CHUANGXIN INDUSTRIES(2788.HK)：CAPACITY GROWTH IN SAUDI ARABIA + SUPERB COST ADVANTAGE ON LOW GREEN ENERGY COST IN CHINA

Company Overview - Chuangxin was founded in 2012 and listed on the HKEX in November 2025, primarily engaged in electrolytic aluminum smelting and alumina refining [2] - By the end of 2025, Chuangxin's electrolytic aluminum capacity is expected to reach 788kt, with a 100% stake, and alumina refining capacity of 1.2mt, with a 58.5% stake [2] - In 2024, Chuangxin's aluminum smelter in Huolinguole, Inner Mongolia, ranked as the 4th largest production base in North China and the 12th largest in China [2] Capacity Expansion - Chuangxin is expanding its capacity by initiating a 500kt aluminum project in Saudi Arabia through a joint venture, holding a 25.2% equity interest, with completion targeted for Q2 2027 [2] Cost Leadership - Chuangxin's cost advantage is attributed to high self-sufficiency in electricity (87% in 5M25) and proprietary low-cost electricity (RMB 0.33/kWh in 5M25) [3] - The company is constructing 1,750MW of captive wind and solar power plants, with 640MW completed by December 2025, aiming to replace coal power and achieve power costs that constitute 50% of total power supply by 2027E [3] Market Outlook - The aluminum sector is expected to experience tight supply, which will support aluminum prices [1] - A 1% increase in aluminum prices is estimated to boost Chuangxin's earnings by 2.5% in 2026E [1] Valuation - Chuangxin is initiated with a BUY rating and a target price of HK$32, based on a 13x P/E ratio for 2026E, reflecting a ~20% premium over the target multiple for China Hongqiao [4] - The target multiple is considered reasonable, falling between the average of A-share and overseas comparables [4]