Core Viewpoint - The conflict in the Middle East has escalated from shipping disputes in the Strait of Hormuz to direct physical attacks on core industrial facilities, particularly aluminum plants in Bahrain and the UAE, leading to injuries and property damage [1]. Group 1: Impact of Attacks on Aluminum Industry - Two major aluminum plants in Bahrain and the UAE confirmed attacks by Iran, resulting in injuries and property damage, with Bahrain Aluminum Company reporting a 20% reduction in production due to previous shipping disruptions [1]. - The Iranian Revolutionary Guard stated that the attacks were a retaliation against U.S. strikes on Iranian civilian facilities, indicating a significant escalation in the conflict [1]. - The physical damage to aluminum smelting facilities has long-term effects, with recovery and resumption of production potentially taking 6 to 12 months [1]. Group 2: Aluminum Supply Chain and Market Dynamics - Aluminum is a critical metal in modern industry, and disruptions in supply could lead to increased production costs in advanced manufacturing sectors such as automotive and aerospace [2]. - The Middle East, as the third-largest electrolytic aluminum production region, is projected to reach a capacity of 7.051 million tons per year by 2025, accounting for approximately 9% of global production, with the affected plants representing over 6% of global capacity [2]. - The region's aluminum industry relies heavily on imports for alumina, with a self-sufficiency rate of less than 34%, making it vulnerable to supply chain disruptions [2]. Group 3: Price Trends and Future Outlook - Since the onset of the current U.S.-Iran conflict, LME aluminum prices peaked at $3,546.5 per ton, but have since declined due to concerns over inflation and economic slowdown, with year-to-date increases of 9.59% for LME and 3.99% for Shanghai futures [3]. - Predictions suggest that if the Middle East conflict continues into Q2 and oil prices fluctuate between $100 and $120 per barrel, the average cost of electrolytic aluminum could rise significantly, with energy costs potentially comprising 40-50% of total costs [4]. - The aluminum industry may face supply shortages due to potential preventive shutdowns in the Middle East, which could lead to price increases beyond previous expectations, supported by strong long-term supply-demand dynamics [4]. Group 4: Company Performance - Domestic aluminum companies are already benefiting from rising aluminum prices, with Tianshan Aluminum reporting a projected net profit of 2.2 billion yuan for Q1 2026, a year-on-year increase of 107.92% [6]. - The growth in profits is attributed to the partial production of a green low-carbon efficiency project and a 10% increase in electrolytic aluminum sales volume, alongside a 17% rise in sales prices [7].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 39.90 RMB [7]. Core Views - The company achieved a revenue of 60.04 billion RMB in 2025, a year-on-year increase of 10.27%, and a net profit attributable to shareholders of 6.06 billion RMB, up 37.24% year-on-year [1][5]. - The fourth quarter of 2025 saw a revenue of 15.97 billion RMB, representing a year-on-year increase of 4.63% and a quarter-on-quarter increase of 6.52% [1]. - The company is expected to benefit from high aluminum prices in 2026 due to domestic production capacity constraints and tight overseas supply [1][3]. Summary by Relevant Sections Financial Performance - In 2025, the company produced 3.23 million tons of aluminum products and sold 3.23 million tons, achieving an annual plan completion rate of 104.67% and 105.01% respectively [2]. - The overall gross margin for 2025 was 16.79%, an increase of 3.56 percentage points year-on-year, with the gross margins for electrolytic aluminum and aluminum processing products at 18.16% and 15.24% respectively [2]. - The fourth quarter gross margin reached 20.65%, a quarter-on-quarter increase of 2.7 percentage points [2]. Market Dynamics - The global supply of electrolytic aluminum is expected to face downward pressure due to geopolitical tensions in the Middle East, with a projected global supply increase of only 1.18% in 2026 [3]. - Demand for aluminum is anticipated to grow at approximately 1.53% in 2026, driven by a recovery in global manufacturing [3]. Strategic Developments - The company plans to increase its electrolytic aluminum production capacity to 3.19 million tons in 2026, maintaining high capacity utilization [4]. - The company has acquired minority stakes in several subsidiaries for 2.27 billion RMB, which will enhance its profit attributable to shareholders [4]. - The company intends to distribute a cash dividend of 3.79 RMB per 10 shares, totaling 1.31 billion RMB, reflecting a dividend payout ratio of 40.04% [4]. Profit Forecast and Valuation - The company's net profit forecasts for 2026, 2027, and 2028 are adjusted to 13.85 billion RMB, 15.69 billion RMB, and 15.96 billion RMB respectively, with a three-year compound growth rate of 38.15% [5]. - The estimated EPS for 2026 is 3.99 RMB, with a target PE ratio of 10.0 times, leading to a target price of 39.90 RMB [5].

