Shenwan Hongyuan has issued a research report maintaining an "Overweight" rating on China Hongqiao (01378). The company is a primary aluminum producer with significant integrated advantages, leading overseas bauxite resource deployment, and high self-sufficiency rates in alumina and power. Against the backdrop of China's increasing reliance on imported bauxite, the company's cost advantages are prominent.
The company's dividend payout ratio for 2025 is approximately 65.4%, continuing a high payout policy that underscores its value as a high-dividend stock. With domestic primary aluminum capacity approaching its ceiling and potential for further tightening in global primary aluminum supply in 2026 due to Middle East conflicts, aluminum price trends are expected to strengthen. Consequently, profit forecasts for 2026 and 2027 have been raised, and a new forecast for 2028 has been added. Net profit attributable to shareholders is now projected at RMB 32.2 billion, RMB 34.4 billion, and RMB 37.8 billion for 2026, 2027, and 2028, respectively. This corresponds to price-to-earnings ratios of 10x, 9x, and 8x.
Key points from Shenwan Hongyuan are as follows: The company announced its 2025 annual results, which were in line with expectations. Revenue reached RMB 162.354 billion, a year-on-year increase of 4.0%, while net profit attributable to shareholders was RMB 22.636 billion, up 1.2% year-on-year. The growth was primarily driven by increases in the sales price of aluminum alloy products, sales volume of alumina, and both sales volume and price of aluminum alloy processed products.
Several projects commenced operation in 2025, leading to growth in both volume and price of key products. Yunnan Honghe New Material Co., Ltd. successfully launched the world's first large-scale application of the NEUI600+ super electrolyzer production line. Additionally, Yunnan Hongyan New Material Co., Ltd.'s project for an annual output of 250,000 tons of high-precision aluminum alloy flat ingots officially began production.
Sales data for the year showed aluminum alloy product sales of 5.824 million tons, largely flat year-on-year, with an average selling price of RMB 18,216 per ton, up 3.8%. Alumina product sales reached 13.397 million tons, an increase of 22.7%, with an average selling price of RMB 2,899 per ton. Sales of deep-processed aluminum alloy products were 716,000 tons, also largely unchanged, with an average selling price of RMB 20,874 per ton.
A final dividend of 165 HK cents per share for 2025 has been proposed, representing a payout ratio of approximately 65.4%. The ex-dividend date is set for May 22, 2026. Based on the share capital and exchange rate as of December 31, 2025, this payout ratio compares to the approximately 63% ratio for 2024. The dividend yield is approximately 4.5% based on the closing price on April 1, 2026. Throughout 2025, the company repurchased and canceled a total of 306 million shares at a cost of HKD 5.58 billion.
Risk factors include potential underperformance in downstream demand for primary aluminum, significant fluctuations in raw material costs, and faster-than-expected commissioning of overseas primary aluminum capacity.
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