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 - 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]

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].

Summary of Key Points Core Viewpoint - On May 6, 48 Hong Kong-listed companies conducted share buybacks, totaling 56.32 million shares and an amount of HKD 231 million [1]. Group 1: Buyback Details - China Hongqiao repurchased 3.44 million shares for HKD 47.97 million, with a highest price of HKD 14.10 and a lowest price of HKD 13.78, accumulating HKD 21.22 billion in buybacks this year [1][2]. - COSCO Shipping Holdings repurchased 3.57 million shares for HKD 42.92 million, with a highest price of HKD 12.16 and a lowest price of HKD 11.78, accumulating HKD 33.42 billion in buybacks this year [1][2]. - Times Electric repurchased 0.98 million shares for HKD 31.26 million, with a highest price of HKD 32.00 and a lowest price of HKD 31.40, accumulating HKD 10.79 billion in buybacks this year [1][2]. Group 2: Top Buyback Companies - The highest buyback amount on May 6 was by China Hongqiao at HKD 47.97 million, followed by COSCO Shipping Holdings at HKD 42.92 million [1][2]. - The largest number of shares repurchased on May 6 was by Sihuan Pharmaceutical, with a buyback of 20 million shares, followed by Ying Group and COSCO Shipping Development with 8 million shares and 3.61 million shares, respectively [1][2]. Group 3: Additional Buyback Information - IMAX China conducted its first buyback of the year, while COSCO Shipping Holdings has performed multiple buybacks totaling HKD 33.42 billion this year [2]. - A detailed table of buybacks includes various companies, their respective buyback shares, amounts, highest and lowest prices, and cumulative buyback amounts for the year [2][3].

Core Viewpoint - The report from Guosheng Securities highlights the strong performance of China Hongqiao's subsidiary Shandong Hongqiao in Q1 2025, with significant revenue and profit growth driven by rising profits in electrolytic aluminum production [1][2]. Financial Performance - In Q1 2025, Shandong Hongqiao achieved revenue of 40.17 billion yuan, representing a year-on-year increase of 16% and a quarter-on-quarter decrease of 4% [1][2]. - The net profit attributable to shareholders was 6.36 billion yuan, showing a year-on-year increase of 46% and a quarter-on-quarter increase of 40% [1][2]. Profitability Drivers - The increase in profits for Q1 2025 is primarily attributed to the rapid growth in electrolytic aluminum profits [2]. - The average price of electrolytic aluminum in Q1 2025 was 20,400 yuan per ton, a year-on-year increase of 7.3% and a quarter-on-quarter decrease of 0.5% [3]. - The profit from electrolytic aluminum reached 2,476 yuan per ton, marking a year-on-year increase of 12% and a quarter-on-quarter increase of 2366% [3]. Cost Structure - The total cost of electrolytic aluminum production in Shandong was 15,810 yuan per ton, reflecting a year-on-year increase of 5% and a quarter-on-quarter decrease of 16% [3]. - The total cost for electrolytic aluminum production in Yunnan was 17,622 yuan per ton, with a year-on-year increase of 2% and a quarter-on-quarter decrease of 19% [3]. Capacity Transition - The company is accelerating the transition of electrolytic aluminum capacity from Yunnan, having shut down 24.1 million tons of production capacity in the C series at the Binzhou Hongnuo project [4]. - The company is replacing this capacity with new production lines, which are expected to enhance efficiency and reduce costs [4]. Investment Outlook - The company is positioned for significant growth through overseas expansion and deep integration with upstream and downstream partners, benefiting from its undervalued status in the Hong Kong stock market [4].

中国宏桥 2025042320250416 摘要 • 中国宏桥拥有完善的一体化产业链，包括国内 1,750 万吨和印尼 200 万吨 氧化铝产能，以及几内亚 5,000 万吨铝土矿产能（预计 2025 年增至 6,500 万吨），有效降低风险，保障经营和业绩增长。 • 公司重视股东回报，自上市以来累计分红 524 亿元，2024 年分红 140 亿 元，股息支付率 63%，股息率超 10%，与中国神华类似，具备估值重塑 潜力。 • 通过北铝南移，中国宏桥提高水电比例，降低能源成本，应对煤炭价格波 动和环保政策压力，同时享受云南水电宽松及价格优势，优化成本结构， 增强绿色溢价。 • 欧盟碳关税（CBAM）将增加每吨产品约 650 元成本，低碳铝产品将具有 绿色溢价优势，提升中国宏桥出口竞争力，推动公司优化低碳生产工艺。 • 中国将电解铝纳入国内碳交易市场，云南水电铝绿证可进入碳交易，每吨 节约约 10 万吨碳，产生约 500 元成本收益，表明公司在长期布局和稳健 资产方面取得重要进展。 Q&A 中国宏桥在过去一年中股价翻倍的原因是什么？ • 中国宏桥完成槽型升级改造，使用 600 千安槽型，显著优于海外资产，降 ...

