Western Securities has issued a research report stating that China Hongqiao (01378) is expected to report year-on-year growth in both revenue and profit for 2025. After adjusting for changes in the fair value of financial instruments, the net profit attributable to shareholders is projected to exceed 26 billion yuan, surpassing expectations. As the company's capital expenditures decline, the brokerage anticipates that its future net operating cash flow will become more robust. Earnings per share for 2026-2028 are forecasted at 3.24, 3.50, and 3.78 yuan, respectively, with corresponding price-to-earnings ratios of 9, 9, and 8 times. The "Buy" rating is reaffirmed.
Key points from Western Securities are as follows: The company released its 2025 annual report, showing revenue of 162.354 billion yuan, a 3.96% increase year-on-year, and net profit attributable to shareholders of 22.636 billion yuan, up 1.18% year-on-year. A dividend of 1.65 Hong Kong dollars per share has been proposed. After adjusting for the fair value changes of financial instruments, performance met expectations, with net operating cash flow being particularly strong.
According to the 2025 annual report, the fair value change of financial instruments, primarily impacted by the market value fluctuation of convertible bonds, was -3.782 billion yuan. Adding back this amount, net profit attributable to shareholders would exceed 26 billion yuan, outperforming forecasts. In terms of profitability, the gross profit margin for 2025 was 25.56%, and the net profit margin was 14.88%. The asset-liability ratio stood at 42.25%, down 5.99 percentage points year-on-year. Net operating cash flow reached 38.995 billion yuan, reflecting a 14.75% increase.
Notably, capital expenditures for 2025 were 10.657 billion yuan, with future capital commitments for plant construction at 5.833 billion yuan. Both figures declined compared to 2024, when capital expenditures were 12.609 billion yuan and future commitments were 7.455 billion yuan. This trend suggests that the company's net operating cash flow will strengthen further.
By business segment: 1) Aluminum alloy sales volume was 5.824 million tons, flat year-on-year. The average selling price was 18,216 yuan per ton (excluding tax), up 3.8% year-on-year. Revenue reached 106.096 billion yuan, a 3.6% increase, with a gross profit margin of 28.5%, up 3.9 percentage points. 2) Alumina sales volume was 13.397 million tons, rising 22.7% year-on-year. The average selling price was 2,899 yuan per ton (excluding tax). Revenue amounted to 38.834 billion yuan, up 4.0% year-on-year, with a gross profit margin of 22.2%. 3) Aluminum alloy processing sales volume for deep-processed products was 716,000 tons, unchanged year-on-year. The average selling price was 20,874 yuan per ton (excluding tax), increasing 3.1% year-on-year. Revenue reached 14.956 billion yuan, up 4.0% year-on-year, with a gross profit margin of 19.2%.
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