Summary of Key Points from the Conference Call on Electrolytic Aluminum Industry Industry Overview - The global electrolytic aluminum supply-demand balance is projected to shift from a surplus of 400,000 tons in 2026 to a deficit of 1,544,000 tons, with an overseas deficit reaching 1,650,000 tons [1][5] - Geopolitical conflicts in the Middle East have led to a reduction in overseas production by 2,660,000 tons, with extreme scenarios suggesting reductions could exceed 4,000,000 tons, representing 5% of global capacity [1][4] - LME aluminum inventory is critically low at 420,000 tons, sufficient for only 5 days of overseas consumption, which amplifies supply disruptions and drives prices upward, potentially reaching $4,000 [1][5] Key Insights and Arguments - China's electrolytic aluminum capacity has reached a critical threshold of 45.5 million tons, with utilization rates exceeding 98%, leading to a loss of supply elasticity; domestic aluminum prices are expected to surpass 27,000-28,000 yuan/ton [1][6] - The Middle East aluminum plants have only two weeks of raw material inventory left, with the Strait of Hormuz being blocked, posing significant risks of production halts for Bahrain Aluminum and Qatar Aluminum [1][2] - Russian aluminum export flows may change due to soaring European premiums, with previously planned exports to China potentially redirected to the European and American markets [1][5] Production and Supply Dynamics - As of now, global electrolytic aluminum capacity stands at 81.716 million tons, with operational capacity close to 73.953 million tons; overseas operational capacity is approximately 29.38 million tons, accounting for 39.7% of the global total [2] - The Middle East has seen a significant reduction in operational capacity from 6 million tons to around 4.6 million tons due to geopolitical tensions, with 80% of the overseas production cuts occurring in this region [2][3] - Different aluminum plants exhibit varying resilience to risks; for instance, Saudi Arabia's Ma'aden Aluminum and Oman’s Sohar Aluminum are less affected due to resource advantages, while Bahrain Aluminum and Qatar Aluminum face severe challenges [3][4] Future Projections - The anticipated global electrolytic aluminum production for 2026 is around 74.5 million tons, with consumption expected at 76.044 million tons, resulting in a supply-demand gap of over 1.5 million tons [5][17] - The supply-demand imbalance is primarily driven by rigid supply constraints and geopolitical disruptions, with over 90% of the deficit originating from overseas supply reductions [5][6] - The price dynamics for aluminum in 2026 are expected to be influenced more by supply constraints than macroeconomic downturns, with LME prices likely to exceed domestic prices [6][7] Risks and Challenges - The ongoing geopolitical conflict in the Middle East poses a continuous threat to aluminum production, with potential further reductions in output expected if the situation escalates [3][4] - Transportation bottlenecks exacerbate the risk of production cuts, as logistical challenges hinder the timely delivery of raw materials [4] - The recovery timelines for affected plants vary significantly, with some, like EGA's Abu Dhabi facility, facing extended downtime due to severe damage [8] Additional Considerations - The aluminum market is currently experiencing a divergence in consumption patterns, with sectors like electric vehicles and photovoltaics showing slower order recovery due to rapid price fluctuations [10] - The anticipated increase in global electrolytic aluminum capacity through 2026 is expected to be concentrated in Indonesia, with significant uncertainty regarding the actual realization of these projects [12][13] - The potential for new projects by Chinese companies overseas is being explored, with several initiatives in countries like Guinea and Kazakhstan still in preliminary stages [19][20] This summary encapsulates the critical insights and projections regarding the electrolytic aluminum industry, highlighting the impact of geopolitical tensions, supply dynamics, and future market expectations.

