Capital Contribution to Chalco’s Subsidiaries Will Not Change Our Long-Term Bearish Outlook
No-moat Aluminum Corporation of China, or Chalco, has announced that it plans to introduce new investors to its subsidiaries by capital contribution through cash and a debt-to-equity swap. Although we think this move will reduce Chalco’s gearing and provides much-needed working capital for its operations, we think the firm remains overvalued, on the back of our bearish view on market dynamics weighing on the long-term aluminum price. As such, we retain our fair value estimate of USD 3.00 per ADR...
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