CHALCO shares jump over 4% as Q3 profit rises 66% to $1.88b; UBS, Citi retain Buy ratings

Aluminum Corporation of China Limited (CHALCO) reported a sharp increase in profitability in the third quarter of 2026, supported by cost controls and stable margins at its Yunnan aluminium operations. However, the company's alumina business continued to face pressure from higher bauxite and freight costs, highlighting the contrasting performance of its two major product segments.

According to CHALCO's third-quarter report released on October 29, 2026, total profit increased 66.08 per cent year on year to RMB 12.50 billion (USD 1.88 billion) in Q3 2026, compared with RMB 7.53 billion (USD 1.13 billion) in the corresponding quarter of 2025. Net profit attributable to shareholders of the listed company rose 59.10 per cent to RMB 6.04 billion (USD 909 million), against RMB 3.80 billion (USD 571 million) a year earlier.

Revenue increased 1.74 per cent to RMB 61.18 billion (USD 9.20 billion), compared with RMB 60.14 billion (USD 9.04 billion) in Q3 2025. The company's net profit attributable to shareholders, after excluding extraordinary gains and losses, also increased 58.86 per cent to RMB 5.99 billion (USD 901 million), up from RMB 3.77 billion (USD 567 million) in the corresponding quarter of 2025.

The nine-month performance was similarly strong. Between January and September 2026, CHALCO generated revenue of RMB 186.59 billion (USD 28.07 billion), an increase of 5.69 per cent year on year. Net profit attributable to shareholders reached RMB 17.92 billion (USD 2.69 billion), up 64.83 per cent from the corresponding period of 2025.

Explore the production, demand and consumption forecasts of bauxite and alumina in our report: "Global Bauxite & Alumina Market Forecast to 2036: Supply–Demand, Trade Flows & Price Outlook"

Cost control and Yunnan electricity prices support aluminium profitability

The stronger earnings performance came despite relatively modest revenue growth. CHALCO attributed the improvement to comprehensive cost reduction measures, stable full-capacity production and continued improvements in operational efficiency.

The company said it had optimised production and operational indicators, strengthened its market monetisation capabilities and improved overall competitiveness. It also highlighted the benefits of its integrated industrial chain in supporting its operating results.

UBS's assessment of CHALCO's Yunnan production base provides further insight into the company's aluminium profitability. The brokerage noted that although aluminium prices softened during the third quarter, margins in Yunnan remained stable. Lower electricity prices during the rainy season largely offset the pressure from weaker aluminium prices, keeping third-quarter margins broadly in line with first-half 2026 levels.

This cost advantage helped cushion the impact of market price movements on the company's aluminium operations.

CHALCO's production and sales figures for January–September 2026 also showed moderate growth in primary aluminium. Production, including alloys, increased 1.33 per cent to 6.08 million tonnes, compared with 6.00 million tonnes in the first nine months of 2025. External sales of self-produced primary aluminium, including alloys, rose 1.50 per cent to 6.08 million tonnes from 5.99 million tonnes a year earlier.

Explore potential leads of primary aluminium on AL Biz.

Alumina output falls as bauxite and freight costs weigh on margins

While the aluminium business benefited from lower electricity costs in Yunnan, the alumina segment faced a more challenging operating environment.

UBS reported that CHALCO's third-quarter alumina output stood at 5.04 million tonnes, down 10 per cent year on year. The brokerage highlighted rising freight costs, which pushed up bauxite procurement costs, as one of the factors weighing on industry margins. Alumina prices also declined by approximately CNY 20 per tonne (USD 3 per tonne) from the previous quarter, leaving smelter profits close to the break-even point.

CHALCO's official nine-month operational figures also reflected weakness in its metallurgical-grade alumina business. Production declined 13.42 per cent to 11.29 million tonnes during January–September 2026, compared with 13.04 million tonnes in the corresponding period of 2025.

External sales of self-produced metallurgical-grade alumina fell 19.96 per cent to 3.93 million tonnes from 4.91 million tonnes over the same period. This represented a decline of 0.98 million tonnes in sales volume.

Refined alumina production, however, followed a different trend, increasing 6.12 per cent to 3.47 million tonnes during the first nine months of 2026, compared with 3.27 million tonnes a year earlier.

The contrasting performance indicates that while CHALCO maintained growth in primary aluminium production and refined alumina output, its metallurgical-grade alumina production and external sales remained under pressure.

UBS and Citi retain positive ratings following earnings release

Despite the pressure on alumina margins, UBS expects investors to respond positively to CHALCO's latest results. The brokerage noted that the company had delivered another solid quarterly performance, reinforcing the stability of its earnings during the first nine months of 2026.

UBS maintained its 'Buy' rating on CHALCO's H shares with a target price of HKD 12.80. Its assessment also highlighted that the company's Q3 net profit of RMB 6.04 billion (USD 909 million) was around 3 per cent above its forecast of RMB 5.89 billion (USD 885 million).

Citi also maintained a 'Buy' rating on CHALCO, setting a higher target price of HKD 17.08 (USD 2.19). The brokerage considered the results better than expected, mainly due to quarter-on-quarter growth in sales volumes of alumina and aluminium products.

Although UBS and Citi differed in their target prices, both maintained a positive view of the company's earnings performance.

CHALCO's shares also responded positively following the earnings announcement. The stock rose more than 4 per cent intraday to HKD 7.215 (USD 0.93), while trading turnover reached HKD 234 million (USD 30 million).

For the coming quarter, the company's ability to maintain its aluminium margins while managing pressure on alumina profitability will remain important. Both UBS and Citi have highlighted aluminium product sales growth and the cost advantages of the Yunnan production base as supporting factors. However, alumina prices and freight costs remain key variables to watch as CHALCO moves towards the end of 2026 and seeks to sustain its profit growth.

Unlock key insights from leading companies and experts across the aluminium ecosystem with our e-Magazine - Mine to Market: Aluminium Producers & Manufacturers 2026