Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected relative increase in stock price of over 15% in the next 6 to 12 months [2][12]. Core Views - The company has demonstrated strong financial performance, with a significant increase in revenue and net profit. For the reporting period, the company achieved a revenue of 136.165 billion RMB, a year-on-year growth of 12%, and a net profit of approximately 11.461 billion RMB, reflecting a year-on-year increase of about 273% [2][3]. - The company announced an interim dividend of 0.59 HKD per share, representing a payout ratio increase from 48% to 56%, with a dividend yield of 5.6% based on the closing price [2][3]. - The report highlights the company's strong dividend characteristics and the evolving structure of its business, emphasizing its "resource-rich" attributes [2][3]. Financial Performance Summary - **Revenue Forecast**: - 2023A: 136.165 billion RMB - 2024E: 182.545 billion RMB (34% growth) - 2025E: 199.568 billion RMB (9% growth) - 2026E: 217.674 billion RMB (9% growth) [2][3] - **Net Profit Forecast**: - 2023A: 11.461 billion RMB - 2024E: 20.963 billion RMB (83% growth) - 2025E: 24.793 billion RMB (18% growth) - 2026E: 29.876 billion RMB (21% growth) [2][3] - **Earnings Per Share (EPS)**: - 2023: 1.21 RMB - 2024E: 2.21 RMB - 2025E: 2.62 RMB - 2026E: 3.15 RMB [2][3] - **Price-to-Earnings (P/E) Ratio**: - 2023: 8.1 - 2024E: 4.4 - 2025E: 3.8 - 2026E: 3.1 [2][3] Industry Insights - The report discusses the supply-demand dynamics in the alumina market, noting that while there is an oversupply, production may be constrained by raw material bottlenecks. The dependence on imported bauxite, particularly from Guinea, poses risks to alumina production and pricing [3]. - The relationship between alumina and electrolytic aluminum prices is highlighted, with historical stability in their price ratio. The report suggests that the market may underestimate the benefits of alumina during periods of rising electrolytic aluminum prices [3].

Investment Rating - The investment rating for the company is "Outperform the Market" [3][17][20] Core Views - The company has significantly improved its profitability due to the rise in alumina and aluminum prices, with a 273% increase in net profit attributable to shareholders in H1 2024 [1][4] - The company plans to maintain a high dividend payout ratio, declaring an interim dividend of 0.59 HKD per share, totaling approximately 5.59 billion HKD [1][4] - The report anticipates stable raw material prices and a favorable aluminum industry cycle, which will enhance the company's sustainable development capabilities [1][17] Financial Performance Summary - In H1 2024, the company reported revenue of 736 billion CNY, a year-on-year increase of 12%, and a net profit of 91.5 billion CNY, up 273% [1][4] - The operating cash flow for the period was 142.6 billion CNY, reflecting a 101% increase compared to the previous year [1][4] - The company's aluminum alloy product gross profit reached 12.1 billion CNY, an increase of 8 billion CNY from the same period last year [1][4] - The average selling price of electrolytic aluminum was 17,379 CNY/ton, with a gross profit of 4,280 CNY/ton, while the cost of sales was 13,100 CNY/ton [1][4] Production and Cost Analysis - The production volume of aluminum alloy products in H1 2024 was 3.221 million tons, with an annualized capacity of 6.442 million tons, indicating near full capacity utilization [1][4] - The report highlights a decrease in electrolytic aluminum costs by 1,770 CNY/ton, primarily due to lower prices for prebaked anodes and coal [1][4] - The gross profit for alumina sales was 4.1 billion CNY, with an average selling price of 2,942 CNY/ton, up 426 CNY/ton from the previous year [5] Future Projections - The company expects revenues of 134.1 billion CNY for 2024, with net profits projected at 20.16 billion CNY, reflecting a year-on-year growth rate of 75.9% [2][17] - The diluted EPS is forecasted to be 2.13 CNY for 2024, with a PE ratio of 4.5 [2][17] - The report assumes stable prices for aluminum and alumina, with an average aluminum price of 19,500 CNY/ton and alumina at 3,600 CNY/ton for the years 2024-2026 [17]

