Core Viewpoint - The domestic electrolytic aluminum production capacity is nearing its limit, while overseas capacity is being released slowly, leading to a more pronounced supply-demand imbalance in 2025-2026. The company, as a global leader in the electrolytic aluminum industry, is expected to benefit from the continuous rise in aluminum prices, enhancing its performance. The company is also actively repurchasing shares and maintaining a high dividend payout ratio, thus maintaining a "buy" rating [1]. Financial Performance - The core subsidiary, Shandong Hongqiao New Materials Co., Ltd., reported a revenue of 116.93 billion yuan for the first three quarters, a year-on-year increase of 6.2%, and a net profit attributable to shareholders of 19.37 billion yuan, up 23.1% year-on-year. In Q3 alone, the company achieved a revenue of 38.72 billion yuan, with a year-on-year and quarter-on-quarter increase of 1.8% [1]. - The gross profit margin for Q3 was 26.6%, an increase of 1.3 percentage points year-on-year and 2.6 percentage points quarter-on-quarter, primarily due to rising prices of electrolytic aluminum and alumina [1]. Market Outlook - The profit margins in the electrolytic aluminum sector are expected to continue expanding, offsetting the downward pressure from alumina prices. The domestic aluminum production growth is slowing due to supply constraints, while demand from sectors like automotive and power grids remains strong. The global supply-demand balance for electrolytic aluminum is anticipated to tighten further in 2026 [2]. - The alumina supply-demand situation remains relatively loose, with prices expected to fluctuate weakly in 2025-2026. However, the company’s electrolytic aluminum segment is likely to see profit increases that could counterbalance the drag from the alumina segment [2]. Shareholder Returns - The company plans to initiate a share repurchase program of no less than 3 billion HKD, following a previous repurchase of 2.6 billion HKD for 18.7 million shares. The company has maintained a high dividend payout ratio over the past three years, with rates of 46.8%, 47.0%, and 63.4%, reflecting its commitment to shareholder returns and confidence in future growth [2]. Profit Forecast and Valuation - Due to the continuous rise in aluminum prices and a decrease in electricity costs, the company has revised its net profit forecasts for 2025-2027 to 25.625 billion, 25.426 billion, and 25.760 billion yuan, representing increases of 18.31%, 21.72%, and 17.56% respectively. The company is assigned a target price of 35.22 HKD based on a 12X PE ratio for 2025, up from a previous target of 24.89 HKD [2].
中国宏桥(1378.HK)：回购+高分红 公司强化投资者回报