Goldman cuts Chalco to neutral on cost pressures

Goldman Sachs cut its rating on Aluminium Corp of China (2600.HK: Quote, Profile, Research, Stock Buzz) (601600.SS: Quote, Profile, Research, Stock Buzz), also known as Chalco, to neutral from buy amid further cost pressures on expectations of another power tariff hike in China.

China raised on-grid power tariffs by an average of 4.5 percent this month.

The brokerage house also cut its target price on Chalco to HK$11 from HK$17.

Chalco, which issued a profit warning for the first half in June, also joined China's top aluminum smelters in cutting production by 5-10 percent with an aim to push up prices of the commodity.

The stock has come under severe selling pressure in recent weeks, with mounting input costs and falling prices of its main product alumina, seen eroding the company's bottomline. (Reporting by Parvathy Ullatil; Editing by Anne Marie Roantree)

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