Core Viewpoint - DBS Bank maintains a "Buy" rating for China Hongqiao (01378) and significantly raises the 12-month target price from HKD 29 to HKD 45 based on strong profitability, a solid balance sheet, and high dividend yield expectations [2][6] Group 1: Company Overview - China Hongqiao holds 14% of China's aluminum production capacity and 8% of global capacity, establishing a complete integrated supply chain with bauxite from Guinea, alumina from Indonesia, and electrolytic aluminum domestically [2][6] - The company has relocated part of its production capacity to Yunnan, leveraging hydropower to reduce production costs and meet clean energy requirements [2][6] - Despite Guinea's plans to tighten bauxite mining rights, China Hongqiao maintains good cooperation with local governments to secure raw material supply, with bauxite inventory covering 8-12 months of production [2][6] Group 2: Price and Profitability Outlook - Management expects the average aluminum price to reach CNY 23,000 per ton in 2026, an 11% year-on-year increase, while alumina prices are projected to decline by 19% to CNY 27,000-28,000 per ton [3][7] - The combination of rising aluminum prices, stable raw material costs, and the launch of aluminum processing projects is anticipated to drive significant net profit growth for the company in the 2026 fiscal year [3][7] Group 3: Financial Performance - China Hongqiao's cash flow and debt structure continue to improve, with cash holdings of CNY 51 billion, a 14.3% year-on-year increase [3][7] - The company's debt-to-asset ratio has decreased by 6 percentage points to 42.2% [3][7] - The company commits to a long-term dividend payout ratio of 65% and reserves funds for share buybacks, resulting in a dividend yield of approximately 6%, which is expected to enhance long-term shareholder confidence [3][7]
星展：全产业链优势支撑盈利高增 上调中国宏桥目标价至45港元