Winsway Coking Shares Soar ahead expectiing Chalco acquisition

Shares of Hong Kong-listed Winsway Coking Coal Holdings Ltd. have been surging this week with some analysts asking if China’s state-backed aluminum giant could be at work.

On Wednesday, Winsway was up more than 20%. The unusual share price movement led the company to issue a statement to the stock exchange Wednesday it did not know the reason behind it. On Thursday morning, Winsway gave up some of those gains and was off 6.3%.

Analysts think it could be connected to a pending acquisition by Aluminum Corp. of China Ltd. for a 30% stake in Winsway for HK$2.39 billion, announced in April. The Winsway deal comes as Chalco’s earlier attempt to buy a majority stake in SouthGobi Resources, controlled by Canada’s Ivanhoe Mines Ltd., has stalled amid political opposition in Mongolia. Chalco is seeking to diversify away from aluminum into coal.

Chalco proposed paying HK$2.12 a share for Winsway, a 22.5% premium over its closing price of HK$1.73 before the deal was announced. But since then, shares have dropped to HK$1.30. With an upcoming annual general meeting on June 29 for Chalco shareholders, analysts at UOB KayHian have speculated that perhaps Chalco is behind the massive buying as it props up Winsway’s share price to ensure shareholders vote in favor of the deal. Winsway’s share price hit as high as HK$1.61 on Wednesday.