Investment Rating - The report maintains a "Buy" rating for Tianshan Aluminum [3] Core Views - The company achieved a revenue of 29.5 billion yuan in 2025, representing a year-on-year growth of 5.0%, with a net profit attributable to shareholders of 4.818 billion yuan, up 8.1% year-on-year [9] - The company expects significant profit growth in Q1 2026, with a projected net profit of 2.2 billion yuan, a year-on-year increase of 107.9% [9] - The report highlights the gradual release of new production capacity and the improvement in profitability of electrolytic aluminum [9] Financial Forecasts - Revenue projections for 2025 to 2028 are as follows: 29.5 billion yuan (2025), 36.6 billion yuan (2026), 37.8 billion yuan (2027), and 38.4 billion yuan (2028) [2] - Net profit attributable to shareholders is forecasted to grow from 4.818 billion yuan in 2025 to 10.468 billion yuan in 2028, with growth rates of 8.1%, 92.6%, 8.1%, and 4.3% respectively [2] - Earnings per share are expected to increase from 1.04 yuan in 2025 to 2.26 yuan in 2028 [2] Production and Cost Analysis - The company produced 1.186 million tons of electrolytic aluminum in 2025, a slight increase of 0.8% year-on-year, while alumina production rose by 10.4% to 2.515 million tons [9] - The average price of aluminum in 2025 was 20,721 yuan per ton, up 4.0% year-on-year, with a projected price of 24,024 yuan per ton in Q1 2026 [9] - The production cost of electrolytic aluminum decreased by 6.7% to 12,700 yuan per ton, primarily due to lower energy costs [9] Strategic Developments - The company is advancing a new electrolytic aluminum production capacity of 200,000 tons, expected to be fully operational by the first half of 2026 [9] - Tianshan Aluminum is expanding its strategic layout in Indonesia with a planned investment of 1.556 billion USD for a 2 million ton alumina production line [9] - The company has secured a 50% stake in Elite Mining Guinea S.A. and exclusive purchasing rights for bauxite, enhancing its resource supply [9]

Investment Rating - The report maintains a "Buy" rating for Tianshan Aluminum [3] Core Views - The company achieved a revenue of 29.5 billion yuan in 2025, representing a year-on-year growth of 5.0%, with a net profit attributable to shareholders of 4.818 billion yuan, up 8.1% year-on-year [9] - The company expects to release additional production capacity, with a projected net profit of 9.280 billion yuan in 2026, reflecting a significant growth of 92.6% [2][9] - The report highlights the company's strong performance in the electrolytic aluminum sector, with a production capacity of 1.186 million tons in 2025, a slight increase of 0.8% year-on-year [9] Financial Forecasts - Revenue projections for 2026 are estimated at 36.589 billion yuan, with a growth rate of 24.0% [2] - The net profit attributable to shareholders is forecasted to reach 10.034 billion yuan in 2027, with a growth rate of 8.1% [2] - The earnings per share (EPS) is expected to increase from 1.04 yuan in 2025 to 2.00 yuan in 2026 [2] Production and Pricing Insights - The average aluminum price in 2025 was 20,721 yuan per ton, showing a year-on-year increase of 4.0% [9] - The company plans to release 200,000 tons of new electrolytic aluminum capacity, with full production expected by the first half of 2026 [9] - The report notes a significant improvement in profitability due to lower energy costs, with a decrease of approximately 23% in self-generated electricity costs [9] Dividend Policy - For the fiscal year 2025, the company plans to distribute a cash dividend of 2.5 yuan per 10 shares, resulting in a total cash dividend of 2.52 billion yuan, with a dividend payout ratio of 52.4% [9]