Investment Rating - The report maintains a "Buy" rating for China Hongqiao Group (01378.HK) with a current price of HKD 34.50 and a target value of HKD 45.15 [7]. Core Views - The main viewpoint is that the increase in aluminum prices will enhance the company's profitability, with projected EPS for 2026-2028 being CNY 3.31, CNY 3.34, and CNY 3.36 respectively [8]. Financial Performance Summary - In 2025, the company achieved a revenue of CNY 162.354 billion, a year-on-year increase of 4.0%, and a net profit attributable to shareholders of CNY 22.636 billion, a slight increase of 1.2% [8]. - The company’s sales volume for aluminum alloy, alumina, and aluminum deep processing products were 5.82 million tons, 13.40 million tons, and 0.72 million tons respectively, with year-on-year changes of -0.2%, +54%, and -3% [8]. - The average selling prices for aluminum alloy and alumina were CNY 18,217 and CNY 2,899 per ton, reflecting year-on-year changes of +4% and -15% respectively [8]. - The company plans to distribute a cash dividend of HKD 1.65 per share for 2025, representing a 2.5% increase and a payout ratio of 64% [8]. Profitability and Valuation Metrics - The report forecasts EBITDA of CNY 56.856 billion for 2026, with a corresponding P/E ratio of 9.2 [5]. - The return on equity (ROE) is projected to be 22.8% in 2026, with a gradual decline to 20.3% by 2028 [5]. - The company’s debt-to-asset ratio decreased by 6.0 percentage points to 42.2% by the end of 2025 [8].

1. Report Industry Investment Rating - Unilateral: Aluminum: Cautiously bullish; Alumina: Cautiously bullish; Aluminum alloy: Cautiously bullish. Arbitrage: Neutral [8] 2. Core View of the Report - In the long - term, without considering recession trading, the Middle East production cuts lead to a medium - term reduction in additional supply, and the overseas power shortage causes a continuous upward trend in electricity prices, so there is still room for aluminum prices to rise. The policy adjustment and oil price fluctuations strongly support alumina from the cost side [6][7] 3. Summary by Related Catalogs 3.1 Important Data 3.1.1 Aluminum Spot - East China A00 aluminum price is 24,510 yuan/ton, a change of - 390 yuan/ton from the previous trading day, and the spot premium is - 200 yuan/ton, a change of 10 yuan/ton from the previous trading day. Central China A00 aluminum price is 24,410 yuan/ton, and the spot premium changes by 40 yuan/ton to - 300 yuan/ton from the previous trading day. Foshan A00 aluminum price is 24,520 yuan/ton, a change of - 390 yuan/ton from the previous trading day, and the aluminum spot premium changes by 15 yuan/ton to - 185 yuan/ton from the previous trading day [1] 3.1.2 Aluminum Futures - On March 18, 2026, the main contract of Shanghai aluminum opened at 25,060 yuan/ton, closed at 24,800 yuan/ton, a change of - 245 yuan/ton from the previous trading day, with a maximum price of 25,110 yuan/ton and a minimum price of 24,650 yuan/ton. The trading volume for the whole trading day is 287,273 lots, and the position is 307,325 lots [2] 3.1.3 Inventory - As of March 18, 2026, the domestic social inventory of electrolytic aluminum ingots is 1.326 million tons, a change of 32,000 tons from the previous period. The warrant inventory is 392,206 tons, a change of 850 tons from the previous trading day. The LME aluminum inventory is 436,625 tons, a change of - 3,700 tons from the previous trading day [2] 3.1.4 Alumina Spot Price - On March 18, 2026, the SMM alumina price in Shanxi is 2,715 yuan/ton, in Shandong is 2,680 yuan/ton, in Henan is 2,735 yuan/ton, in Guangxi is 2,730 yuan/ton, in Guizhou is 2,770 yuan/ton, and the FOB price of Australian alumina is 298 US dollars/ton [2] 3.1.5 Alumina Futures - On March 18, 2026, the main contract of alumina opened at 3,081 yuan/ton, closed at 3,048 yuan/ton, a change of 20 yuan/ton (0.66%) from the previous trading day's closing price, with a maximum price of 3,117 yuan/ton and