Core Viewpoint - DBS Bank maintains a "Buy" rating for China Hongqiao (01378) after a strong performance in the first half of 2025, raising the 12-month target price from HKD 22 to HKD 29, supported by an optimistic aluminum price outlook [1] Financial Performance - In the first half of 2025, China Hongqiao's revenue increased to RMB 81 billion, a year-on-year growth of 10.1%, driven by higher average selling prices (ASP) of alumina and aluminum products, as well as increased sales volume [1] - The company's gross margin improved by 1.5 percentage points to 25.7%, while net attributable profit rose by 35% to RMB 12.36 billion, with a net profit margin increase of 3 percentage points to 17% [1][2] Financial Health - China Hongqiao's financial condition is improving, with interest coverage ratio significantly rising to 17.6 times due to optimized debt structure and improved interest rates [2] - Although no interim dividend was declared for the first half of 2025, management expects the annual dividend payout ratio to remain stable at 63% for the fiscal year 2024, leading to an implied dividend yield of 7% based on the projected earnings per share of HKD 2.60 for fiscal year 2025 [2] Market Outlook - DBS Bank anticipates strong aluminum prices to continue through 2026-2027, highlighting China Hongqiao's competitive advantages [2] - Management projects the average selling price for electrolytic aluminum in 2025 to be between RMB 20,600 and RMB 21,300 per ton, and for alumina between RMB 3,200 and RMB 3,300 per ton, indicating a robust price outlook [2] - Global aluminum demand is expected to grow by 3.1% in 2025, outpacing supply growth of 1.8% [2] Competitive Position - Under China's "anti-involution" guidelines, supply control is expected to strengthen, benefiting leading companies like China Hongqiao from rising average prices and market consolidation [3] - China Hongqiao aims to complete the transfer of approximately 2.2 million tons of capacity to Yunnan by the end of fiscal year 2025, representing 34% of total capacity, enhancing its production cost advantages through an integrated supply chain and increased use of green power [3]

Core Viewpoint - The report from Guohai Securities indicates that aluminum prices are entering an upward channel due to high production levels and low inventory, with positive demand expectations as the peak season approaches [1] Industry Summary - In the short term, Yunnan's production recovery is nearly complete, maintaining high output levels while inventory remains low, leading to an anticipated increase in aluminum prices and expanded profit margins for companies [1] - Continuous favorable policy signals and expectations for demand improvement support a positive outlook for the industry [1] - In the long term, supply constraints in the aluminum industry combined with growth points in demand suggest that the industry may maintain high prosperity levels [1] Company Recommendations - Companies to watch include Yunnan Aluminum Co., Shenhui Co., Tianshan Aluminum, and China Aluminum [1]

Core Viewpoint - China Hongqiao (01378) has seen its stock price rise over 3%, reaching a new high of 22.62 HKD, driven by a significant increase in expected net profit for the first half of the year [1] Financial Performance - The company anticipates a net profit attributable to shareholders of approximately 12.36 billion HKD for the first half of the year, representing a year-on-year increase of around 35% [1] - The substantial growth in performance is primarily attributed to the rise in aluminum prices compared to the previous year, alongside a decrease in the cost of thermal coal [1] Business Operations - Electrolytic aluminum is the main source of revenue and profit for the company, while alumina is primarily produced for self-use, with some portion sold externally [1]

Group 1 - China Hongqiao (01378) saw its stock price increase over 3%, reaching a new high of 22.62 HKD, with a current trading price of 22.32 HKD and a trading volume of 339 million HKD [1] - The company expects a net profit attributable to shareholders of approximately 12.359 billion RMB for the first half of the year, representing a year-on-year increase of around 35% [1] - The significant growth in the company's performance is primarily attributed to the year-on-year increase in aluminum prices, coupled with a decrease in the cost of thermal coal [1] Group 2 - According to Guolian Minsheng Securities, domestic electrolytic aluminum production capacity is nearing its ceiling, with limited potential for new capacity additions in the future [1] - The demand side is supported by sectors such as the power grid and new energy vehicles, which are expected to show resilience, leading to a gradual emergence of a supply-demand gap in electrolytic aluminum [1] - The China Nonferrous Metals Industry Association announced on July 29 that it will strictly control the new production capacity of alumina, indicating a potential slowdown in the pace of new capacity coming online, which may improve the current overcapacity situation [1]