Group 1: Market Outlook - Concerns about a global recession are easing, leading HSBC to favor copper and aluminum sectors in Asia [1] - HSBC expects significant short-term rebounds in prices of copper and aluminum commodities, supported by new stimulus policies in China [1][2] - The market's fears of a recession have been deemed overblown, with panic selling exceeding reasonable levels [1] Group 2: Copper Market Analysis - Recent data shows improved operating rates in downstream industries for copper and aluminum, indicating a seasonal demand recovery [2] - Tight supply conditions are confirmed by negative spot processing fees (TC/RC), and China's trade measures against the US will reduce scrap copper imports, impacting refined copper output [2] Group 3: Aluminum Market Outlook - The operational capacity for aluminum is nearing a ceiling of 45 million tons, with limited room for new supply [2] - If demand increases significantly due to China's stimulus policies, a supply shortage may occur in the aluminum market [2] Group 4: Company Specifics - China Hongqiao - HSBC maintains a target price of HKD 17.10 for China Hongqiao, using a forward P/E ratio of 7.5x based on projected EPS of RMB 2.16 for 2025 [3] - The target P/E is significantly above the historical average since 2018, indicating potential upside of over 30% [3] - HSBC's "buy" rating for China Hongqiao is supported by strong fundamentals and an attractive dividend yield of approximately 10% [3]

