January 31, 2018 / 2:56 AM / a year ago

Chalco shares sink on weaker-than-expected 2017 FY profit forecast

* Chalco says expects 2017 FY profit will rise 239 percent

* Shares on track for biggest daily drop since Dec. 6

* Cites cost cutting, higher prices for profit jump

* Company forecasts misses market expectations - Argonaut

* Hurt by fall in aluminium prices later in year - Argonaut

BEIJING, Jan 31 (Reuters) - Aluminum Corp of China Ltd’s shares sank on Wednesday after the state-owned aluminium smelter issued a full-year profit forecast that was below market expectations amid concerns about growing output in the world’s top producer.

In a filing on Tuesday evening, Chalco said it expected to post a 239 percent rise in its 2017 net profit to 1.36 billion yuan ($215 million), pointing to supply side reform, environmental measures and cost cutting.

Aluminium and alumina prices in China rose during the first three quarters of the year as some of Chalco’s private competitors were forced to curb output or close factories amid government efforts to curb excess capacity and clean the nation’s toxic air.

The forecast profit would be the best annual profit since at least 2012, according to Reuters’ records, but it was below market consensus, according to Argonaut Securities.

The forecast also suggested the company made an unexpected net loss in the fourth quarter of 467 million yuan, Argonaut said in a note to clients on Wednesday.

That would be the company’s first quarterly loss since the third quarter of 2015, according to Reuters records.

At 10:48 a.m. (0248 GMT), shares in Hong Kong were down 6.1 percent at HK$5.20, on track for their worst daily performance since Dec. 6 and biggest weekly drop since mid-December 2015. Chalco’s shares fell 5.8 percent on Tuesday.

Argonaut analysts said Chalco’s fourth quarter profit was likely wiped out after a “stellar” first three quarters by a steep fall in local aluminium prices later in the year.

Chinese aluminium prices plunged almost 20-percent from mid-September to mid-December as investors raised doubts about the effectiveness of the government’s efforts to curb excess production.

In December, China’s aluminium production rebounded to its highest since June, as state-owned producers launched new capacity even as Beijing curbed their private rivals, lifting 2017 output to a record.

$1 = 6.3156 Chinese yuan renminbi $1 = 7.8214 Hong Kong dollars Reporting by Josephine Mason; editing by Richard Pullin

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