Core Viewpoint - China Hongqiao Group (01378) has released a positive profit forecast, expecting a net profit increase of approximately 35% in the first half of 2025 compared to the same period last year, driven by rising aluminum product prices and increased sales volumes [1] Group 1: Financial Performance - In the first half of 2024, China Hongqiao's net profit reached 10.008 billion RMB, representing a significant increase of 236.7% compared to the same period in 2023 [1] - Following the profit announcement, the company's stock price opened high and reached a historical peak of 17.28 HKD, reflecting an increase of 8.68% [1] Group 2: Aluminum Price Trends - As of June 20, the LME aluminum spot price was 2,529 USD/ton, up 44 USD/ton week-on-week, and increased by 84 USD/ton year-on-year, indicating a 3.4% rise [2] - The average price of A00 aluminum in the Yangtze River region was 20,700 RMB/ton, which is 280 RMB/ton higher than the same period last year, marking a 1.4% increase [2] - The low inventory levels of electrolytic aluminum, at 3.66 days as of June 20, have provided strong support for aluminum prices [2] Group 3: Supply and Demand Dynamics - The domestic electrolytic aluminum production capacity is nearing its ceiling, leading to a lack of supply elasticity, while demand continues to benefit from the rapid development of the new energy sector, creating a long-term mismatch between supply and demand [5] - The price of alumina has shown volatility due to supply disruptions from Guinea and domestic production cuts, with expectations of continued tight supply [6] Group 4: Cost Management - The decline in energy prices, particularly coal, is expected to positively impact China Hongqiao's cost control. The average coal price at Qinhuangdao Port was 703 RMB/ton in the first five months of this year, down 169 RMB/ton from the average of 872 RMB/ton last year [6] Group 5: Future Growth Prospects - The company is expected to see further profit expansion in the electrolytic aluminum segment due to low inventory levels and favorable cost conditions [7] - The Guinea Simandou iron ore project, in which China Hongqiao has a stake, is set to commence production by the end of this year, potentially contributing significant incremental earnings [7] - Ongoing asset restructuring is anticipated to enhance the company's market influence and investment appeal, with a transaction value of approximately 63.518 billion RMB for acquiring 100% of Hongtu Industrial [7] Group 6: Dividend Policy - China Hongqiao has increased its dividend payouts, with expected distributions of 0.51 HKD, 0.63 HKD, and 1.61 HKD per share for the years 2022-2024, indicating a commitment to returning value to shareholders [8]

Macro Factors - The US-China trade war shows significant signs of easing, with important consensus reached during the Geneva trade talks in early May, establishing a normalized economic consultation mechanism [3] - Recent economic and financial data in China shows marginal improvement, with retail sales growing by 6.4% year-on-year in May, and industrial added value increasing by 5.8% year-on-year, indicating a recovery phase [4] Oil Price Impact - Since early May, international oil prices have rebounded from around $55, influenced by geopolitical factors in the Middle East, reaching new highs not seen since July of the previous year [5] - Historical trends indicate a strong positive correlation between oil prices and aluminum prices, as fluctuations in oil prices affect the energy costs associated with aluminum production [5] Supply and Demand Dynamics - Domestic bauxite production in May reached 5.3664 million tons, with a month-on-month increase of 5.31% and a year-on-year increase of 8.97%, while imports of bauxite hit a historical high [8] - Despite weak overall real estate data, other sectors such as automotive and cable industries are providing incremental demand, with domestic automobile production increasing by 11.3% year-on-year in May [10] - Both domestic and international aluminum inventories are on a downward trend, with domestic social inventory decreasing by nearly 50% since mid-March, indicating a tightening supply situation [10]

Core Viewpoint - Aluminum prices have risen nearly 2% within the day, surpassing $2,500 per ton, marking the highest level since April 1 [1] Group 1 - The increase in aluminum prices indicates a strong market demand and potential bullish trends in the aluminum industry [1]

Core Viewpoint - The price of London aluminum has increased by 2.00%, currently reported at $2468.00 per ton [1] Group 1 - The increase in aluminum price indicates a positive market trend for the aluminum industry [1]