Summary of the Conference Call on China's Aluminium Sector Industry Overview - The report focuses on the **China Aluminium Sector** and its supply-demand dynamics, highlighting the constrained supply and rising prices due to tight fundamentals [2][4][9]. Key Points Supply Constraints - China's aluminium industry capacity is capped at **45.2 million tonnes per annum (mtpa)**, currently operating at over **98% utilization** [3][9]. - Planned capacity additions for 2026 include **200,000 tonnes per annum (ktpa)** from Tianshan and **350 ktpa** from Zhalv, with no new capacity expected for 2027 [3][9]. - Ex-China, new capacity is anticipated mainly from Indonesia, contributing **400 kt** and **200 kt** YoY in 2026 and 2027, respectively [3][9]. Demand Growth - UBS forecasts global primary aluminium demand growth of **4%** for both 2026 and 2027, while supply growth is expected to be only **1-2%**, potentially leading to market deficits [4][9]. Price Forecasts - Aluminium price forecasts for China have been raised by **5%** for 2026 and **7%** for 2027, now projected at **Rmb22,000/t** and **Rmb23,000/t**, respectively [2][16]. - The global aluminium price is also expected to rise, with UBS increasing its LME aluminium price forecasts by approximately **15%** [2][16]. Earnings Revisions - Net profit estimates for major companies in the sector have been revised upwards: - **Hongqiao**: +11% for 2026E, +16% for 2027E - **Chalco**: +14% for 2026E, +22% for 2027E - **Tianshan**: +12% for 2026E, +26% for 2027E [5][17][18][19]. Price Target Adjustments - Price targets (PT) for key companies have been adjusted significantly: - **Hongqiao**: Raised from **HK$28.0** to **HK$38.60** (implying a **10x** 2026E PE) [5][17]. - **Chalco-H**: Increased from **HK$8.60** to **HK$13.10** [5][18]. - **Chalco-A**: Upgraded from **HK$8.30** to **HK$12.40** [5][18]. - **Tianshan**: Increased from **Rmb12.60** to **Rmb17.00** [5][19]. Investment Ratings - The report reiterates **Buy** ratings on **Hongqiao**, **Tianshan**, and **Chalco-H**, while upgrading **Chalco-A** to **Buy** from Neutral [5][18][19]. Additional Insights - The report emphasizes the importance of corporate governance improvements and stable earnings delivery for Chalco, which supports the upgraded ratings [18]. - The aluminium market is expected to remain tight, with potential drawdowns in visible inventory supporting price increases [4][9]. Conclusion - The outlook for China's aluminium sector remains positive, driven by constrained supply, rising demand, and improved earnings forecasts for key players, making it an attractive investment opportunity.