Financial Performance - Revenue for the fiscal year 2024 reached RMB 156.17 billion, a 17.0% increase from RMB 133.62 billion in 2023[4] - Gross profit for 2024 was RMB 42.16 billion, with a gross margin of 27.0%, up from 15.7% in 2023[4] - Net profit attributable to shareholders for 2024 was RMB 22.37 billion, representing a 95.5% increase from RMB 11.46 billion in 2023[4] - The company's revenue for the year was approximately RMB 156.17 billion, an increase of about 16.9% year-on-year[15] - Gross profit reached approximately RMB 42.16 billion, reflecting a year-on-year increase of about 101.2%[15] - Net profit attributable to shareholders was approximately RMB 22.37 billion, up about 95.2% compared to the previous year[15] - The basic earnings per share were approximately RMB 2.3611, compared to RMB 1.2095 in the same period last year[15] - The group's revenue for the year ended December 31, 2024, was approximately RMB 156.17 billion, an increase of about 16.9% year-on-year, driven by higher sales prices and volumes of aluminum alloy and alumina products[27] - The net profit attributable to shareholders for the year was approximately RMB 22.37 billion, representing a significant increase of about 95.2% compared to the previous year, mainly due to increased sales prices and reduced procurement costs of key raw materials[28] Assets and Liabilities - Total assets increased to RMB 229.17 billion in 2024, compared to RMB 200.32 billion in 2023, reflecting a growth of 14.4%[5] - The group's cash and cash equivalents increased by approximately 41.1% to about RMB 44.77 billion, primarily due to increased net cash inflow from operating activities[35] - The group's total liabilities as of December 31, 2024, were approximately RMB 110,551,534,000, compared to RMB 94,063,640,000 as of December 31, 2023, resulting in a debt-to-asset ratio of approximately 48.2%[43] - Total liabilities rose to RMB 110,551,534 from RMB 94,063,640, indicating an increase of about 17.5%[103] Market and Product Development - The company plans to expand its market presence in the renewable energy sector, particularly in aluminum demand for electric vehicles and solar energy[12] - New product development initiatives are focused on enhancing the quality and sustainability of aluminum production[12] - The company anticipates continued growth in demand for aluminum driven by government policies supporting green energy initiatives[12] - The overall profitability of the alumina industry has significantly improved, with alumina prices reaching a nearly ten-year high during the year[12] - Aluminum alloy product sales volume reached approximately 5.84 million tons, a year-on-year increase of about 1.5%, with an average selling price rising approximately 6.6% to about RMB 17,550 per ton[27] - The group's alumina product revenue was approximately RMB 37.35 billion, a year-on-year increase of about 40.6%, driven by higher sales volumes and prices[30] Corporate Governance and Management - The company has received multiple awards for corporate governance and sustainable development, including recognition as one of the "Most Admired Companies" in Asia[19] - The company is committed to maintaining high standards of corporate governance through the involvement of independent directors and specialized committees[81][84] - The company’s board includes members with significant experience in the aluminum industry, which supports strategic decision-making and market expansion efforts[83][86] - The board of directors consists of four executive directors, four non-executive directors, and four independent non-executive directors, ensuring a balanced governance structure[177] - The board is responsible for leading and supervising the business strategy and performance of the group, ensuring compliance with applicable laws and regulations[178] Environmental and Social Responsibility - The company has established a dedicated environmental protection department to oversee compliance with environmental regulations and standards in China[55] - The company has installed dust removal and desulfurization facilities at its power plants to reduce emissions of pollutants, achieving ultra-low emissions across all coal-fired units[55] - The company donated RMB 428,078,000 during the year ending December 31, 2024, primarily for rural revitalization, education, and healthcare projects[130] Financing and Capital Management - The company successfully issued short-term financing bonds and corporate bonds totaling RMB 12.6 billion, along with USD 300 million in senior unsecured bonds, which were oversubscribed by seven times[20] - The company issued $330 million of 7.05% senior unsecured notes due in 2028, with proceeds intended for refinancing existing offshore debt and general corporate purposes[64] - The company has agreed to issue convertible bonds with an initial principal of $300,000,000, with a preliminary conversion price of HKD 20.88 per share[65] - The net proceeds from the issuance of the convertible bonds are approximately $294,584,687, intended for refinancing existing offshore debt and general corporate purposes[65] Risk Management - The company is facing risks related to domestic and international economic conditions, credit policies, and raw material prices, which are managed through a comprehensive risk management system[54] - The company has faced major risks and uncertainties, which are detailed in the management discussion and analysis section of the annual report[167] Employee Development - The company emphasizes the importance of employee development, providing training programs and competitive compensation to enhance workforce efficiency[58] - All directors are required to undergo training to enhance their understanding of the company's culture and operations, with training costs covered by the company[186] Shareholder Information - The company proposed a final dividend of HKD 1.02 per share, totaling HKD 1.61 per share for the fiscal year, compared to HKD 0.63 per share last year[15] - As of December 31, 2024, major shareholders include Shih Ping Trust Company holding 6,090,031,073 shares, representing approximately 64.27% of the total issued share capital[145] - Zhang Hongxia and Zhang Yanhong, as concert parties, collectively hold 6,098,901,073 shares, accounting for approximately 64.36% of the total issued share capital[145] Compliance and Legal Matters - The company has maintained directors and officers liability insurance for the year ending December 31, 2024, providing appropriate protection against legal actions[154] - The company has complied with all relevant disclosure requirements under the Listing Rules regarding connected transactions[158] - The company has adopted a code of conduct for directors' securities transactions that meets or exceeds the standards set by the standard code[160]

Core Viewpoint - China Hongqiao has successfully issued convertible bonds with an oversubscription of 8 times, reflecting strong investor confidence and a robust financial strategy aimed at optimizing its debt structure [1][4][6]. Group 1: Financial Performance - In the fiscal year 2024, China Hongqiao reported revenue of 156.17 billion RMB, a year-on-year increase of 16.9%, and a net profit attributable to shareholders of 22.37 billion RMB, up 95.2% [2][9]. - The company achieved a record high in both earnings and dividends, with a basic earnings per share of 2.36 RMB and total dividends of 1.61 HKD per share [2][9]. Group 2: Debt Optimization - The issuance of convertible bonds is part of the company's strategy to optimize its financing structure, with a significant reduction in short-term debts from 7 billion RMB in 2023 to 3 billion RMB in 2024 [6][5]. - The company has increased its unrestricted cash from 31.7 billion RMB in 2023 to 44.77 billion RMB in 2024, enhancing liquidity [6][5]. - The average coupon rate for 11 medium-term notes issued in 2024 has decreased to 3.2%, down from 4.92% in 2023, indicating a reduction in financing costs [6][7]. Group 3: Market Reception and Future Outlook - The convertible bond issuance attracted nearly 100 high-quality investors, with total orders exceeding 2.5 billion USD, marking a historic breakthrough in the Hong Kong market [1][3]. - Following the announcement of the convertible bonds, the company's stock price remained stable above 15 HKD per share, demonstrating its defensive and offensive attributes in the market [3][4]. - The company is expanding its global market presence, significantly increasing exports to countries like Vietnam and the UAE, and optimizing costs through its supply base in Guinea [11].