Group 1 - The core viewpoint of the report is that China's electrolytic aluminum prices are expected to stabilize above 20,000 yuan/ton in the long term, with China Hongqiao (01378) being favored due to multiple advantages, leading to a "buy" rating and a target price increase from 20 HKD to 26 HKD [1] - The report highlights that China's low electricity prices and coal cost advantages will likely widen the cost gap further in 2025-26, enhancing profit stability for integrated producers like Hongqiao [1] - It is projected that the profit per ton for Chinese aluminum companies will remain between 3,000-4,000 yuan in 2025-26, significantly above the historical average of 1,000-2,000 yuan, indicating a weakening of industry cyclicality and laying the groundwork for valuation reassessment [1] Group 2 - Demand for aluminum is expected to grow by 2-3% from the second half of 2025 to 2026, driven by investments in power grids and the increased use of aluminum in lightweight vehicles, which will offset weaknesses in the real estate and photovoltaic sectors [2] - On the supply side, despite a global planned capacity of 7.5 million tons, power bottlenecks in regions like Indonesia may delay production progress [2] - The structural supply gap in 2025-26 cannot be compensated by recycled aluminum, and political instability in Guinea regarding bauxite mining licenses further tightens resource constraints, significantly supporting alumina costs [2]
美银：2025年铝价企稳2万元 重申中国宏桥(01378) “买入”评级