1. Report Industry Investment Rating - Aluminium: Cautiously bullish [9] - Alumina: Cautiously bullish [9] - Aluminium alloy: Cautiously bullish [9] - Arbitrage: Neutral [9] 2. Core View of the Report - The issue in the Middle East is tending to ease, but the reduction of electrolytic aluminium production in the Middle East has actually occurred, and there is still a possibility of further production cuts. Overseas consumption has not been substantially affected, and domestic aluminium rod and alloy inventories are declining, laying the foundation for future aluminium ingot destocking. The long - term outlook for fundamentals and macro - expectations remains optimistic [6]. - The export limit policy of bauxite in Guinea is yet to be clearly introduced. Although it is not clear whether it will cause a supply shortage, the policy - oriented price limit strengthens the support for alumina prices. The alumina supply - demand situation remains in surplus, and the price fluctuates with crude oil prices in the short term and will shift upward in the long term due to raw material disturbances [7][8]. 3. Summary by Related Catalogs Aluminium Spot - The price of East China A00 aluminium is 24,610 yuan/ton, with a change of 80 yuan/ton from the previous trading day, and the spot premium/discount is - 100 yuan/ton, with a change of - 10 yuan/ton from the previous trading day. The price of Central China A00 aluminium is 24,510 yuan/ton, and the spot premium/discount changes - 30 yuan/ton to - 200 yuan/ton. The price of Foshan A00 aluminium is 24,520 yuan/ton, with a change of 90 yuan/ton from the previous trading day, and the aluminium spot premium/discount changes - 5 yuan/ton to - 190 yuan/ton [1]. Aluminium Futures - On March 31, 2026, the main contract of Shanghai aluminium opened at 24,585 yuan/ton, closed at 24,875 yuan/ton, with a change of 350 yuan/ton from the previous trading day. The highest price reached 24,905 yuan/ton, and the lowest price was 24,580 yuan/ton. The trading volume was 357,773 lots, and the holding volume was 258,839 lots [2]. Aluminium Inventory - As of March 31, 2026, the domestic social inventory of electrolytic aluminium ingots was 1.373 million tons, with a change of 24,000 tons from the previous period. The warehouse receipt inventory was 416,607 tons, with a change of 4,155 tons from the previous trading day. The LME aluminium inventory was 416,775 tons, with a change of - 1,900 tons from the previous trading day [2]. Alumina Spot Price - On March 31, 2026, the SMM alumina price in Shanxi was 2,805 yuan/ton, in Shandong was 2,770 yuan/ton, in Henan was 2,810 yuan/ton, in Guangxi was 2,770 yuan/ton, in Guizhou was 2,810 yuan/ton, and the FOB price of Australian alumina was 315 US dollars/ton [2]. Alumina Futures - On March 31, 2026, the main contract of alumina opened at 2,931 yuan/ton, closed at 2,827 yuan/ton, with a change of - 102 yuan/ton from the previous trading day's closing price, a change rate of - 3.48%. The highest price reached 2,941 yuan/ton, and the lowest price was 2,825 yuan/ton. The trading volume was 399,634 lots, and the holding volume was 199,275 lots [2]. Aluminium Alloy Price - On March 31, 2026, the purchase price of Baotai civil raw aluminium was 18,400 yuan/ton, and the purchase price of mechanical raw aluminium was 18,800 yuan/ton, with no change from the previous day. The Baotai quotation of ADC12 was 24,200 yuan/ton, with no change from the previous day [3]. Aluminium Alloy Inventory - The social inventory of aluminium alloy was 44,900 tons, and the in - factory inventory was 80,400 tons [4]. Aluminium Alloy Cost and Profit - The theoretical total cost was 23,927 yuan/ton, and the theoretical profit was 273 yuan/ton [5].

