Changjiang Securities·2025-06-29 23:30Core Insights - The report emphasizes that the electrolytic aluminum industry is expected to experience a significant wave of dividends due to years of tight balance, abundant cash flow, balance sheet repair, and reduced capital expenditures [4][10][63] - The demand for aluminum is characterized by strong resilience, with a compound annual growth rate (CAGR) of 4.7% from 1955 to 2024, surpassing that of copper and steel [10][70] - Supply bottlenecks in aluminum production are primarily related to electricity, with overseas investment costs being more than double that of domestic projects, leading to concerns about production continuity [10][63] - The high profitability of electrolytic aluminum is expected to be sustained due to an oversupply of alumina and declining coal and electricity prices [10][63] Industry Overview - The report highlights that aluminum is a scarce resource with significant dividend potential, as the industry has maintained a tight balance for years, leading to improved cash flow and reduced debt ratios [10][63] - The demand for aluminum is driven by its functional, structural, and consumer properties, with diverse applications across various sectors [10][65][70] - The report notes that the global aluminum demand has shown strong growth, particularly in new energy vehicles, photovoltaic applications, and industrial upgrades, effectively offsetting declines in traditional real estate demand [10][71] Investment Strategy - The report suggests that companies with high dividend yields and strong operational resilience, such as China Hongqiao and Tianshan Aluminum, are well-positioned for investment [11][14] - It draws parallels with the coal industry, where high cash dividends and valuation re-evaluations have led to significant stock price increases, indicating a similar potential for the aluminum sector [9][39] - The report indicates that the capital expenditure in the aluminum sector is decreasing, which, combined with improved cash flow, enhances the ability to sustain and increase dividends [10][46][48]