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]