June 26 (Bloomberg) -- Yunnan Aluminium Co., China's fourth- largest producer of the metal by output, said first-half profit may triple on higher prices and a decline in costs. The company's share price soared today by their 10 percent daily limit.

Net income may surge by as much as 200 percent in the six months ending June 30 from 88.2 million yuan ($12 million), or 0.16 yuan a share, a year ago, the Kunming, Yunnan province-based company said today in a preliminary earnings statement.

The increase could translate into a profit of as much as 176.4 million yuan for the second quarter, more than tripling the 51 million-yuan-profit a year ago, according to a Bloomberg calculation derived by subtracting Yunnan Aluminium's reported first-quarter profit from the half-year forecast. The company's shares almost quadrupled in the past year.

``Chinese aluminum producers' profit would be encouraging for the first half, and in some regions, favorable electricity prices will reduce production costs,'' said Chen Yue, analyst at Guotai Securities Co. by telephone from Shenzhen today.

Aluminum consumption in China, the world's top producer and consumer of the metal, rose 40 percent in the January to April period from a year ago on demand from carmakers and construction companies, Goldman Sachs Group Inc. said in a report on June 13. The price of the lightweight metal has gained 6.4 percent in the past year on the London Metal Exchange.

Aluminum for September delivery, the most actively traded contract, slipped 0.5 percent to close at 19,200 yuan a ton at 3:00 p.m. local time on the Shanghai Futures Exchange.

Power Costs

Yunnan Aluminium shares jumped 1.63 yuan to a five-day high of 17.92 yuan, the biggest daily surge in 10 days and surpassing the 1.3 percent rise in the key CSI 300 Index.

Power accounts for a third of the costs of making aluminum, and the Yunnan region is partly supplied by hydro power.

``As we enter the raining season in the second quarter, the company enjoys a favorable rate for electricity, resulting in lower costs compared with the first quarter,'' Yunnan Aluminium said in today's statement.

Separately, the company said it will receive a corporate tax refund of 27 million yuan for 2007 because of a government policy to encourage companies to purchase home-made equipments for upgrading their facilities. The profit forecast doesn't include gains from the refund, the company said.

Yunnan Aluminum increased the number of shares 60 percent to 874 million, and so the earnings per share growth will lag behind the growth in net income, the statement said.

To contact the reporter for this story: Xiao Yu in Beijing at yxiao@bloomberg.net

Last Updated: June 26, 2007 04:04 EDT