Key Takeaways:
- Chinalco plans to buy RMB1 billion to RMB2 billion of Chalco A and H shares
- The stake increase is capped at 2% of total share capital over 12 months
- Chalco H-shares rose 4.5% and A-shares jumped 6.2% on the announcement
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Chinalco plans up to RMB2 billion stake increase in Chalco
Chinalco plans to buy RMB1 billion to RMB2 billion of Chalco A and H shares, capping new holdings at 2% of total capital over as long as 12 months.
"The move reflects confidence in Chalco's long-term prospects and aims to support sustainable, stable development while bolstering investor sentiment," Chinalco said in a filing.
The controlling shareholder and its concert parties will execute purchases through the Shanghai and Hong Kong stock exchanges. Chalco's H-shares rose 4.5% to HKD 7.95, while A-shares jumped 6.2% to RMB 8.96 on Monday.
The buyback signals insider conviction after Chalco's shares fell 36% year-to-date, giving the company a market value of about HK$159 billion. The stock carries a Buy rating from analysts with a consensus target of HK$11.20, implying roughly 41% upside from current levels.
Chalco, formally known as Aluminum Corporation of China Limited, is one of the country's largest aluminum producers. The company warned that market conditions could affect execution of the plan and pledged to provide timely disclosure if implementation risks emerge.
The stake increase comes as aluminum prices face headwinds from global trade uncertainty and slowing demand in key markets. BofA Securities recently said market concerns over the aluminum industry are excessive and reiterated a Buy rating on Chalco.
The planned purchases signal controlling shareholder confidence at a time when Chalco's valuation has compressed sharply. Investors will watch for execution updates over the coming quarters as the 12-month program unfolds.
This article is for informational purposes only and does not constitute investment advice.
