Core Insights - Hongqiao's net profit for 1H25 reached RMB12.3 billion, reflecting a 35% year-on-year increase, aligning with previously announced profit figures [1] - Core net profit, excluding fair value losses from convertible bonds, is estimated at RMB14.9 billion, marking a 42% year-on-year growth [1] - The company did not propose interim dividends, a departure from its historical practice, but initiated a new share buyback scheme with a minimum expenditure of HK$3 billion, indicating management's confidence [1] - Earnings forecasts for 2025E-27E have been revised upward by 12-14% due to higher aluminum prices and lower coal price assumptions [1] - Target price has been adjusted to HK$27 from HK$20.6, based on an 8.6x P/E ratio, which is 1 standard deviation above the historical average [1] Revenue Breakdown - Aluminum alloy products, which account for 64% of revenue, saw a revenue increase of approximately 5% year-on-year to RMB51.9 billion, with sales volume up 2.4% to 2.91 million tonnes and average selling price (ASP) rising 2.7% to RMB17,853 per tonne [2] - The alumina segment, contributing 26% of revenue, experienced a significant revenue surge of around 28% year-on-year to RMB20.7 billion, with sales volume increasing by 10% to 6.37 million tonnes and ASP up 5% to RMB3,243 per tonne [2] - The aluminum fabrication products segment, making up 10% of revenue, reported a 6.5% year-on-year revenue increase to RMB8 billion, with sales volume rising 3.4% to 392 million tonnes and ASP increasing by 2.9% to RMB20,615 per tonne [3] Share Buyback and Earnings Sensitivity - Hongqiao has been actively engaged in share buybacks, completing approximately 62.3 million shares (0.67% of total outstanding shares) in 1Q25, followed by a new buyback plan of RMB2 billion announced in April and an additional plan for at least RMB3 billion [4] - The buyback represents 1.4% of total shares and 4.5% of free float shares, with execution allowed until May 2026 [4] - Earnings sensitivity analysis indicates that a 1% increase in aluminum prices could boost earnings by 3%, while a 1% decrease in coal prices could increase earnings by 0.5% [4]

Summary of China Hongqiao's 1H25 Earnings Call Company Overview - **Company**: China Hongqiao (1378.HK) - **Period**: 1H25 Key Financial Metrics - **Net Profit**: Rmb12.4 billion, up 35% YoY, down 6% HoH [1] - **Total NPAT**: Rmb13.6 billion, up 35% YoY [1] - **Total Revenue**: Up 10% YoY, down 2% HoH [1] - **Gross Profit Margin**: 26%, up 1ppt YoY, down 4ppt HoH [1] - **Operating Profit**: Rmb18.1 billion, up 21% YoY, down 16% HoH [1] - **Recurring Net Income**: Rmb14.7 billion, up 30% YoY [1] - **Interim Dividend**: No dividend declared, compared to HK$0.59/share in 1H24 [1] Aluminum Segment Performance - **Aluminum Revenue**: Up 5% YoY [2] - **Aluminum Sales Volume**: 3.3 million tons, up 3% YoY, down 3% HoH [2] - **Average Selling Price (ASP)**: Rmb18,178/ton, up 3% YoY, up 1% HoH [2] - **Unit Cost**: Rmb13,639/ton, up 2% YoY, up 1% HoH [2] - **Gross Profit per ton**: Rmb4,540/ton, up 6% YoY, up 1% HoH [2] - **Total Aluminum Gross Profit**: Rmb15.0 billion, up 9% YoY, down 2% HoH [2] Alumina Segment Performance - **Alumina Revenue**: Up 28% YoY [3] - **Alumina Sales Volume**: 6.4 million tons, up 16% YoY, up 18% HoH [3] - **Average Selling Price (ASP)**: Rmb3,244/ton, up 10% YoY, down 17% HoH [3] - **Unit Cost**: Rmb2,310/ton, up 5% YoY, up 4% HoH [3] - **Gross Profit per ton**: Rmb934/ton, up 25% YoY, down 45% HoH [3] - **Total Alumina Gross Profit**: Rmb5.9 billion, up 44% YoY, down 35% HoH [3] Cash Flow and Gearing - **Net Gearing**: 28%, down 3ppt YoY, up 6ppt HoH [4] - **Operating Cash Flow (OCF)**: Rmb22 billion, up 56% YoY, up 