Analyst Tina Ting Hu of DBS reiterated a Buy rating on Aluminum of China (ALMMF – Research Report), boosting the price target to HK$5.30.
Tina Ting Hu’s rating is based on Aluminum of China’s strategic expansion of its bauxite resources, which significantly enhances its cost competitiveness by securing essential raw materials. The company has amassed the largest bauxite reserves in China, supplemented by high-quality sources from Africa and Southeast Asia, reaching a total of 2.3 billion tonnes by FY2023. This substantial reserve base is expected to lower production costs and boost long-term profitability for its alumina business, with a self-supply rate of 70% for bauxite and 100% for alumina.
Tina Ting Hu also highlights Aluminum of China’s leading position in the industry, benefiting from economies of scale due to its massive alumina and aluminum capacities, which were 22 million tonnes and 7.6 million tonnes, respectively, by 3Q24. The company’s focus on increasing its proportion of green power through various projects, including the acquisition of Yunnan Aluminum, further enhances its profitability and sustainability by reducing carbon emissions. Despite potential risks such as aluminum price volatility and changes in demand, the company’s integrated supply chain and strategic expansions position it well for future growth.