Chalco to collect up to $1.5bln in A-share sale

Jul.2 MetalBiz-Aluminum Corp. of China Ltd, the country's biggest producer of the metal, plans to raise as much as 10bln yuan ($1.46bln) in Shanghai to fund ongoing projects amid a stock market rebound.

Chalco, as the Beijing-based company is known, will sell up to 1bln A shares to domestic institutions and qualified foreign institutional investors, the company noted on July 2 in a statement. The placement needs regulatory and shareholder approval, it said.

The shares will be sold to a maximum of 10 investors and will not be tradable in the first 12 months, Chalco expressed. The price will be based on the average price of the previous 20 trading days before the share placement and the company will use the funds to invest in alumina production and other projects.

"The pricing of the share sale is fair. Whether Chalco can attract investors relies on an outlook for earnings in 2010," Zhu Lida, a Shanghai-based analyst at Northeast Securities Co., said on July 2. He expects Chalco to earn 0.30 yuan a share in 2010.

China's benchmark Shanghai Composite Index has gained 65% this year, making it the world's third-best performer. Chalco, which posted a loss for second straight quarter in April, needs cash to continue expansion.

"We expect aluminum demand to recover further in the second half from auto and real estate industries," Northeast's Zhu said. "Demand needs to grow to ease an aluminum market surplus."

Chalco slid 0.3% to close at 12.14 yuan at 3 p.m. in Shanghai. The stock has gained 97% this year.

The company will break even or make a "small" profit in the second quarter, Zhu said, after it posted a loss in the previous two quarters due to lower metal prices.

Chalco President Luo Jianchuan said in March the company would cut capital expenditure by 34% to 13bln yuan this year. It had 13bln yuan cash equivalent by the end of March, according to its quarterly report.