Core Viewpoint - China Hongqiao (1378.HK) is optimistic about long-term aluminum prices and plans to enhance its asset value through a significant acquisition and restructuring strategy [1][2] Group 1: Acquisition and Restructuring - Hongchuang Holdings, a subsidiary of China Hongqiao, intends to acquire 100% of Hongtuo Industrial for approximately 63.518 billion yuan, which will dilute the company's shareholding from 95.30% to about 88.99% [1] - The acquisition targets Hongtuo Industrial, which has an electrolytic aluminum production capacity of 6.46 million tons and an approved alumina production capacity of 19 million tons [1] - The restructuring is expected to enhance the company's asset securitization level and market influence, alongside a significant increase in dividend payout ratio to over 60% in 2024 [1] Group 2: Cost Reduction and Production Contributions - The decline in coal prices is expected to lower the company's electricity costs, with the average coal price at Qinhuangdao Port being 703 yuan/ton in the first five months of 2025, down from 872 yuan/ton in 2024 [1] - The Simandou iron ore project in Guinea, in which the company has a stake, is expected to commence production by the end of 2025, contributing significantly to the company's performance [2] Group 3: Market Outlook and Profit Forecast - Despite potential short-term demand fluctuations in electrolytic aluminum, the supply side is constrained, and demand from sectors like new energy vehicles remains strong, leading to a tight supply-demand balance [2] - The company maintains a profit forecast of 16.129 billion yuan, 17.751 billion yuan, and 21.285 billion yuan for 2025-2027, respectively, with a target price of 15.37 HKD based on an 8.5x PE valuation for 2025 [2]

Investment Rating - The report maintains a "Buy" rating for the company [8] Core Views - The company is optimistic about long-term aluminum prices and has a strong dividend profile, which supports the investment thesis [1][2] - The planned acquisition of 100% equity in Hongtuo Industrial by the holding company Hongchuang Holdings is expected to enhance the company's market influence and asset securitization level [2] - The decline in energy prices is anticipated to reduce costs, while the upcoming production of the Simandou iron ore project is expected to contribute positively to the company's performance [3] Summary by Sections Acquisition and Restructuring - Hongchuang Holdings plans to issue shares to acquire 100% of Hongtuo Industrial for approximately 635.18 billion RMB, which will slightly dilute the company's shareholding from 95.30% to about 88.99% [2] Cost and Production Outlook - The average coal price at Qinhuangdao Port for the first five months of 2025 was 703 RMB/ton, down from 872 RMB/ton in 2024, which is expected to lower electricity costs in Shandong [3] - The Simandou iron ore project is expected to commence production by the end of 2025, with a designed capacity of 60 million tons per year [3] Aluminum Price and Profitability - Short-term demand for electrolytic aluminum may face seasonal declines, but supply constraints and high demand in sectors like new energy vehicles are expected to keep prices stable [4] - The company forecasts a gradual increase in aluminum prices from 2025 to 2026, with a projected net profit of 161.29 billion RMB in 2025 [5] Financial Projections - The company’s projected net profits for 2025, 2026, and 2027 are 161.29 billion RMB, 177.51 billion RMB, and 212.85 billion RMB respectively [5] - The target price is set at 15.37 HKD, with a historical average PE ratio of 7.03X since 2017 [5][9]

Core Viewpoint - China Hongqiao Group is expected to achieve net profits of 20.77 billion yuan, 22.38 billion yuan, and 23.45 billion yuan for the years 2025-2027, with respective year-on-year changes of -7.1%, +7.7%, and +4.8% [1] Group 1: Company Overview - China Hongqiao Group is a global leader in the aluminum industry, with a comprehensive business model that includes thermal power, mining, alumina, electrolytic aluminum, and aluminum processing [1] - The company has established 13 production bases in Indonesia and various locations in China, with significant production capacities in alumina and electrolytic aluminum [1] - The controlling Zhang family holds 65.53% of the company's equity, and the company has a strong focus on shareholder returns, having distributed a total of 52.49 billion yuan in cash dividends since its listing in 2011, with an average dividend payout ratio of 44.3% [1] Group 2: Competitive Advantages - The company has a leading global position in electrolytic aluminum production, with an average cost of 13,232 yuan per ton in 2024, benefiting from its self-supplied alumina and electricity [2] - The company's energy structure is expected to improve with falling coal prices, and it aims to increase its green aluminum ratio significantly with ongoing projects [2] - China Hongqiao has a self-sufficiency rate of over 160% in alumina production, ensuring stable costs for its aluminum production [2] Group 3: Future Growth Prospects - The company is involved in the development of the Simandou iron ore project in Guinea, which is expected to enhance its performance significantly once operational [3] - The project has an initial production capacity of 120 million tons of high-quality iron ore per year, with expected contributions to the company's earnings starting in 2026 [3]