1. Report Industry Investment Rating - No relevant content provided 2. Core Viewpoints of the Report - The attack on Middle Eastern aluminum plants has exposed the vulnerability of the global aluminum supply chain, leading to short - term price increases due to sentiment and expectations. However, the long - term price trend is determined by supply - demand fundamentals. The supply has reached the capacity ceiling, demand growth is moderate, and high inventory will suppress price increases. Short - term prices may be strong, but will face downward pressure in the long run [20]. 3. Summary by Directory Global Aluminum Supply Pattern - Global electrolytic aluminum supply is rigid with limited growth elasticity. In 2025, global production was about 74 million tons, a 1.65% year - on - year increase. The Middle East accounted for about 9% of global capacity. Overseas supply is in a fragile state with "easy reduction of existing capacity and difficulty in increasing new capacity". China's electrolytic aluminum industry has reached the 45 - million - ton capacity ceiling, with a 2025 operating capacity of 44.6075 million tons and a utilization rate of 96.5%. Global supply is in a tight balance, and regional supply disruptions will have a magnified impact [2]. Impact of Middle Eastern Events on the Global Aluminum Supply Chain - **Conduction Paths**: The attack impacts the global aluminum supply chain through three paths. Firstly, over 30% of Middle Eastern electrolytic aluminum capacity has stopped, affecting over 6% of global supply. Secondly, the blockage of the Strait of Hormuz has caused dual obstacles in raw material and finished - product logistics, deepening the supply impact from logistics to production. Thirdly, the复产 cycle is long, and the supply gap may be long - term due to the high - continuity and high - energy - consumption nature of electrolytic aluminum production [5]. - **Impact on Trade Flow**: The attack will restructure the global aluminum trade flow. It has intensified the expectation of spot supply shortage, leading to an increase in overseas spot premiums. European aluminum spot premiums have reached a record high, and the overseas aluminum premium has spread to Asia. It is expected that aluminum premiums will continue to rise [6][7]. Global Aluminum Demand Analysis - The demand for electrolytic aluminum is rigid in various industries, and its consumption structure is being reshaped. The proportion of aluminum used in construction has declined to about 15.8%, while that in transportation and power electronics has increased to 26.9% and 22.9% respectively. New - energy vehicles and AI data centers have created new demand growth. In the context of the Middle Eastern conflict, global primary aluminum supply growth is limited, while terminal demand remains resilient. It is estimated that there will be a supply gap of about 250,000 tons in the Chinese market in 2026 and about 820,000 tons in the overseas market, with a global supply gap of about 1.07 million tons [10]. - The consumption side has advanced its inventory - building behavior. The number of LME aluminum cancelled warehouse receipts has increased significantly, indicating a strong overseas consumption - side demand for提货 [11]. Outlook for the Domestic Electrolytic Aluminum Market - **Supply**: The domestic electrolytic aluminum capacity has reached the 45 - million - ton policy ceiling. In 2026, the operating capacity is expected to be about 44.59 million tons, with a utilization rate close to 100%. The annual effective new capacity is only about 590,000 tons, and the growth rate has slowed significantly [15]. - **Demand**: There is a structural transformation in demand. The proportion of aluminum used in construction is decreasing, while that in transportation (especially new - energy vehicles) and power electronics is increasing rapidly [15]. - **Inventory**: As of the end of March, the social inventory of electrolytic aluminum reached 1.3258 million tons, much higher than the average level in previous years. This is due to the slow resumption of downstream production after the Spring Festival and the high operating capacity of electrolytic aluminum [18]. - **Cost and Profit**: The high - profit state of the industry is unsustainable. High inventory and low acceptance of high prices by downstream enterprises will lead to price declines and erode profit margins [18]. - **Price Trend**: Short - term aluminum prices may be strong due to geopolitical conflicts, but lack fundamental support. In the long run, prices will face downward pressure. Investors should be rational and not over - pursue high prices [20][21].

