BEIJING, March 14 (InfoChina) – Aluminum Corp of China (Chalco, ACH.NYSE, 2600.HK) posted an abrupt growth of 64 percent in operating revenue and 67 percent in net profit in 2006, higher than the previous expectation. Besides, the upcoming listing in the A-share market will bring Chalco with funds to further industrial integration. Both are promising factors for the company.

       Expanding output capacity and rising prices of alumina and primary aluminum are the main driving forces for Chalco’s outstanding performance, said Core Pacific – Yamaichi International (HK) Limited.

The output and external sales of alumina reported an annualized growth of 23 percent and 5.9 percent to 8.83 million tons and 6.8 million tons with the price up 8 percent on average in 2006. The internal sales revenue rocketed 104 percent to 10.603 billion yuan.

Meanwhile, the expansion of primary aluminum overrun that of alumina in 2006 with the total output and external sales soaring 84 percent and 101 percent to 1.93 million tons and 1.82 million tons. The average annualized price of primary aluminum surged 21.53 percent, accelerating the profit margin up to 13 percent as against 2 percent in 2005.

However, the excess of alumina output capacity will keep on worsening in 2006 and may not be shortly solved, Core Pacific – Yamaichi said. The output of alumina surged 61 percent in 2006, far beyond the 14.3 percent growth of market demand. The output is expected to jump by 60 percent in 2007, most of which will be released by non-Chalco smelters.

Besides, Core Pacific – Yamaichi predicts that the price of primary aluminum may fall in the second half of this year as the output capacity may expand along with the flock-in of new smelters in pursuit of high profit.

Following is a table showing the indicators and expected figures of Chalco released by Core Pacific – Yamaichi.

Core Pacific – Yamaichi keeps rating Chalco at  “observation”, targeting 7 HK dollars. (Edited by Li Xueqing, )