Core Viewpoint - Guotai Junan Securities International maintains a "Buy" rating for China Hongqiao (01378) and raises the target price to HKD 40.9, reflecting an upward adjustment in earnings forecasts for 2025 to 2027 by 10.2%, 11.3%, and 12.6% to RMB 25.003 billion, RMB 25.378 billion, and RMB 25.946 billion respectively, driven by improved industry valuations and favorable aluminum market conditions [1] Financial Performance - In the first three quarters of 2025, China Hongqiao reported a net profit growth of 23.1%, primarily due to rising electrolytic aluminum prices and decreasing electricity costs [1] - The company's revenue reached RMB 116.9 billion, a year-on-year increase of 6.2%, with a gross margin expansion to 25.2%, up 1.0 percentage points year-on-year [1] - The average aluminum price in the third quarter was approximately RMB 20,700 per ton, up from about RMB 20,200 per ton in mid-2025 [1] - The company is expected to increase its production capacity in Yunnan Province to 2.16 million tons by the end of 2025, significantly up from approximately 1.74 million tons in mid-2025 [1] Shareholder Returns - China Hongqiao has demonstrated management confidence through active share buybacks, having repurchased 1.87 million shares for HKD 2.6 billion in the first half of 2025, and announced a new buyback plan of at least HKD 3 billion [2] - The company has maintained a dividend payout ratio above 45% over the past three years, with ratios of 46.8%, 47.0%, and 63.4%, reflecting a strong commitment to shareholder returns [2]

Core Viewpoint - Guotai Junan Securities International maintains a "Buy" rating for China Hongqiao (01378) and raises the target price to HKD 40.9, reflecting improved profitability and favorable market conditions in the aluminum sector [1] Financial Performance - In the first three quarters of 2025, China Hongqiao reported a net profit increase of 23.1%, driven by rising electrolytic aluminum prices and decreasing electricity costs [1] - Revenue for the same period reached RMB 116.9 billion, marking a 6.2% year-on-year growth, with gross margin expanding to 25.2%, an increase of 1.0 percentage points [1] - The average aluminum price in the third quarter was approximately RMB 20,700 per ton, up from about RMB 20,200 per ton in mid-2025 [1] Production Capacity and Cost Management - The company is shifting more production capacity to Yunnan province, benefiting from lower electricity costs during the non-water period [1] - Management expects production capacity in Yunnan to increase to 2.16 million tons by the end of the fourth quarter of 2025, a significant rise from approximately 1.74 million tons in mid-2025 [1] Shareholder Returns and Management Confidence - China Hongqiao has initiated a new share buyback plan of no less than HKD 3 billion, following a previous buyback of HKD 2.6 billion for 18.7 million shares in the first half of 2025 [2] - The company has maintained a dividend payout ratio above 45% over the past three years, with ratios of 46.8%, 47.0%, and 63.4%, reflecting management's confidence in future growth and commitment to shareholder value [2]