Citi: Aluminum Corporation of China’s third-quarter volume growth supports profit as lower aluminum prices and higher costs squeeze gross profit

Why was third-quarter profit slightly above Citi’s forecast?

Citi estimates that Aluminum Corporation of China’s net profit in the third quarter of 2026 was 6.044 billion yuan, up 59% year on year and down 5% quarter on quarter, slightly above its forecast, mainly because of higher alumina and aluminum sales volumes.
Net profit for the first three quarters was 17.92 billion yuan, up 65% year on year, reaching 83% of Bloomberg’s full-year 2026 consensus net profit forecast and 89% of Citi’s full-year forecast. Excluding impairment losses, Citi calculates recurring net profit for the first three quarters at 18.19 billion yuan, up 58% year on year.

Third-quarter external sales of self-produced alumina were 1.36 million tonnes, up 18% quarter on quarter but down 14% year on year; external sales of self-produced aluminum were 2.08 million tonnes, up 2% both year on year and quarter on quarter.
Gross profit for the quarter was 15.408 billion yuan, up 50% year on year and down 12% quarter on quarter. Citi attributed the quarter-on-quarter decline mainly to lower aluminum prices and higher aluminum costs: the Shanghai Futures Exchange aluminum price was 23711 yuan per tonne in the third quarter, down 3% quarter on quarter; the spot alumina price was 2743 yuan per tonne, up 1% quarter on quarter.

Third-quarter operating cash flow was 14.7 billion yuan, up 33% year on year and down 4% quarter on quarter; capital expenditure was 1 billion yuan, down 55% year on year and 54% quarter on quarter. As capital expenditure declined, free cash flow rose to 13.8 billion yuan, up 53% year on year and 4% quarter on quarter.
The net gearing ratio fell to 1% at the end of the third quarter, below 5% at the end of the first half of 2026 and 21% at the end of 2025.

Citi maintained its buy rating on Aluminum Corporation of China’s H shares and its target price of HK$17.08 per share; the share price listed in the report for 29 October 2026 was HK$6.93.
The target price is based on a forecast 2026 price-to-book ratio of 2.83 times, above the historical average of 1.27 times. Citi expects higher aluminum prices to lift forecast return on equity for 2026–2027 above the historical average; the bank lists lower-than-expected aluminum and alumina prices, higher-than-expected costs or impairment losses, and a possible easing of supply restriction policies after aluminum prices rise too high as downside risks.