Core Viewpoint - Nanshan Aluminium International Holdings is initiated with an OUTPERFORM rating and a target price of HK$33.19, reflecting a valuation of 5.5x 2026e P/E [1][5] Company Overview - Nanshan Aluminium International Holdings is a leading alumina producer in Southeast Asia, focusing on alumina projects in Indonesia and listed on the HKEx in March 2025 [2] - The company currently has an alumina production capacity and plans to build an additional 2 million tonnes per year (mnt/yr) alumina project, expected to come online in phases during 2025 and 2026 [2] Industry Positioning - Indonesia is anticipated to become a global aluminum industry hub, with Nanshan Aluminium well-positioned to benefit from this trend due to China's aluminum production capacity ceiling policy and Indonesia's export ban on raw ores [3] - The company benefits from Indonesia's abundant bauxite and coal resources, which supports a low-cost, integrated industry chain presence [3] Competitive Advantages - Cost Advantage: The company's average costs over the past four years have been only 67% of those in China due to its location in Bintan Island, which minimizes transportation distances for bauxite and coal [2] - Prime Location: The Bintan Industrial Park, where the alumina project is located, offers tax incentives for up to 20 years and facilitates distribution throughout Southeast Asia [2] - Shareholder Support: The three major shareholders have strong industrial strengths across the alumina production chain, creating synergies and enhancing operational efficiency [2] Growth Potential - The firm is expected to achieve an EPS of Rmb0.60 in 2025 and Rmb0.78 in 2026, indicating a compound annual growth rate (CAGR) of 6.9% [5] - The stock is currently trading at 5.8x 2025e and 4.4x 2026e P/E, with substantial capacity expansion driving growth potential [5] Market Differentiation - Unlike the market's focus on earnings upside from alumina prices, the company emphasizes growth potential and earnings stability from its upstream and downstream industry chain expansion, which could justify a valuation premium [4] Potential Catalysts - Potential catalysts for growth include stronger-than-expected hikes in alumina prices, faster-than-expected production ramp-up, and expansion of upstream and downstream business operations [5]
NANSHAN ALUMINIUM INTERNATIONAL HOLDINGS(02610.HK)：AN EMERGING LEADER IN SOUTHEAST ASIA’S ALUMINUM INDUSTRY