Core Viewpoint - HSBC Holdings reports that China Hongqiao's strong performance in the first half of 2025 is driven by rising demand and increases in both alumina and aluminum prices and sales [1] Group 1: Financial Performance - China Hongqiao achieved a net profit of 12.4 billion RMB in the first half of 2025, representing a year-on-year increase of 35%, in line with previous earnings forecasts [1] - The strong profit performance is attributed to a 10% year-on-year increase in alumina prices and a 3% increase in aluminum prices [1] - Sales volumes for aluminum alloys, processed products, and alumina increased by approximately 2%, 3%, and 16% respectively, benefiting from strong downstream demand and an increase in market share [1] Group 2: Future Outlook - HSBC expects aluminum prices to remain robust in the second half of 2025, projected to be between 20,600 and 21,300 RMB per ton, while alumina prices are expected to be between 3,200 and 3,300 RMB per ton [2] - The company plans capital expenditures of 12 to 13 billion RMB for 2025, consistent with 2024 levels [2] - Additional capacity is expected to be relocated to Yunnan in the second half of 2025, with Yunnan's capacity projected to reach 2.2 million tons by year-end [2] Group 3: Dividend and Share Buyback - Although the company has not announced an interim dividend, guidance indicates that the annual payout ratio will remain at 63%, equivalent to an attractive dividend yield of approximately 8.5% [1] - The board has announced a new share buyback plan with a total repurchase amount of no less than 3 billion HKD [1] Group 4: Market Conditions - Despite a potential decline in profit growth year-on-year in the second half of 2025 due to a high comparative base from record alumina prices in Q4 2024, multiple favorable factors remain [2] - The 45 million ton production capacity cap is a key measure to maintain supply discipline [2] - Investments in the power grid, electric vehicle sales, and export recovery are expected to continue supporting demand [2]

Core Viewpoint - Morgan Stanley's report indicates that China Hongqiao currently has a dividend yield of 8%, with a higher ROE compared to peers and record profits, suggesting the company can maintain a premium [1] Group 1 - The stock price of China Hongqiao has further upside potential, especially following the announcement of a new share buyback of no less than 3 billion HKD [1] - The company is expected to benefit from a constructive outlook on aluminum prices and profits due to nearing capacity limits in the second half of the year [1] - Morgan Stanley raised the target price for the company from 17 HKD to 26.5 HKD, maintaining an "overweight" rating [1]

Industry Investment Rating There is no information provided about the industry investment rating in the given content. Core Views - For aluminum, the short - term view is that it will run strongly within the range of 20400 - 20700, and the medium - term view is that it will run at a high level within the range of 19200 - 21000. The recommended strategy is to sell AL2508 - P - 19300 [1]. - For steel products (including rebar and hot - rolled coil), the short - term view is that steel prices will run weakly, and the medium - term view is that there is still a downward driving force for steel prices. The recommended strategies are to sell the out - of - the - money call options of rebar RB2510 (exercise price 3150 - 3450) and buy the at - the - money put options of rebar RB2510 [4]. Summary by Categories Aluminum - The supply side provides strong support for aluminum prices. In 2017, the supply - side reform set the upper limit of China's electrolytic aluminum production capacity at 45 million tons. As of May 2025, the operating capacity of electrolytic aluminum in China was 44.139 million tons, with very limited room for capacity increase [1]. - The current inventory is at the lowest level in the same period of the past 5 years, which is favorable for aluminum prices. As of June 23, the social inventory of electrolytic aluminum in 5 regions was 465,000 tons, an increase of 18,000 tons from last week, while the inventory in the same period last year was 764,000 tons [1]. - The good performance of the automobile market is also favorable for aluminum prices. From January to May, the production and sales of automobiles were 12.826 million and 12.748 million respectively, with year - on - year increases of 12.7% and 10.9% [1]. - The general rise of non - ferrous metals boosts aluminum prices [2]. Steel Products (Rebar and Hot - Rolled Coil) - The overall pressure on the raw material inventory of steel products is still large. This week, the inventory of imported iron ore in 45 ports was 139.6802 million tons, a week - on - week increase of 873,800 tons. The low - grade ore in the tradable inventory of ports is at a high level in the same period of the past 5 years. The price of iron ore is expected to be further pressured under the background of increased supply and decreased demand. The inventory of clean coal in sample mines and coal - washing plants is at a high level in the same period of the past 5 years, and the downward pressure on the price of coal and coke still exists. The inventory pressure of furnace materials will be further transformed into incremental supply of finished steel products [4]. - The downstream consumption of steel products is gradually entering the off - season. The demand for building materials is weakening and is lower than in previous years. The overall consumption of the five major steel products is also weaker than in previous years (year - on - year decrease of 2.06%). With the easing of the conflict between Iran and Israel, the driving force for the increase in the price of black - series commodities pushed up by the rise in energy prices has been temporarily alleviated, and there is no strong driving force for a sharp increase in short - term steel prices [5].