13% HoH [4] - **Free Cash Flow (FCF)**: Rmb12.4 billion, up 43% YoY, down 2% HoH [7] Shareholder Returns and Valuation - **Share Repurchase Plan**: Proposed total amount not less than HK$3 billion, reflecting confidence in long-term value [7] - **Current Trading Metrics**: 8.7x 2025E P/E, 1.7x 2025E P/B [7] - **Target Price**: HK$25.20, implying a 7.8% expected share price return and 7.4% expected dividend yield [5][14] Risks - **Major Risks**: 1. Cost and capex overruns [15] 2. Higher-than-expected capacity addition in the industry [15] 3. Significant slowdown in the Chinese economy [15] Conclusion - **Investment Recommendation**: Maintain as a Top Pick, with further insights expected post-results presentation on 18th Aug [1][7]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Aluminum Industry in China - **Market Dynamics**: The China aluminum market is transitioning into a new era where global high-cost producers are setting price support, while China's cost advantages are expected to widen due to lower power tariffs and coal costs [1][36][60]. Price Forecasts - **Long-term Price Objective**: The long-term price forecast for China aluminum has been raised to RMB20,000/ton from RMB19,000/ton, with a medium-term price floor expected at RMB19,800/ton (US$2,400/ton) [1][36][61]. - **2025 Price Forecast**: The aluminum price forecast for 2025 has been increased to RMB20,500/ton, reflecting a tight market and low inventory levels [1][25][61]. Demand and Supply Dynamics - **Demand Growth**: China aluminum demand is projected to grow at 2-3% YoY in 2H25-26E, driven by strong grid demand and automotive lightweighting, despite a slowdown in the property and solar sectors [2][24][29]. - **Supply Constraints**: China's aluminum production capacity is nearing a cap of 45 million tons, with operating capacity already at 44.2 million tons. Future supply growth will increasingly rely on imports [1][26][35]. - **Global Supply**: There is a global pipeline of 7.5 million tons of new capacity, but ramp-up may be slower than expected due to power and infrastructure uncertainties, particularly in Indonesia [2][27]. Company-Specific Insights - **Top Picks**: Hongqiao and Chalco are identified as top picks due to their strong cash flows, decent dividend yields (8% for Hongqiao, 5% for Chalco), and cost advantages [3][62]. - **Earnings Estimates**: - Hongqiao's 2025 EPS has been raised by 10% to RMB2.63, with a price objective increased to HKD26 from HKD20 [3][61]. - Chalco's 2025 EPS has been raised by 14% to RMB0.76, with price objectives for Chalco-H and Chalco-A increased to HKD8.0 and RMB9.0, respectively [3][6][61]. Cost Structure and Margins - **Cost Advantage**: China's C1 cash cost is 5% lower than the global average, with expectations for this advantage to widen in 2025 due to lower power costs [1][36][45]. - **Margin Expectations**: The expected margin for low-cost integrated producers like Hongqiao and Chalco is projected to be RMB3,000-4,000/ton, significantly above the long-term average of RMB1,000-2,000/ton [1][24][60]. Risks and Considerations - **Policy Uncertainty**: The revocation of mining licenses in Guinea has led to policy uncertainty, which may affect bauxite prices and alumina costs [2][33]. - **Recycled Aluminum**: While recycled aluminum production is increasing, it is not expected to offset the structural deficit in the near term [28]. Conclusion - The aluminum market in China is characterized by tight supply, strong demand, and favorable cost dynamics for key producers. The outlook for Hongqiao and Chalco remains positive, supported by strong cash flows and dividend yields, amidst a backdrop of rising aluminum prices and constrained supply.

