Core Viewpoint - Nanshan Aluminum's performance in H1 2025 was impacted by a decline in alumina prices, despite a year-on-year increase in revenue and net profit. The company is making steady progress on its projects in Indonesia, which are expected to drive future growth [1][2][3]. Financial Performance - In H1 2025, Nanshan Aluminum achieved revenue of 17.27 billion yuan, a year-on-year increase of 10.3%, and a net profit of 2.63 billion yuan, up 20.0% year-on-year. However, Q2 2025 saw a revenue decline of 1.8% year-on-year and a significant net profit drop of 31.1% year-on-year, primarily due to falling alumina prices [2][3]. - The company plans to distribute a cash dividend of 0.4 yuan per 10 shares, totaling 460 million yuan, with a dividend payout ratio of 17.7% [2]. Price and Production Insights - Nanshan Aluminum's current electrolytic aluminum capacity is 680,000 tons, and alumina capacity is 3.4 million tons, with 1.4 million tons in China and 2 million tons in Indonesia. In H1 2025, the electrolytic aluminum production is expected to be around 340,000 tons [3]. - The average aluminum price in H1 2025 was 20,321 yuan per ton, up 2.7% year-on-year, while the alumina price in Shandong was 3,416 yuan per ton, down 0.4% year-on-year [3]. Project Development - The first phase of the 2 million-ton alumina project in Indonesia, with a capacity of 1 million tons, was commissioned in H1 2025, and the second phase is progressing as planned. Additionally, the company is constructing a 250,000-ton electrolytic aluminum and a 260,000-ton carbon project in Indonesia [3][4]. - Nanshan Aluminum's Indonesian operations are set to be listed on the Hong Kong Stock Exchange, which will facilitate further investment and growth in the region [4]. Market Opportunities - The rapid growth of the new energy vehicle market presents significant demand for automotive plates, with Nanshan Aluminum positioned as a leader in this sector. The company has partially commissioned a 200,000-ton capacity for automotive plates, which is expected to benefit from increasing demand [4]. Profit Forecasts - Analysts project Nanshan Aluminum's net profit for 2025 to be approximately 4.93 billion yuan, with estimates for 2026 and 2027 at 5.20 billion yuan and 5.68 billion yuan, respectively. The corresponding price-to-earnings ratios are expected to be 10x, 9x, and 8x [4][5].

Investment Rating - The report maintains a "Recommended" rating for the company, with a current price of 4.06 yuan [7]. Core Views - The company's performance in H1 2025 showed a revenue of 17.27 billion yuan, a year-on-year increase of 10.3%, and a net profit attributable to shareholders of 2.63 billion yuan, up 20.0% year-on-year. However, Q2 2025 saw a revenue decline of 1.8% year-on-year and a significant net profit drop of 31.1% year-on-year, primarily due to falling alumina prices [1][2]. - The company is progressing steadily with its Indonesian projects, including the commissioning of the first phase of a 1 million-ton alumina capacity and ongoing construction of additional capacities [3][4]. - The growth potential in the automotive aluminum sheet market is highlighted, with expectations of increased demand due to stricter energy consumption requirements and the company's leading position in this segment [4]. Summary by Sections Financial Performance - In H1 2025, the company achieved a revenue of 17.27 billion yuan, with a net profit of 2.63 billion yuan, reflecting a year-on-year growth of 20.0%. The Q2 2025 results showed a revenue of 8.29 billion yuan, down 1.8% year-on-year, and a net profit of 0.92 billion yuan, down 31.1% year-on-year [1][2]. - The company's gross margin for H1 2025 was 28.5%, up 3.3 percentage points year-on-year, while the net margin was 19.2%, up 2.4 percentage points year-on-year. However, Q2 2025 saw a gross margin drop to 23.7%, down 9.2 percentage points from the previous quarter [2]. Project Development - The Indonesian alumina project has a total capacity of 2 million tons, with the first phase of 1 million tons already in production. The second phase is progressing as planned, alongside the construction of a 250,000-ton electrolytic aluminum and 260,000-ton carbon product capacity [3][4]. Market Outlook - The report emphasizes the growth potential in the automotive aluminum sheet market, driven by increasing demand for lightweight materials. The company is positioned to benefit from this trend, with part of its 200,000-ton capacity already in production [4]. - The company plans to invest 6.06 billion yuan in Indonesia for the construction of additional capacities, which is expected to enhance its growth prospects in the region [4]. Earnings Forecast - The company is projected to achieve net profits of 4.93 billion yuan in 2025, 5.20 billion yuan in 2026, and 5.68 billion yuan in 2027, with corresponding price-to-earnings ratios of 10x, 9x, and 8x respectively [4][6].