a minimum price of 3,006 yuan/ton. The trading volume for the whole trading day is 1,015,496 lots, and the position is 273,934 lots [2] 3.1.6 Aluminum Alloy Price - On March 18, 2026, the purchase price of Baotai civil raw aluminum is 18,400 yuan/ton, and the purchase price of mechanical raw aluminum is 18,800 yuan/ton, both with a price change of - 200 yuan/ton compared to the previous day. The Baotai quotation of ADC12 is 24,500 yuan/ton, with a price change of - 100 yuan/ton compared to the previous day [3] 3.1.7 Aluminum Alloy Inventory - The social inventory of aluminum alloy is 58,000 tons, and the in - factory inventory is 74,600 tons [4] 3.1.8 Aluminum Alloy Cost and Profit - The theoretical total cost is 23,980 yuan/ton, and the theoretical profit is 720 yuan/ton [5] 3.2 Market Analysis 3.2.1 Electrolytic Aluminum - Overseas supply is decreasing. Mozambique's electrolytic aluminum plant has entered the shutdown stage as expected, Qatar's electrolytic aluminum plant has suspended further production cuts after a 40% reduction, and Bahrain Aluminum has cut production by 30%. The Middle East event continues, and the Hormuz Strait is still blocked, causing concerns about local raw material and energy supply. Overseas inventories are continuously declining, and the LME premium is at a high level, which is still bullish for aluminum prices. In China, the recovery of downstream consumption needs to be concerned. Currently, the social inventory is still increasing, while the aluminum rod inventory shows signs of de - stocking due to consumption recovery [6] 3.2.2 Alumina - In the spot market, 2,100 tons of delivery goods in Henan are traded at an ex - factory price of 3,050 yuan/ton, and Xinjiang electrolytic aluminum plants purchase 20,000 tons of alumina at a factory - arrival price of 3,030 yuan/ton and 3,130 yuan/ton respectively. Guinea will cut bauxite export volume in April to boost prices. Policy adjustments and oil price fluctuations strongly support alumina from the cost side. The blockade of the Hormuz Strait continues, and the risk of oil price driving up freight rates persists. In China, an alumina plant in Guangxi has been ignited, the oversupply situation continues, the social and warrant inventories of alumina are still increasing, the warrant contradiction accumulates continuously, and the spot flow pressure is not large [7]

1. Report Industry Investment Rating - Aluminum: Cautiously bullish [9] - Alumina: Neutral [9] - Aluminum alloy: Cautiously bullish [9] - Arbitrage: Neutral [9] 2. Core View of the Report - The continuous closure of the Strait of Hormuz and rising oil prices have led to concerns about overseas aluminum supply. Although Qatar has suspended production cuts after a 40% reduction, transportation disruptions still cause concerns about raw material supply. If the situation persists, the scope of production cuts may expand. In China, downstream industries are resuming production, with aluminum rods showing a de - stocking trend and aluminum ingots still slightly accumulating inventory. Export data shows high - speed growth, and the overseas supply - demand gap is expected to widen. Rising overseas electricity prices support the upward potential of aluminum prices, but the risk of recession trading due to rising oil prices should be watched out for. The alumina market remains stable, but there is a risk of rising freight rates, and the domestic supply surplus pattern remains unchanged [6][8]. 3. Summary by Relevant Catalogs 3.1 Important Data 3.1.1 Aluminum Spot - East China A00 aluminum price is 25,260 yuan/ton, with a change of 230 yuan/ton from the previous trading day. The spot premium/discount is - 110 yuan/ton, with a change of 20 yuan/ton from the previous trading day. - Central China A00 aluminum price is 25,110 yuan/ton, and the spot premium/discount has changed by 10 yuan/ton to - 260 yuan/ton from the previous trading day. - Foshan A00 aluminum price is 25,190 yuan/ton, with a change of 240 yuan/ton from the previous trading day. The aluminum spot premium/discount has changed by 25 yuan/ton to - 180 yuan/ton from the previous trading day [1]. 