of RMB1.48, RMB1.78, and RMB1.86 for 2026 through 2028, supported by attractive dividend yields of 5.4%, 6.6%, and 6.9%, respectively.