DJ MARKET TALK: Chalco +0.5%; Fundamentally Unattractive - BOCI
1038 [Dow Jones] Chalco (2600.HK) is up 0.5% at HK$3.94, actually rising a tad more than the HSI's 0.3% gain, despite news that it plans to raise up to CNY8 billion via a private placement of A-shares.
This is likely due to the CNY8 billion fund-raising plan is lower than the CNY10 billion originally proposed by Chalco.
Still, BOCI says that fundamentally, it views Chalco as "an unattractive high-cost producer currently trapped in an aluminium market with oversupply and facing price weakness ahead."
With its substantial reliance on on-grid electricity and high debt level, Chalco is likely to see low ROE during 2011-13; it adds, Chaco's results may continue to disappoint the market with weak aluminium prices, rising electricity costs and high interest costs impacting its profitability.
Source: Dow Jones Newswire