Core Insights - Century Aluminum Company (CENX) reported a loss of 5 cents per share for Q2 2025, missing the Zacks Consensus Estimate of 34 cents and showing a decline from a loss of 3 cents in the prior year quarter and earnings of 29 cents in the previous quarter [1][7] Revenue and Shipments - The company achieved net sales of $628.1 million, reflecting a 12% year-over-year increase, but fell short of the Zacks Consensus Estimate of $650.7 million. Sequentially, sales decreased by 0.9% due to lower third-party alumina sales, although this was partially offset by favorable regional premium prices, volumes, and mix. Primary aluminum shipments totaled 175,741 tons, up approximately 4.7% year over year [2][7] Financials - At the end of Q2 2025, CENX had cash and cash equivalents of $40.7 million, a decrease of 9.4% from the previous quarter. The net cash provided by operating activities for the six months ending June 30, 2025, was $80.2 million [3] Q3 Outlook - The company anticipates adjusted EBITDA for Q3 2025 to be between $115 million and $125 million, driven by increased realization of Midwest regional premium [4][7] Stock Performance - CENX shares have increased by 74.6% over the past year, significantly outperforming the industry growth of 31.9% [5]

Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: Aluminium and Alumina - **Geographical Focus**: Indonesia, China, India, and global markets Aluminium Market Insights - **Supply and Demand Outlook**: - Primary aluminium demand growth is expected to be around 2.5% for 2024/25, slightly below the trend of 3-4% [2] - Supply growth is anticipated to match demand, leading to a modest surplus in the global aluminium market [2] - Limited supply growth is expected due to China smelter run rates being at the 45 million tonnes (mt) cap, with potential projects in Indonesia, India, Middle East, and Africa contributing modestly over the next 2-3 years [2][8] - The LME price is above the cost curve, indicating an improving supply and demand outlook [2] - **Investment Recommendations**: - Preferred stocks for aluminium exposure include Hydro and Press Metal (BUY) while Alcoa and S32 are rated Neutral [1] - **Medium-Term Price Risks**: - Limited scope for the industry to quickly lift supply when demand improves, resulting in tighter markets and medium-term price risks skewed to the upside [2] Alumina Market Insights - **Price Trends**: - After a sharp decline in the first half of 2025, alumina prices have bounced back, trading between $370-380 per tonne [3][41] - Prices are expected to remain anchored to the cost curve due to significant overcapacity in China and additional supply from Indonesia and India [3][41] - **Supply Outlook**: - China is expected to add 7-10 million tonnes of new capacity in 2025, contributing to overcapacity [3] - Approximately 6 million tonnes of projects are ramping up in Indonesia, with an additional 2.5 million tonnes in India [3][35] Indonesia's Role in Aluminium Supply - **Capacity Additions**: - Indonesia is expected to be a significant contributor to global supply growth, with 2.2 million tonnes of new aluminium supply projected over the next 3-4 years [10][22] - Current projects in Indonesia are constrained by insufficient land and power, limiting overwhelming growth in supply [10][15] - **Power Constraints**: - Aluminium smelting is power-intensive, requiring approximately 15 terawatt-hours (TWh) of power for 1 million tonnes of capacity [11][13] - The planned 2.2 million tonnes of aluminium smelters would consume about 40% of the power currently used by the nickel industry, necessitating a 10% growth in national power output over 3-4 years [13] Risks and Considerations - **Alumina Supply Risks**: - The combination of additional supply from Indonesia and overcapacity in China is likely to limit sustainable upside in alumina prices [3][41] - Potential disruptions in bauxite supply from Guinea could create upside risks for alumina prices, but sustained tightness is not the central case [34] - **Market Dynamics**: - The aluminium market is closely monitoring the evolution of Indonesia's industrial parks and smelter project pipeline, with measured growth in aluminium supply expected rather than overwhelming growth [15] Conclusion - The aluminium market is characterized by limited supply growth and a positive fundamental outlook, while the alumina market faces challenges from overcapacity and price volatility. Indonesia's role as a growing supplier is significant, but power constraints and project development challenges may temper expectations for rapid supply increases.