3.1.2 Aluminum Futures - On March 12, 2026, the main contract of Shanghai aluminum opened at 25,270 yuan/ton, closed at 25,240 yuan/ton, with a change of 95 yuan/ton from the previous trading day. The highest price reached 25,490 yuan/ton, and the lowest price was 25,120 yuan/ton. The trading volume for the whole trading day was 319,158 lots, and the position was 205,970 lots [2]. 3.1.3 Inventory - As of March 12, 2026, the domestic social inventory of electrolytic aluminum ingots was 1.294 million tons, with a change of 23,000 tons from the previous period. The warehouse receipt inventory was 358,635 tons, with a change of 7,944 tons from the previous trading day. The LME aluminum inventory was 447,300 tons, with a change of - 2,825 tons from the previous trading day [2]. 3.1.4 Alumina Spot Price - On March 12, 2026, the SMM alumina price in Shanxi was 2,685 yuan/ton, in Shandong was 2,650 yuan/ton, in Henan was 2,700 yuan/ton, in Guangxi was 2,705 yuan/ton, in Guizhou was 2,765 yuan/ton, and the FOB price of Australian alumina was 306 US dollars/ton [2]. 3.1.5 Alumina Futures - On March 12, 2026, the main contract of alumina opened at 2,880 yuan/ton, closed at 2,865 yuan/ton, with a change of 16 yuan/ton (0.56%) from the previous trading day's closing price. The highest price reached 2,924 yuan/ton, and the lowest price was 2,858 yuan/ton. The trading volume for the whole trading day was 585,975 lots, and the position was 295,463 lots [2]. 3.1.6 Aluminum Alloy Price - On March 12, 2026, the purchase price of Baotai civil raw aluminum was 18,800 yuan/ton, and the purchase price of mechanical raw aluminum was 19,200 yuan/ton, with a price change of 100 yuan/ton compared to the previous day. The Baotai quotation of ADC12 was 24,800 yuan/ton, with a price change of 100 yuan/ton compared to the previous day [3]. 3.1.7 Aluminum Alloy Inventory - The social inventory of aluminum alloy was 58,000 tons, and the in - factory inventory was 74,600 tons [4]. 3.1.8 Aluminum Alloy Cost and Profit - The theoretical total cost was 23,980 yuan/ton, and the theoretical profit was 720 yuan/ton [5]. 3.2 Market Analysis 3.2.1 Electrolytic Aluminum - The continuous blockade of the Strait of Hormuz and rising oil prices have led to concerns about overseas supply. Although Qatar has suspended production cuts after a 40% reduction, transportation disruptions still cause concerns about raw material supply. If the situation persists, the scope of production cuts may expand. In China, downstream industries are resuming production, with aluminum rods showing a de - stocking trend and aluminum ingots still slightly accumulating inventory. Export data shows high - speed growth, and the overseas supply - demand gap is expected to widen. Rising overseas electricity prices support the upward potential of aluminum prices, but the risk of recession trading due to rising oil prices should be watched out for [6]. 3.2.2 Alumina - In the spot market, 50,000 tons of alumina were traded at FOB 302 US dollars/ton in East Australia for April shipment. The domestic and overseas alumina spot markets are basically stable, but there is a risk of rising freight rates due to the continuous blockade of the Strait of Hormuz. The domestic supply surplus pattern remains unchanged, and social inventory is still rising. New production capacity in Guangxi is imminent. Although the price of bauxite has risen slightly, it will not affect alumina production for the time being. The pressure of expiring warehouse receipts in the next three months is not large, and the inter - month spread is conducive to alleviating the release of warehouse receipt pressure, but the contradiction between the premium of the futures market over the spot warehouse receipts is increasing [7][8].