Investment Rating - The report maintains a "Buy" rating for the company [2] Core Views - The company reported a significant increase in revenue and net profit for the first half of 2024, with revenue rising approximately 12.0% year-on-year to RMB 73.592 billion and net profit attributable to shareholders increasing approximately 272.7% to RMB 9.155 billion. A mid-term dividend of HKD 0.59 per share was also announced [4] - The company's performance was driven by increased production and sales across its aluminum and alumina businesses, with aluminum alloy production rising 5.3% to 3.221 million tons and sales increasing 0.5% to 2.837 million tons. Alumina sales reached 5.507 million tons, up 2.4%, while aluminum processing products saw a production increase of 30.6% to 493,000 tons and sales up 35.9% to 379,000 tons [4] - The decline in coal and anode costs contributed to profit growth, with average coal prices dropping approximately 20.1% and 7.2% in the first two quarters of 2024. However, financial instruments' fair value changes negatively impacted profits by RMB 1.615 billion [4] Summary by Sections Market Performance - The company's stock price is currently at HKD 10.36, with a market performance comparison showing a relative decline against the Hang Seng Index [2][3] Financial Data and Forecasts - The company’s total revenue for 2024 is projected to be RMB 140.681 billion, with net profit forecasts of RMB 18.185 billion, RMB 20.251 billion, and RMB 21.309 billion for 2024, 2025, and 2026 respectively [6][7] - Key financial metrics include a projected EPS of RMB 1.92 for 2024 and a dividend payout ratio of 55.9% [5][6] Investment Recommendations - The report suggests that the company's strong profit performance, coupled with rising product prices and a favorable cost structure, enhances its investment value. The net profit forecasts for 2024-2026 have been adjusted to RMB 18.185 billion, RMB 20.251 billion, and RMB 21.309 billion respectively, maintaining the "Buy" rating [5][6]

Investment Rating - The investment rating for the company is "Buy" (maintained) [2][5][13] Core Views - The company's performance has significantly benefited from the rise in aluminum prices, with a notable increase in revenue and net profit for the first half of 2024 [5][6] - The company has a stable production and sales of aluminum products, with a strong profit elasticity due to cost reductions and price increases [6][7] - The company continues to maintain a high dividend payout ratio, highlighting its long-term investment value [7] Financial Performance Summary - In the first half of 2024, the company achieved operating revenue of 735.9 billion CNY, a year-on-year increase of 12%, and a net profit of 100.08 billion CNY, a year-on-year increase of 237% [5] - The company expects to achieve revenues of 1441.0 billion CNY, 1467.4 billion CNY, and 1490.5 billion CNY for 2024, 2025, and 2026 respectively, with corresponding net profits of 195.3 billion CNY, 195.7 billion CNY, and 195.8 billion CNY [5][9] - The company's earnings per share (EPS) are projected to be 2.06 CNY, 2.07 CNY, and 2.07 CNY for 2024, 2025, and 2026 respectively, with a price-to-earnings (P/E) ratio of 5.0 for all three years [5][9] Production and Sales Overview - In the first half of 2024, the company produced 3.221 million tons of aluminum alloy products, a year-on-year increase of 5.3%, and sold 2.837 million tons, a year-on-year increase of 0.5% [6] - The sales price of aluminum alloy products increased by 1091 CNY/ton, while the sales price of aluminum processing products decreased by 243 CNY/ton [6] Dividend Policy - The company plans to distribute an interim dividend of 0.59 HKD per share for the first half of 2024, representing a year-on-year increase of 73.5% [7]

Investment Rating - The investment rating for the company is maintained as BUY with a target price of HKD 17.90, reflecting a potential upside of 73.4% from the current price of HKD 10.32 [2][19]. Core Insights - The company reported a net profit of RMB 91.6 billion for 1H24, representing a year-on-year increase of 270%, exceeding the previous estimate of 220% [1]. - The strong profit growth is attributed to the unexpected expansion in unit gross margins for aluminum and alumina, with aluminum unit gross margin doubling to RMB 4,277 per ton and alumina unit gross margin increasing by 230% to RMB 748 per ton [1]. - The proposed interim dividend is HKD 0.59 per share, indicating a payout ratio of approximately 57% [1]. Revenue and Profit Breakdown - Aluminum Alloy Products (67% of revenue): Revenue increased by approximately 7% year-on-year to RMB 49 billion, with sales volume up 0.5% to 284 million tons and average selling price (ASP) rising by 7% to RMB 17,379 per ton [1]. - Alumina Segment (22% of revenue): Revenue grew by about 20% year-on-year to RMB 16 billion, with sales volume up 2.4% to 5.5 million tons and ASP increasing by 17% to RMB 2,942 per ton [1]. - Aluminum Processing Products (10% of revenue): Revenue surged by approximately 34% year-on-year to RMB 7.58 billion, with sales volume up 36% to 3.79 million tons, although ASP decreased by 1% to RMB 20,027 per ton [1]. Price Sensitivity and Market Conditions - A 1% increase in aluminum prices is expected to enhance the company's earnings by approximately 4% [1]. - The latest Shanghai aluminum price rebounded from RMB 18,835 per ton to RMB 19,310 per ton since early August, with an average price of RMB 19,500 per ton at the end of the quarter, reflecting a 6% year-on-year increase [1]. Financial Projections - Revenue projections for FY24 are estimated at RMB 142.33 billion, with a year-on-year growth of 6.5% [2]. - Adjusted net profit for FY24 is forecasted to be RMB 16.10 billion, representing a 40.5% increase compared to FY23 [2]. - The company is expected to maintain a P/E ratio of 9.8x for FY24, which is above its historical average of 6x [19].