Core Viewpoint - China Hongqiao Group Limited (CHGL) is initiated with an OUTPERFORM rating and a target price of HK$23.62, implying an 8.0x 2025 estimated P/E ratio [1] Investment Positives - CHGL is a leader in the aluminum industry with an integrated presence across the green aluminum value chain, focusing on high-quality green development [2] - The company has established a green ecosystem through optimizing energy structure, advancing green energy projects, and developing a circular industry to meet China's carbon neutrality goals [2] Raw Material Self-Sufficiency - CHGL has a high self-sufficiency ratio in raw materials, with a bauxite production base in Guinea (60 million tons annually) and alumina production capacity of 17.5 million tons in Shandong, China, and 2 million tons in Indonesia [3] Energy Optimization and Production Capacity - The company is relocating aluminum production capacity to Yunnan province, aiming to increase its exposure to green power-based aluminum to 46% [4] Downstream Expansion - CHGL is expanding into lightweight automotive materials to further develop a green and recycling industry [5] Market Opportunities - The aluminum sector is expected to present investment opportunities due to a supply shortage, with proactive fiscal and monetary policies likely to improve macro expectations and boost aluminum prices [6] Competitive Advantages - CHGL has four key competitive advantages: substantial upside potential in profit and valuation, high self-sufficiency in raw materials, a high dividend payout ratio (62%) and yield (8.9% in 2024), and a focus on building a green aluminum value chain [7] Differentiation from Market - Unlike the market's focus on earnings driven by price hikes, CHGL's high self-sufficiency and transformation towards a green value chain may enhance product competitiveness and valuation premium [8] Financial Projections - Expected EPS for 2025 and 2026 are Rmb2.63 and Rmb2.70, indicating a CAGR of 6%, with the stock trading at 6.8x 2025e and 6.5x 2026e P/E [8]

Core Insights - Alcoa Corporation's recent financial performance reflects the changing dynamics of the aluminum industry amid fluctuating commodity prices and geopolitical uncertainties [1] Financial Performance - Alcoa reported total third-party revenue of $3.0 billion for the second quarter, representing a 10% sequential decrease [1] - The adjusted EBITDA for the second quarter of 2025 was $313 million, surpassing Bank of America's estimate of $278 million and Bloomberg's consensus of $292 million [3] - Full-year 2025 EBITDA is now projected at $1.87 billion, an increase from the previous estimate of $1.62 billion, with earnings per share expected to rise to $3.19 from $2.52 [7] Segment Performance - In the Alumina segment, third-party revenue decreased by 28% due to a decline in average realized prices, although this was partially offset by increased shipments [2] - The Aluminum segment's EBITDA outperformed expectations, likely due to lower energy costs and an improved product mix [3] Future Outlook - For the third quarter of 2025, Alcoa anticipates a $30 million sequential benefit, net of tariffs, and has raised third-quarter EBITDA estimates to $328 million from $205 million [6] - The company expects alumina prices to be supported by widespread curtailments in China, where over 80% of refineries are unprofitable, despite risks from new supply in Indonesia or India [5] Analyst Ratings - BofA analyst Lawson Winde reiterated an Underperform rating on Alcoa but raised the price forecast from $26 to $27 [2][4]

Financial Performance - Alcoa reported 2Q25 Earnings Per Share (EPS) of $0.62 and Adjusted EPS of $0.39[22] - Adjusted EBITDA excluding special items decreased from $855 million in 1Q25 to $313 million in 2Q25, a decrease of $542 million[22] - Net income attributable to Alcoa Corporation decreased from $548 million in 1Q25 to $164 million in 2Q25, a decrease of $384 million[22] - Adjusted net income attributable to Alcoa Corporation decreased from $568 million in 1Q25 to $103 million in 2Q25, a decrease of $465 million[22] - The company's YTD capital returns to stockholders totaled $53 million[29] - The company's 2Q25 cash balance was $15 billion[29] Market Dynamics - Realized primary aluminum price decreased from $3,213 per metric ton in 1Q25 to $3,143 per metric ton in 2Q25, a decrease of $70 per metric ton[22] - Realized alumina price decreased significantly from $575 per metric ton in 1Q25 to $378 per metric ton in 2Q25, a decrease of $197 per metric ton[22] - Tariffs negatively impacted Adjusted EBITDA by $95 million in 2Q25[24] - The final sale of Ma'aden was valued at $135 billion, with shares valued at $12 billion[17] Production and Shipments - Alumina production for YTD 2Q25 was 47 million metric tons, with a FY25 outlook of 95 – 97 million metric tons[30] - Alumina shipments for YTD 2Q25 were 65 million metric tons, with a FY25 outlook of 131 – 133 million metric tons[30] - Aluminum production for YTD 2Q25 was 11 million metric tons, with a FY25 outlook of 23 – 25 million metric tons[30] - Aluminum shipments for YTD 2Q25 were 12 million metric tons, with a FY25 outlook of 25 – 26 million metric tons[30]