Core Viewpoint - The company is a global leader in the aluminum industry, focusing on a full industrial chain from power generation to aluminum processing, with a strong emphasis on shareholder returns and sustainable growth [1][2]. Group 1: Company Overview - Established in 1994, the company operates 13 production bases in Indonesia and China, with significant capacities in bauxite, alumina, electrolytic aluminum, and aluminum processing [1]. - The company has a concentrated ownership structure, with the Zhang family holding 65.53% of the equity, and has distributed a total cash dividend of 52.49 billion yuan since its listing in 2011, with an average dividend payout ratio of 44.3% [1]. Group 2: Competitive Advantages - The company has a leading position in electrolytic aluminum production, with an average cost of 13,232 yuan per ton in 2024, benefiting from self-supplied bauxite and alumina [1]. - The energy structure is expected to improve with falling coal prices and the completion of renewable energy projects, aiming for a significant increase in green electricity usage [1]. - The company has secured high-quality bauxite and alumina resources, ensuring stable production costs, with a self-sufficiency rate of over 160% for alumina [1]. Group 3: Future Growth and Projects - The company is expanding into high-end low-carbon development with plans for aluminum processing capacity to reach 1.52 million tons, alongside projects in automotive lightweight materials [1]. - The company is involved in the West Simandou iron ore project in Guinea, expected to start production in 2025, which will contribute significantly to future earnings [2]. - Projected net profits for 2025-2027 are estimated at 20.77 billion yuan, 22.38 billion yuan, and 23.45 billion yuan, with a target price of 17.0 HKD based on a 7x PE ratio [2].

Investment Rating - The report assigns a "Buy" rating for the company, with a target price of 17.0 HKD based on a 7x P/E ratio for 2025 [4][10][12]. Core Views - The company is a global leader in the aluminum industry, with a comprehensive integrated business model that includes power generation, mining, alumina, electrolytic aluminum, and aluminum processing, establishing a strong profit moat [8][10]. - The company has a high dividend payout history, with a cumulative cash dividend of 524.9 billion CNY since its listing in 2011, reflecting a commitment to shareholder returns [8][40]. - The company is strategically positioned with a robust supply chain, including self-sufficient alumina production and a high self-supply rate of electricity, which contributes to a competitive cost structure [8][10][60]. Summary by Sections Company Overview - The company has established itself as a leading aluminum producer with a total alumina capacity of 21 million tons and an electrolytic aluminum capacity of 646,000 tons as of 2024 [8][45]. - The company has a stable shareholding structure, with the Zhang family controlling 65.53% of the equity, ensuring long-term strategic planning [22][24]. Financial Performance - The company reported total revenue of 156.17 billion CNY for 2024, with a year-on-year growth of 14.7%, and a net profit of 22.37 billion CNY, reflecting a significant increase of 95.2% [4][25]. - The company’s operating income has grown from 84.18 billion CNY in 2019 to 133.62 billion CNY in 2023, with a compound annual growth rate of 12% [25][27]. Production and Cost Structure - The company has a self-sufficient alumina production rate exceeding 160%, which stabilizes the cost of aluminum production [2][8]. - The average cost of electrolytic aluminum production in 2024 is projected to be 13,232 CNY per ton, which is among the lowest in the industry [8][10]. Strategic Initiatives - The company is expanding its footprint in the aluminum recycling and processing sectors, with plans to establish a joint venture for recycling 50,000 tons of aluminum per year [2][10]. - The company is also involved in the Simandou iron ore project in Guinea, which is expected to enhance its earnings starting in 2026 [9][10]. Market Position - The company maintains a leading position in the electrolytic aluminum market, with a production capacity utilization rate close to 100% as of 2024 [46][49]. - The company’s electrolytic aluminum sales volume is expected to reach 583.7 million tons in 2025, reflecting a stable growth trajectory [11][55].

