Our target price of HK$8.89/sh for the Chalco H-share is based on 1.96x 2024E PB, set at 1x SD above the historical average of 1.25x to reflect stronger than historical average 2024-26E ROEs benefit from higher aluminum margin with decreasing coal and other raw material prices.

Downside risks that could impede the stock from reaching our target price are: 1) Lower-than-expected aluminum and alumina prices; 2) Higher-than-expected costs; 3) Higher-than-expected impairment loss; and 4) The Chinese government may loosen its supply cut policies if aluminum price overshoots.