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 Dynamics - 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 accelerating as it increasingly substitutes copper, with the copper-aluminum price ratio reaching 4.2, significantly above the historical reasonable level of 3.5 [2] Group 2: Demand Trends - The demand from the renewable energy sector is on the rise, with increasing consumption of aluminum in electric vehicles and energy storage devices [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 relocated to Yunnan [3] - The company is expected to gradually execute its relocation plan based on policy requirements and market conditions, leading to a decrease in capital expenditure compared to previous high levels [3] - With improved profitability and reduced capital expenditure needs, the company's dividend payout capacity is projected to enhance, with a maximum dividend payout ratio of 64% anticipated in 2024 [3]