Core Viewpoint - The report maintains a "Buy" rating for China Hongqiao (01378), citing a significant rise in aluminum prices driven by supply disruptions from the Mozal aluminum smelter in Mozambique and the narrative of aluminum replacing copper [1] Group 1: Supply Dynamics - The Mozal aluminum smelter in Mozambique will officially close in March 2026 due to rising electricity costs, exacerbating supply disruptions in the overseas aluminum market [1] - Global aluminum production faces challenges from aging equipment, thin profit margins, and increasing electricity costs, leading to a long-term reduction in overseas aluminum capacity [1] - Since the end of 2025, there has been a notable increase in supply disruption events in overseas aluminum production [1] Group 2: Demand Trends - The global average demand increase for electrolytic aluminum is projected to be around 1.8 million tons per year from 2023 to 2025, with a compound annual growth rate (CAGR) of 2.5% [3] - Structural demand growth is expected from sectors such as transportation, power grids, energy storage, and aluminum replacing copper [3] Group 3: Company Performance and Shareholder Returns - China Hongqiao is positioned as a leading integrated electrolytic aluminum producer, with strong performance and a focus on shareholder returns, expecting a significant decrease in capital expenditures by 2026 [4] - The company has increased its dividend payout ratio from approximately 45% in 2019 to 63% in 2024, with a commitment to maintain stable dividends in 2025 [4] - In 2025, the company repurchased 310 million shares at a cost of 5.6 billion HKD, with anticipated shareholder returns exceeding 20 billion RMB [4]