ACH actually reported a 5% drop in profits in 1st half 07, due to lower product prices, but the results were not as bad as analysts had predicted (hence "a beat")
Per Reuters:
Analysts said Chalco's annual net profit has likely peaked as the firm should face ongoing pressure on its bottom line in the second half with more alumina capacity coming on-stream in China.
"Alumina and aluminium prices could see downward risk in the second half," said Geoffrey Cheng at Daiwa Institute of Research.
He plans to upgrade full-year earnings forecast for Chalco from 10.6 billion yuan but would retain the underperform rating.
Spot-alumina price fell to 3,900 yuan per tonne in the first half of 2007 from around 5,650 yuan a year earlier as China boosted production and drove down world prices."
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So prices have fallen by 30%. Yet investors continue to gobble.
While you have to take everything analysts say with a grain of salt; it's interesting to watch this play out.
I am lightening my exposure to the name on this ramp up - the stock was in the low 40s before the earnings report and after 3 strong days is up to low 50s. I sold some more today for the fund. ACH is now down to a 0.75% position in the fund
Long ACH in fund; no personal position