Company Overview - Alcoa is set to announce its earnings on July 16, 2025, with consensus earnings estimated at approximately $0.51 per share and revenues projected to increase by nearly 2% year-over-year [2] - The company has a current market capitalization of $7.9 billion and reported revenue of $13 billion over the past twelve months, with operating profits of $1.6 billion and net income of $860 million [3] Earnings Expectations - The earnings expectations are influenced by tariff disruptions, mixed performance among business units, and uncertain aluminum demand, slightly offset by strong alumina margins and effective internal cost management [2] - The Alumina segment is expected to remain robust due to steady demand and advantageous cost structures, while the Aluminum segment faces challenges from elevated costs and weak global pricing [2] Historical Performance - Over the last five years, Alcoa has documented 19 earnings data points, with positive one-day (1D) returns observed approximately 32% of the time, which declines to 25% over the last three years [5] - The median of the six positive returns is 3.1%, while the median of the thirteen negative returns is -5.4% [5]

Core Viewpoint - Alcoa Corporation (AA) and Constellium SE (CSTM) are key players in the aluminum sector, with high aluminum prices driven by global economic uncertainties and trade tensions, making them relevant for investors in the Zacks Metal Products - Distribution industry [1] Group 1: Industry Overview - Aluminum has gained attractiveness as an investment due to the rising demand for lighter and energy-efficient electric vehicles, recycled aluminum, and rechargeable batteries, alongside a recovery in global air travel boosting demand for aluminum alloys [2] - The demand for aluminum is increasing as industries focus on sustainability and efficiency [2] Group 2: Alcoa Corporation (AA) - Alcoa's Aluminum segment is expected to produce 2.3-2.5 million tonnes in 2025, with shipments anticipated between 2.6-2.8 million tonnes, despite recent challenges [6] - The Alumina segment is benefiting from the popularity of its low-carbon EcoLum primary aluminum, with production expected to be 9.5-9.7 million tonnes and shipments likely at 13.1-13.3 million tonnes in 2025 [7] - Alcoa's strategic actions, including the acquisition of Alumina Limited, aim to enhance its position as a leading bauxite and alumina producer, providing long-term value creation [8] - Alcoa's third-party shipments of alumina declined by 8% in Q1 2025, and total shipments from the Aluminum segment decreased by 5% sequentially [5] Group 3: Constellium SE (CSTM) - Constellium's Packaging & Automotive Rolled Products segment saw a 2% year-over-year increase in shipments to 269,000 metric tons in Q1 2025, with revenues rising 17% to $1.2 billion [9] - Total revenues for Constellium increased by 5% to $2 billion compared to the prior-year quarter, driven by strong demand and higher metal prices [10] - Constellium is investing in its production capacity and recycling capacity in France to leverage its market position [11][12] - The company has a share repurchase program of up to $300 million, with approximately $206 million remaining as of Q1 2025 [13] Group 4: Financial Performance and Estimates - The Zacks Consensus Estimate for Alcoa's 2025 sales implies a year-over-year growth of 4.3%, while EPS estimates indicate a significant increase of 164.4%, although estimates have been trending downward [15] - In contrast, Constellium's 2025 sales and EPS estimates imply year-over-year growth of 7.2% and 184.2%, respectively, with EPS estimates increasing over the past 60 days [16] - Alcoa's shares have lost 32.7% in the past six months, while Constellium's stock has gained 6.6% [18] - Alcoa is trading at a forward P/E ratio of 9.12X, below its three-year median of 14.47X, while Constellium's forward earnings multiple is at 9.54X, close to its median of 9.51X [19] Group 5: Conclusion - Alcoa's strength in electrical and packaging markets is hindered by production constraints and lower shipments, leading to cautious earnings estimates [21] - Constellium's robust performance in the Packaging & Automotive segment, along with growth investments and favorable earnings estimates, positions it as a more attractive investment option compared to Alcoa [22]