Core Viewpoint - The report from CICC indicates that the aluminum supply-demand gap is widening, and the vulnerability due to the US-Iran conflict is increasing. Coupled with positive global fiscal and monetary policies, aluminum prices are expected to reach new highs. Given the low cost environment, profits per ton of aluminum are likely to expand further [1] Group 1: Aluminum Market Dynamics - The widening aluminum supply-demand gap is a significant factor influencing market conditions [1] - The US-Iran conflict is contributing to increased market vulnerability, impacting aluminum prices [1] - Global fiscal and monetary policies are positively resonating, further supporting the potential rise in aluminum prices [1] Group 2: Profitability Outlook - The current low cost environment is expected to lead to an increase in profits per ton of aluminum [1] - The rise in energy and alumina prices is a consideration for future profitability [1] Group 3: Investment Recommendations - The report suggests focusing on companies with high self-sufficiency in electricity and alumina, recommending specific companies such as Nanshan Aluminum, China Hongqiao, China Aluminum, Tianshan Aluminum, and Huatong Cable [1]

Core Viewpoint - The report from CICC indicates that the aluminum supply-demand gap is widening, and the vulnerability due to the US-Iran conflict is increasing. Coupled with positive global fiscal and monetary policies, aluminum prices are expected to reach new highs. Given the low cost environment, profits per ton of aluminum are likely to expand further [1] Group 1: Market Dynamics - The widening aluminum supply-demand gap is a significant factor influencing market conditions [1] - The US-Iran conflict is contributing to increased market vulnerability, impacting aluminum prices [1] - Global fiscal and monetary policies are creating a supportive environment for rising aluminum prices [1] Group 2: Profitability Outlook - The low cost environment is expected to lead to further expansion in profits per ton of aluminum [1] - Rising energy and alumina prices are factors to consider in the profitability outlook [1] Group 3: Investment Recommendations - Companies with high self-sufficiency in electricity and alumina are recommended for investment focus [1] - Specific companies to watch include Nanshan Aluminum International, China Hongqiao, China Aluminum, Tianshan Aluminum, and Huatong Cable [1]

Core Viewpoint - The report from CICC highlights the impact of force majeure announcements from Qatar Aluminum and Bahrain Aluminum, leading to a significant increase in LME aluminum prices, which reached a new high since 2022 [1] Group 1: Market Impact - Qatar Aluminum has an annual capacity of 636,000 tons, while Bahrain Aluminum has an annual capacity of 1,620,000 tons, representing 0.8% and 2.0% of global production, respectively [1] - Following the announcements, LME aluminum prices rose by 2.5% on March 3 and surged to 5% in the night session on March 4, reaching $3,418 per ton [1] Group 2: Future Outlook - The widening aluminum supply-demand gap, coupled with increased vulnerabilities from the US-Iran conflict and supportive global fiscal and monetary policies, suggests that aluminum prices may reach new highs [1] - With low-cost conditions, the profit per ton of aluminum is expected to further expand [1] Group 3: Investment Recommendations - The report recommends focusing on companies with high self-sufficiency in electricity and alumina, including Nanshan Aluminum International (02610), China Hongqiao (01378), China Aluminum (02600), Tianshan Aluminum (002532.SZ), Nanshan Aluminum (600219.SH), and Huatong Cable (605196.SH) [1]

Group 1 - Qatar Aluminium and Bahrain Aluminium announced force majeure, with annual capacities of 636,000 tons and 1,620,000 tons respectively, accounting for 0.8% and 2.0% of global production [1] - LME aluminium prices rose significantly, increasing by 2.5% on March 3 and reaching a peak of 5% on the night of March 4, hitting $3,418 per ton, the highest since 2022 [1] - The widening aluminium supply-demand gap and increased vulnerabilities due to the US-Iran conflict, combined with positive global fiscal and monetary policies, suggest that aluminium prices may reach new highs [1] Group 2 - The company expects further expansion in aluminium profit margins due to low costs, with a recommendation to focus on companies with high self-sufficiency in electricity and alumina [1] - Recommended companies include Nanshan Aluminium (600219), China Hongqiao (01378), China Aluminium (601600), Tianshan Aluminium (002532), and Huatong Cable (605196) [1]

Summary of Key Points from the Conference Call Industry Overview - The aluminum industry in the Middle East is facing significant risks due to the escalation of the Israel-Palestine conflict, which has raised concerns about production capacity, shipping capabilities, and energy supply risks in the region [1] - The production disruptions in the Middle East aluminum supply chain and the potential for a secondary energy crisis are critical issues that cannot be overlooked [1] Core Insights and Arguments - Historical context indicates that during the 2021-2022 energy crisis, aluminum prices and the sector experienced maximum increases of 60% and 100% respectively [1] - Looking ahead, concerns regarding supply in the aluminum industry are expected to lead to price increases that may exceed previous expectations [1] - The long-term supply-demand dynamics in the aluminum sector remain strong, supporting a bullish outlook for both aluminum prices and valuations [1] Additional Important Information - Qatalum, a joint venture under Hydro, officially ceased operations on March 3 due to a natural gas supply interruption, affecting a production capacity of 648,000 tons, which represents 0.9% of global capacity [1] - A full restart of Qatalum's operations is projected to take between 6 to 12 months [1]