Group 1: Production and Capacity - The Guinea bauxite project is currently in trial production, with an expected mining volume of approximately 1 million tons in 2025, benefiting from local cost advantages [4] - The company plans to produce 25,000 tons of aluminum foil and aluminum foil raw materials in 2026, with confidence in meeting these targets based on order production models [4] - The Xinjiang 1.4 million tons electrolytic aluminum energy efficiency improvement project has commenced, with the first batch of electrolytic cells powered on, aiming for an annual capacity increase to 1.4 million tons [4] Group 2: Financial Performance and Debt Management - The company's debt-to-asset ratio has decreased from 52% at the beginning of 2025 to 45.4%, with plans to continue reducing debt in 2026 while maintaining operational efficiency [5] - The actual dividend payout ratio for 2025 was 52.4%, with a commitment for 2026 to maintain a payout ratio of no less than 50% [5] Group 3: Energy and Cost Management - The cost of self-generated electricity decreased by approximately 23% year-on-year in 2025, while the cost of purchased electricity fell by about 17% [5] - The company expects a slight increase in average electricity costs in 2026 due to increased purchased electricity volume, but overall costs are projected to remain competitive due to high self-generation ratios and local coal cost advantages [5] Group 4: Strategic Projects and Investments - Future capital expenditures will focus on routine maintenance and strategic investments, particularly in the Indonesian alumina project, with estimated costs of $900 million to $1 billion for the first phase [6] - The company is actively preparing for the renewal of its high-tech enterprise certification, which is set to expire in 2026 [7] Group 5: Market Conditions and Risks - The geopolitical situation in the Middle East poses dual risks to the global aluminum supply chain, increasing concerns over supply disruptions and raising production costs for overseas electrolytic aluminum companies, particularly in Europe and the Middle East [7]

Investment Rating - The report maintains a "Recommendation" rating for Tianshan Aluminum [2][8] Core Views - Tianshan Aluminum achieved record high performance driven by both volume and price increases, with a target price set at 21.5 yuan [2][8] - The company reported a total revenue of 29.502 billion yuan for 2025, representing a year-on-year growth of 5.03%, and a net profit attributable to shareholders of 4.818 billion yuan, up 8.13% year-on-year [7][9] - The company plans to distribute a cash dividend of 2.5 yuan per 10 shares, totaling 2.524 billion yuan, with a dividend payout ratio of 52.40% [7][9] - For Q1 2026, the company expects a net profit of 2.2 billion yuan, a significant increase of 107.92% year-on-year [7][9] - The average selling price of self-produced electrolytic aluminum was approximately 20,600 yuan per ton, up about 4% year-on-year, while the average selling price of self-produced alumina decreased by about 14% to 3,400 yuan per ton [7][9] - The company’s production costs for electrolytic aluminum decreased by about 7%, with self-generated electricity costs down by 23% and purchased electricity costs down by 17% [7][9] - The company’s asset quality continues to improve, with a debt-to-asset ratio reduced to 45.40%, down 7 percentage points year-on-year [7][9] - Tianshan Aluminum's production of major products reached historical highs, with electrolytic aluminum production at 1.1858 million tons, up approximately 0.84% year-on-year, and alumina production at 2.5154 million tons, up 10.38% year-on-year [7][9] - The company is advancing its upstream and downstream projects, enhancing its integrated advantages [7][9] - The report forecasts net profits for 2026-2028 to be 9.04 billion yuan, 9.928 billion yuan, and 10.547 billion yuan, respectively, with significant year-on-year growth rates [8][9]

Investment Rating - The report maintains a "Recommended" rating for the company [2] Core Insights - The company reported a revenue of 60.4 billion yuan in 2025, a year-on-year increase of 10.3%, and a net profit attributable to shareholders of 6.06 billion yuan, up 37.2% year-on-year [8] - The company plans to distribute a cash dividend of 3.79 yuan per 10 shares, with a total cash dividend of 2.42 billion yuan for 2025, resulting in a dividend payout ratio of 39.9%, an increase of 7.7 percentage points year-on-year [8] - The company recorded an asset impairment provision of 320 million yuan in 2025, primarily in Q4, affecting fixed assets due to upgrades and dismantling [8] - The company’s aluminum production capacity is 3.08 million tons, with alumina production capacity at 1.4 million tons. The aluminum product output reached 3.226 million tons, a 6.5% increase year-on-year [8] - The average aluminum price in 2025 was 20,721 yuan per ton, a 4.0% increase year-on-year [8] - The company’s gross profit margin was 16.8% in 2025, with a net profit margin of 12.2% [8] Financial Forecasts - Revenue is projected to reach 69.99 billion yuan in 2026, with a growth rate of 16.6%, and net profit is expected to be 13.1 billion yuan, reflecting a growth rate of 116.3% [2] - The company’s earnings per share (EPS) is forecasted to be 3.78 yuan in 2026, with a price-to-earnings (P/E) ratio of 8 [2] - The company’s return on equity (ROE) is expected to be 32.76% in 2026 [9]

