Chalco shares recover after early fall following record loss

Shares of Aluminum Corporation of China (Chalco) dropped as much as 2.8 per cent after the nation’s largest smelter of the lightweight industrial metal posted its biggest annual net loss.

Although the loss was in line with a profit warning in late January, analysts said the near-term outlook was not good, given depressed metal prices.

“With the largest loss in its history, we estimate that Chalco has destroyed around 35 per cent of its book value in just [the past year] while the cumulative destruction since 2008 now stands at around 60 per cent,” Barclays head of metals and mining research, Ephrem Ravi, said in a note on Thursday. “Given the lower aluminium prices, breaking even on profitability is unlikely near term.”

The three-month aluminium futures price continued to fall this year, with yesterday’s closing price of US$1,775 a tonne 4.2 per cent lower than that at the end of last year.

Chalco’s shares traded at HK$3.64 at 11.57am, recovering all the lost ground, and 0.3 per cent higher than Wednesday’s close.

Chalco posted a net loss of 16.22 billion yuan (HK$20.26 billion) for last year on Wednesday, compared with a profit of 975.2 million yuan in 2013 and a loss of 8.23 billion yuan in 2012. Revenue fell 16.3 per cent to 141.77 billion yuan.