China Hongqiao targets US$1.5 billion from share sale in Hong Kong amid aluminium boom

Core Viewpoint - China Hongqiao Group, the largest private aluminium producer in China, is planning to raise HK$11.68 billion (US$1.5 billion) through a share sale to fund projects and repay debt, leveraging strong industry margins and a favorable Hong Kong equity market [1][2]. Group 1: Fundraising Details - The company intends to sell up to 400 million existing shares at HK$29.20 each, which is a 9.6% discount to its closing price on Monday [1]. - The placed shares will represent approximately 4% of China Hongqiao's enlarged share capital [4]. - The offer price is nearly 2.2% higher than the average closing price of around HK$28.58 per share over the past 30 trading days [4]. Group 2: Market Conditions - Aluminium prices are currently near a three-year high due to solid demand and controlled supply [4][5]. - Analysts expect tight supply conditions to persist, benefiting from China's capacity cap policy and limited capacity additions in Indonesia, which will support higher aluminium margins [5]. Group 3: Analyst Insights - Citigroup has raised China Hongqiao's 12-month target price to HK$36 from HK$25.20, citing improved margins, superior profitability, and an attractive shareholder return policy [6]. - The management's cautious approach towards the company's expansion projects in Indonesia is noted as a positive factor [6].