Core Viewpoint - The recent missile and drone attacks on aluminum plants in Bahrain and the UAE have significantly impacted global aluminum supply, shifting the situation from logistical disruptions to a dual pressure of capacity damage and raw material chain limitations [4][39]. Group 1: Incident Overview - On March 28, 2026, the Askar aluminum plant in Bahrain and the Al Taweelah aluminum plant in the UAE were attacked, with respective annual capacities of 1.6 million tons and 1.5 million tons [4][8]. - The Al Taweelah complex has reported severe damage, likely indicating a scenario of substantial operational disruption [39]. Group 2: Impact Scenarios - Three scenarios were analyzed regarding the potential impact on production: - **Scenario A**: Minor damage to auxiliary equipment, leading to a production decrease of 112,500 tons, shifting global supply from a surplus of 170,000 tons to a surplus of 50,000 tons [6][34]. - **Scenario B**: Damage to core electrical systems, resulting in a production decrease of 750,000 tons, potentially extending the recovery period to 6-12 months [29][39]. - **Scenario C**: Significant damage to electrolytic cells, leading to a production decrease of 2.3 million tons, with a shift from a surplus to a shortage of 2.13 million tons [6][34]. Group 3: Regional Aluminum Industry Context - In 2025, the Middle East's six countries produced 6.927 million tons of electrolytic aluminum, accounting for approximately 9.25% of global production and 23.4% of non-Chinese production [9]. - The region's aluminum industry benefits from energy and port advantages, with significant reliance on imports of alumina and bauxite through the Strait of Hormuz [9]. Group 4: Market Implications - The attacks are expected to provide stronger support for aluminum prices, with a potential divergence in the domestic and international aluminum markets, characterized by tight external conditions and looser internal conditions [39]. - The aluminum market will need to closely monitor the actual production disruptions resulting from the attacks [39].

Investment Rating - The investment rating for the company is "Outperform the Market" [6][4] Core Views - The company's revenue for 2025 is projected to be 34.62 billion yuan, a year-on-year increase of 3.41%, while the net profit attributable to the parent company is expected to be 4.736 billion yuan, a decrease of 2% year-on-year [10][4] - The decline in performance for 2025 is primarily attributed to the drop in alumina prices, despite a significant increase in production capacity from the Indonesian alumina project [11][10] - The company plans to distribute a cash dividend of 1.36 yuan per 10 shares, leading to a total cash dividend distribution of 4.995 billion yuan, resulting in a cumulative cash dividend ratio of 105.49% for the year [10][4] Financial Performance Summary - In 2025, the company achieved a gross margin of 25.20%, a decrease of 1.99 percentage points year-on-year, and a net profit margin of 16.77%, down 1.02 percentage points year-on-year [2][15] - The company's asset-liability ratio improved to 19.28% by the end of 2025, a decrease of 0.7 percentage points from the end of 2024 [19][2] - The sales volume of alumina powder reached 4.144 million tons in 2025, with a significant contribution from the Indonesian alumina production, while the sales volume of electrolytic aluminum decreased by 7% year-on-year [3][21] Earnings Forecast and Financial Indicators - The company’s projected revenues for 2026-2028 are 34.427 billion yuan, 37.542 billion yuan, and 38.082 billion yuan, with year-on-year growth rates of -0.6%, +9.0%, and +1.4% respectively [4][5] - The net profit attributable to the parent company is expected to grow significantly in the coming years, reaching 6.331 billion yuan in 2026, 7.527 billion yuan in 2027, and 8.082 billion yuan in 2028, with growth rates of 33.7%, 18.9%, and 7.4% respectively [4][5] - The diluted EPS for the same period is forecasted to be 0.55 yuan, 0.66 yuan, and 0.70 yuan, with corresponding P/E ratios of 10.9, 9.2, and 8.5 [4][5]