Investment Rating - The report assigns a "Buy" rating to China Hongqiao Group (1378.HK) [4] Core Views - China Hongqiao is a leading player in the aluminum industry with a fully integrated supply chain, expected to enjoy high profit elasticity [4][11] - The company has a stable aluminum hydroxide self-sufficiency rate of 100%, supported by diversified raw material supply channels [10][11] - The aluminum price is expected to maintain an upward trend in the medium to long term due to limited supply growth and increasing demand from the new energy sector [10][26] Summary by Sections Company Overview - China Hongqiao Group, established in 1994, is a comprehensive enterprise involved in power generation, mining, alumina, liquid aluminum alloys, aluminum alloy ingots, and new materials [4][11] - As of March 2024, the company has an annual bauxite production capacity of approximately 50 million tons, alumina capacity of 19.5 million tons, and electrolytic aluminum capacity of 6.46 million tons [4][10] Upstream Operations - The company has a high self-sufficiency rate for alumina, currently at 100%, and has secured bauxite supply from both Guinea and Australia [10][11] - The integration of upstream and downstream operations enhances the stability of raw material supply [10] Midstream Operations - The electrolytic aluminum segment is stable, with significant improvements in energy structure, particularly with the relocation of production capacity to Yunnan, where electricity costs are lower [10][11] - The company is expected to benefit from reduced overall electricity costs as it shifts 396,000 tons of annual capacity to Yunnan [10] Downstream Operations - The company is expanding its recycling aluminum and automotive lightweight projects, which are expected to contribute to low-carbon development [10][11] - The recycling project aims to produce 500,000 tons of recycled aluminum annually and recover 100,000 scrapped vehicles [10] Financial Performance - The report forecasts the company's EPS for 2024-2026 to be 1.70, 1.94, and 1.95 CNY per share, respectively, with corresponding P/E ratios of 6.42x, 5.61x, and 5.60x [6] - The company has maintained a high dividend payout ratio, averaging 28.48% since its listing in 2011, indicating stable operations and growth [24] Market Outlook - The aluminum price is projected to continue its upward trend due to supply constraints and increasing demand from sectors such as new energy vehicles and photovoltaics [10][26] - The report anticipates a global aluminum demand growth rate of approximately 1.65% annually from 2023 to 2025 [10]
中国宏桥：公司深度报告：铝产业链一体化龙头，有望享高盈利弹性