19 Aug 2024 CMB International Global Markets | Equity Research | Company Update China Hongqiao (1378 HK) Net profit 1H24 +2.7x YoY, beat expectations Hongqiao's net profit came in at RMB9.16bn (+2.7x YoY), which is better than the pre-announced profit growth of 2.2x in Jun. Excluding the fair value loss of convertible bonds (CB), the core net profit would be even higher at RMB10.5bn (+3.3x YoY). The strong profit growth was driven by higher-than-expected unit gross margin expansion for both aluminum (Al) (+ ...

Investment Rating - The report maintains a "Buy" rating for China Hongqiao (01378.HK) based on the expected increase in aluminum prices and significant cost reductions enhancing earnings elasticity [1]. Core Views - The company reported a revenue of 73.59 billion yuan for H1 2024, a year-on-year increase of 12%, and a net profit of 10.01 billion yuan, up 236.7% year-on-year, exceeding the previous profit forecast [1]. - The strong performance is attributed to rising prices of electrolytic aluminum and alumina, alongside a robust production capacity recovery in Yunnan [1]. - The company has a well-integrated industrial chain, with a total electrolytic aluminum capacity of 6.459 million tons and alumina capacity of 19.5 million tons, ensuring strong raw material supply [1]. - Future growth is supported by the transition to green energy, with a focus on hydropower in Yunnan, which is expected to enhance long-term development [1]. Summary by Sections Financial Performance - In H1 2024, the company produced 3.221 million tons of electrolytic aluminum, a 5.3% increase year-on-year, with alumina sales reaching 5.507 million tons, up 2.4% year-on-year [1]. - The average profit per ton for alumina in Q2 was 875 yuan, reflecting improved profitability in the sector [1]. - The mid-term dividend for H1 2024 is set at 0.59 HKD per share, totaling approximately 5.59 billion HKD, with a payout ratio of about 56% [1]. Future Outlook - The report highlights several future growth drivers, including the completion of the industrial chain integration, cost advantages from declining coal prices, and the strategic shift of electrolytic aluminum capacity to Yunnan [1]. - The company is also expanding its resource base by participating in a Guinea iron ore project, which is expected to provide additional returns [1]. - Forecasted net profits for 2024-2026 are 17.796 billion yuan, 20.065 billion yuan, and 21.985 billion yuan, respectively, with corresponding PE ratios of 5, 4, and 4 times [1].

Investment Rating - The report assigns a "Buy" rating for China Hongqiao (01378) as part of its initial coverage [4][6]. Core Views - The significant growth in the company's performance in the first half of 2024 is attributed to the simultaneous increase in both the volume and price of aluminum and alumina, alongside a decrease in procurement prices for coal and anodes, leading to reduced costs [5][6]. - The company plans to increase its dividend payout ratio to 56%, with an interim dividend of HKD 0.59 per share, resulting in a dividend yield of 5.7% based on the closing price on August 16, 2024 [6][8]. Summary by Sections Financial Performance - In the first half of 2024, China Hongqiao achieved revenue of CNY 73.59 billion, a year-on-year increase of 12.0%, and a net profit attributable to shareholders of CNY 9.15 billion, up 272.7% year-on-year [4][5]. - The production of aluminum alloy products reached 3.221 million tons, a 5.3% increase year-on-year, while sales were 2.837 million tons, up 0.5% year-on-year [5]. - The unit selling price for aluminum alloy products was CNY 17,379 per ton, a 6.7% increase year-on-year, while the unit cost was CNY 13,100 per ton, down 11.9% year-on-year, resulting in a unit gross profit of CNY 4,279 per ton, up 203% year-on-year [5]. Alumina Performance - The company sold 5.507 million tons of alumina in the first half of 2024, a 2.4% increase year-on-year, with a unit selling price of CNY 2,942 per ton, up 16.9% year-on-year [5]. - The unit cost for alumina was CNY 2,195 per ton, down 4.3% year-on-year, leading to a unit gross profit of CNY 748 per ton, an increase of 233% year-on-year [5]. Future Earnings Forecast - The report forecasts revenues for 2024, 2025, and 2026 to be CNY 147.4 billion, CNY 151.7 billion, and CNY 157.2 billion, respectively, with year-on-year growth rates of 10%, 3%, and 4% [6][7]. - Net profits attributable to shareholders are projected to be CNY 20.12 billion, CNY 21.35 billion, and CNY 23.39 billion for the same years, reflecting growth rates of 76%, 6%, and 10% [6][7]. - The earnings per share (EPS) are expected to be CNY 2.12, CNY 2.25, and CNY 2.47 for 2024, 2025, and 2026, respectively [6][7].

