• Buy Entry – 4.25 Target – 5.00 Stop Loss –3.95
  • Aluminum Corp of China Ltd is a China-based company principally engaged in the production and sales of alumina, primary aluminum and aluminum alloy products. The Company operates businesses through five segments. The Alumina segment is engaged in the production and sales of alumina, fine alumina and aluminum ore. The Primary Aluminum segment is engaged in the production and sales of primary aluminum, carbon products, aluminum alloys and other electrolytic aluminum products. The Energy segment is mainly engaged in coal mining, thermal power generation, wind power generation, photovoltaic power generation and new energy equipment manufacturing. The Trading segment mainly provides alumina, primary aluminum, aluminum processed products and other non-ferrous metal products and coal and other raw materials, auxiliary materials trading and logistics services. The Headquarters and Other Operating segment is engaged in other research and development of aluminum business and other activities. 
  • Aluminium futures jumped to a two-month high. LME aluminium futures closed at US$2,904.25/tonne on the first week of 2022, up 3.5% WoW, and highest since 25th October 2021. On one hand, China started to build inventories seasonally at the start of the year; on the other hand, Indonesia suddently initiated a coal export ban, which raised concerns of the regional aluminium production in Asia as electricity supply could be impacted. Meanwhile, the elevated power prices in Europe due to rising gas prices propelled aluminium futures prices upward. 
  • Monetary policy: China loosening vs US tightening. It is uncommon for the largest and second largest economies to be out of sync in terms of monetary policies. PBOC has lowered the RRR and LPR, while the US is discussing an earlier date to tapering and to enter the rate hike cycle. It will be a mixed signal for commodities. However, supply chain issues remain due to the surge in omicron infections. Hence, hard commodities prices will stay afloat in the near term. 
  • The updated market consensus of the EPS growth in FY22/23 is 18.1%/13.4% YoY respectively, which translates to 8.7x/8.7x forward PE. Current PER is 11.3x. Bloomberg consensus average 12-month target price is HK$6.47.

LME Aluminium price trend