Investment Rating - The report assigns a "Buy" rating for the company, with a target price of HKD 17.90, representing a potential upside of 50.4% from the current price of HKD 11.90 [2][9]. Core Insights - The company is positioned to benefit from a tight global aluminum supply due to production controls in China and disruptions in bauxite supply, while demand is expected to grow from sectors like electric vehicles and solar energy [1][12]. - The report forecasts aluminum and alumina prices to increase by 4.5% and 10% respectively in 2024, with the company expected to achieve profit growth of 61% in 2024E [1][22]. - The company has a global market share of approximately 9% in aluminum production and operates a vertically integrated business model, which includes bauxite mining, alumina production, and self-generated power [25][26]. Financial Summary - Revenue is projected to grow from HKD 133.6 billion in FY23A to HKD 142.3 billion in FY24E, reflecting a 6.5% year-on-year increase [2]. - Adjusted net profit is expected to rise significantly from HKD 11.46 billion in FY23A to HKD 16.11 billion in FY24E, indicating a 61.5% growth [2]. - The company’s P/E ratio is forecasted to be 5.7x in FY24E, which is significantly lower than the industry average, suggesting an attractive valuation [2][11]. Industry Context - The aluminum industry is experiencing a shift from surplus to deficit, with global aluminum demand expected to grow by 3.2% in 2024E, while supply growth is forecasted at 2.3% [1][22]. - China's aluminum production capacity has been capped at approximately 45 million tons since 2017, leading to high utilization rates and limited future production increases [12][16]. - The demand for aluminum is driven by the automotive sector, which accounts for about 25% of total aluminum demand, and the growing solar energy market, which is expected to increase its share of aluminum consumption [22][23].
中国宏桥：以具有吸引力的估值进行紧张的铝供应交易的主要受益者