Investment Rating - The report maintains a "Buy" rating for the company [6][9]. Core Views - The company reported significant growth in H1 2024, with revenue reaching 73.592 billion yuan, a year-on-year increase of 11.95%, and a net profit attributable to shareholders of 9.155 billion yuan, up 272.66% year-on-year [9]. - The revenue growth was driven by both price increases and higher sales volumes across its product lines, including electrolytic aluminum, alumina, and aluminum alloy processing products [9]. - The report highlights the company's integrated aluminum industry chain advantages, which are expected to lead to high earnings elasticity for the full year 2024 [9]. Financial Performance Summary - For H1 2024, the company achieved a gross profit margin of 24.2%, an increase of 15.2 percentage points year-on-year, attributed to lower costs of electrolytic aluminum and reduced management expenses [9]. - The company’s projected revenues for 2024-2026 are 132.79 billion, 133.16 billion, and 135.58 billion yuan, with corresponding net profits of 19.59 billion, 21.27 billion, and 22.59 billion yuan, reflecting growth rates of 70.93%, 8.58%, and 6.22% respectively [9][10]. - The earnings per share (EPS) are forecasted to be 2.07, 2.24, and 2.38 yuan for the years 2024, 2025, and 2026, with current price-to-earnings (P/E) ratios of 4.99, 4.60, and 4.33 [9][10].

Investment Rating - The investment rating for China Hongqiao (1378.HK) is "Buy" [1] Core Views - The report highlights a significant increase in both volume and price of aluminum products, leading to substantial growth in performance. The company achieved a revenue of 73.592 billion yuan in the first half of 2024, representing a year-on-year increase of 11.95%. The net profit attributable to shareholders reached 9.155 billion yuan, up 272.66% year-on-year, with a non-recurring net profit of 10.77 billion yuan, an increase of 352.68% [1] - The company continues to maintain a high dividend payout ratio, with an interim dividend of 0.59 HKD per share, a 73.5% increase, resulting in a dividend yield of 5.72% as of August 16, 2024 [1] - China Hongqiao is positioned as a leading integrated player in the aluminum industry, expected to enjoy high profit elasticity due to its comprehensive supply chain and production capacity [1] Summary by Sections Financial Performance - In the first half of 2024, the company reported: - Revenue from electrolytic aluminum of 49.3 billion yuan, a 7% increase, with a gross margin of 24.6%, up 15.9 percentage points - Revenue from alumina of 16.2 billion yuan, a 20% increase, with a gross margin of 25.4%, up 16.5 percentage points - Revenue from aluminum processing of 7.6 billion yuan, a 34% increase, with a gross margin of 21.0%, up 7.4 percentage points [1] Production Capacity and Supply Chain - As of March 2024, the company has an annual alumina production capacity of approximately 19.5 million tons, with a self-sufficiency rate of 100%. The company also has a total electrolytic aluminum production capacity of 6.46 million tons per year [1] - The Guinea bauxite project ensures a stable supply of raw materials, while the company is also diversifying its bauxite supply sources [1] Profit Forecast - The forecast for net profit attributable to shareholders for 2024-2026 is as follows: - 2024: 19.081 billion yuan - 2025: 21.867 billion yuan - 2026: 23.947 billion yuan - Corresponding P/E ratios are projected to be 4.7, 4.1, and 3.8 respectively [2][3]