Our target price of HK$7.47/sh for the Chalco H-share is based on 1.59x 2025E PB, set at 0.5x SD above the historical average of 1.24x to reflect stronger than historical average 2025-27E 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.