Group 1: Industry Overview - Guinea has revoked mining rights for several bauxite mines, including the Axis mine, which is expected to produce 24 million tons in 2024, accounting for approximately 5% of global demand [1] - DBS Bank predicts that if this situation persists, it may reverse the declining trend in bauxite prices that has been ongoing since Q2 2025, potentially leading to tighter supply [1] - China's domestic bauxite resources are limited, meeting only about 30% of its demand, while Guinea accounts for over 80% of China's imports [1] - The revocation of mining rights in Guinea may alleviate the oversupply of alumina in China, driving prices to recover from their lows [1] Group 2: Company Analysis - China Hongqiao (01378) holds a 25% stake in SMB in Guinea, which has established mature transportation channels capable of providing 55 million tons of bauxite annually, sufficient to meet its domestic alumina production needs, thus unaffected by the mining rights revocation [2] - China Hongqiao has an alumina production capacity of 17.5 million tons in China and is expected to benefit directly from the increase in alumina prices, enhancing its business profit margins [2] - Nanshan Aluminum International (02610) reported a decline in overseas alumina prices in Q1 2025, with the average price around $518 per ton, a 40.88% increase year-on-year but a 2.98% decrease compared to the average price in 2024 [2] - China Aluminum (02600) reported annual revenue of approximately 237.066 billion yuan, a year-on-year increase of 5.21%, with a net profit of about 12.4 billion yuan, up 85.38% year-on-year [3] - The alumina segment of China Aluminum achieved a pre-tax profit of 11.685 billion yuan, a significant increase compared to the previous year, while the primary aluminum segment saw a pre-tax profit decline of 2.288 billion yuan [3]

Group 1 - The core viewpoint of the report is that China Hongqiao (01378) is expected to see steady growth in net profit from 2025 to 2027, with projected figures of 22.759 billion, 26.169 billion, and 28.969 billion yuan respectively, indicating year-on-year growth rates of 1.73%, 14.98%, and 10.70% [1] - The earnings per share (EPS) for the same period are forecasted to be 2.44, 2.81, and 3.11 yuan per share, with corresponding price-to-earnings (P/E) ratios of 6.0, 5.2, and 4.7 times [1] - In Q1 2025, Shandong Hongqiao achieved operating revenue of 40.173 billion yuan, a year-on-year increase of 15.56%, and a net profit of 6.357 billion yuan, reflecting a year-on-year growth of 46.46% and a quarter-on-quarter increase of 43.28% [1] Group 2 - The significant improvement in profitability for electrolytic aluminum in Q1 2025 has driven a substantial increase in net profit for Shandong Hongqiao, with a gross margin of 24.97%, up 4.06 percentage points year-on-year [2] - The average profit for electrolytic aluminum in Q1 2025 was 2,376 yuan per ton, which is an increase of 160 yuan per ton year-on-year and 2,276 yuan per ton quarter-on-quarter [2] - The report indicates that the rapid decline in alumina prices may be nearing an end, with the average profit for alumina in Q1 2025 being 498 yuan per ton, down 83 yuan year-on-year and 1,662 yuan quarter-on-quarter [3] Group 3 - China Hongqiao is enhancing its integrated industrial chain layout, with stable profit expectations in the alumina segment due to the slowing decline in alumina prices [3] - The company is expanding its alumina supply through joint ventures in Guinea and has established stable supply channels in Indonesia and Australia, ensuring cost advantages [3] - The ongoing capacity replacement in Shandong Hongqiao and the continuous improvement of the aluminum industry chain in Yunnan are notable, with the company exiting certain production lines while developing new capacities [4]

Major Events - Jin'an Industrial (02292) received a privatization offer from its controlling shareholder at a premium of approximately 30%, with resumption of trading on May 12 [1] - Jingtai Holdings (02228) plans to acquire 90% of Shanghai Siwei Medical for 250 million yuan, aiming to create an AI-enabled remote electrocardiogram diagnosis platform [1] - China Investment and Financing (01226) is in contact with MCHKI to explore several potential corporate activities following unusual stock price movements [1] - Qiu Tai Technology (01478) reported camera module sales of 33.229 million units in April, an increase of 8.4% month-on-month but a decrease of 20.1% year-on-year [1] - Stone Pharmaceutical Group (01093) received approval for clinical trials of SYH2046 in the United States [1] - Fosun Pharma (02196) subsidiary Junji Health obtained FDA approval for drug clinical trials [1] - Rongchang Bio (09995) received approval for the marketing of Aidiqi® for treating HER2-positive advanced breast cancer with liver metastasis in China [1] - Livzon Pharmaceutical (01513) received approval for the marketing of injectable aripiprazole microspheres [1] - GAC Group (02238) reported April automobile production of 108,600 units, a year-on-year decline of 25.74% [2] - China Overseas Development (00688) reported contract property sales of approximately 20.164 billion yuan in April, a year-on-year decrease of 7.5% [2] Share Buybacks/Reductions - China Hongqiao (01378) repurchased 19.667 million shares for 273 million HKD on May 9 [1] - AIA Group (01299) repurchased 1.5 million shares for 92.1915 million HKD on May 9 [1] - Cathay Securities (02611) repurchased 1.6906 million A-shares for 29.3356 million yuan on May 9 [1] - Times Electric (03898) repurchased 610,300 shares for 19.7008 million HKD on May 9 [1] - East Asia Bank (00023) acquired 52.8 million shares from Sumitomo Mitsui Banking Corporation [1] - Shandong Molong (00568) saw shareholder Zhimo Holdings reduce its holdings by 28.81 million H-shares [1] Operating Performance - Longyuan Power (00916) achieved a power generation volume of 6.9064 million MWh in April, a year-on-year increase of 4.85% [2] - New天绿色能源 (00956) reported a power generation volume of 1.4778 million MWh in April, a year-on-year increase of 16.91% [2] - Jianye Real Estate (00832) achieved a total property contract sales amount of 2.71 billion yuan in the first four months, a year-on-year increase of 4.8% [2] - China Overseas Hongyang Group (00081) reported a cumulative contract sales amount of 9.556 billion yuan in the first four months, a year-on-year decrease of 14.1% [2] - Times China Holdings (01233) reported a cumulative contract sales amount of approximately 1.81 billion yuan in the first four months, a year-on-year decrease of 29.87% [2] - Agile Property Holdings (01813) reported a pre-sale amount of 509 million yuan in April, a year-on-year decrease of 47.5% [2] - Greenland Hong Kong (00337) reported contract sales of approximately 880 million yuan in the first four months, a year-on-year decrease of 69.3% [2]

