Core Viewpoint - Cathay Securities maintains a "Buy" rating for China Hongqiao (01378) and raises the target price to HKD 43.2, citing a continued tight supply in the aluminum market through 2026, which has led to upward revisions in profit expectations [1] Group 1: Supply Factors - Domestic aluminum production capacity is nearing regulatory limits, with an expected capacity of 44.59 million tons by the end of 2025, close to the 45 million tons cap [2] - Significant disruptions are anticipated in overseas supply, such as the planned closure of the Mozal aluminum smelter in Africa due to rising electricity costs, which poses long-term risks to global aluminum production [2] - The demand for aluminum is expected to increase as the trend of substituting aluminum for copper accelerates, with the copper-aluminum price ratio reaching 4.2, significantly above the historical reasonable level of 3.5 [2] Group 2: Demand Factors - The demand from the renewable energy sector is on the rise, particularly from electric vehicles and energy storage devices, which are consuming increasing amounts of aluminum [2] Group 3: Company Strategy and Financial Outlook - China Hongqiao plans to implement a high dividend strategy, benefiting from reduced future capital expenditures, with 2.17 million tons of capacity already transferred to Yunnan and 830,000 tons remaining in its 3 million tons transfer plan [3] - The company is expected to gradually implement its transfer plan starting in 2026, leading to a decrease in capital expenditure compared to previous high levels, which will enhance its dividend payment capacity [3] - The dividend payout ratio is projected to reach a maximum of 64% in 2024, making the company an attractive high-dividend stock in the Hong Kong market [3]