Group 1 - The global economic landscape has become uncertain since 2025, but stable supply and resilient demand for certain commodities, such as electrolytic aluminum, have led to strong performance [1] - In Q1 2025, the price of electrolytic aluminum was 20,400 CNY/ton, a year-on-year increase of 7.3%, remaining stable compared to Q4 2024 [1] - The complete cost of electrolytic aluminum production in Shandong was 15,810 CNY/ton, showing a year-on-year increase but a significant quarter-on-quarter decrease of 16% [1] Group 2 - Shandong Hongqiao's Q1 2025 revenue reached 40.173 billion CNY, a year-on-year growth of 15.6%, with net profit increasing by 46.5% year-on-year [1][2] - The main components of electrolytic aluminum production costs include alumina and electricity, which together account for 60%-85% of total costs [2] - The price of alumina in Q1 was approximately 3,833 CNY/ton, down 28.1% from Q4 2024, while the price of thermal coal was 721 CNY/ton, down 20% year-on-year [2] Group 3 - Despite falling upstream resource prices, aluminum prices have remained high due to supply-side reforms limiting production growth and sustained demand from sectors like renewable energy [5] - The global electrolytic aluminum production capacity is primarily concentrated in Asia, Europe, and North America, with China accounting for over half of the total capacity [5] - Limited growth in domestic production capacity is expected due to a 45 million ton production cap, while overseas production increases are forecasted to be modest [5] Group 4 - The demand for electrolytic aluminum is expected to grow, driven by its applications in various industries, including lightweight materials and aerospace [6] - Projections indicate a persistent supply-demand imbalance in the domestic market, with deficits expected from 2022 to 2027 [6] - The upward trend in aluminum prices is anticipated to continue due to rigid supply and orderly demand release [7] Group 5 - China Hongqiao is well-positioned in the aluminum industry due to its resource advantages and integrated operations, which enhance its profitability [7] - The company has achieved a 100% self-sufficiency rate in alumina and a 50% self-sufficiency rate in electricity, providing a strong cost advantage [7] - China Hongqiao is accelerating its capacity relocation to Yunnan, focusing on hydropower aluminum production, which is more environmentally friendly and cost-effective [8]

Core Viewpoint - The aluminum industry continues to experience high prosperity, with leading companies like China Hongqiao reporting significant performance improvements, leading to a surge in stock prices [1][2]. Financial Performance - In Q1 2025, Shandong Hongqiao achieved total revenue of 40.173 billion yuan, a year-on-year increase of 15.56%, and a net profit of 6.357 billion yuan, reflecting a substantial growth of 46.46% [2]. - For the full year 2024, China Hongqiao reported a net profit of 22.37 billion yuan, a remarkable year-on-year increase of 95%, setting a new historical record [3]. Market Conditions - The high demand for aluminum products, particularly in sectors like new energy vehicles and renewable energy, has contributed to the robust performance of Shandong Hongqiao [5][6]. - As of the end of 2024, China Hongqiao's electrolytic aluminum production capacity accounted for approximately 14% of the national total, leading the industry [6]. Strategic Advantages - China Hongqiao has established a complete industrial chain from mining to aluminum processing, enhancing its risk resistance and cost control capabilities [4][5]. - The company has been optimizing its production capacity and has made significant investments in green aluminum projects, which are expected to further reduce costs [6][8]. Market Outlook - Analysts are optimistic about China Hongqiao's future performance, citing ongoing cost reductions and favorable market conditions as key drivers for growth [9][13]. - The company is expected to benefit from the completion of its Yunnan electrolytic aluminum base, which will likely lead to further decreases in production costs [9].