Gf Securities has released a research report indicating that rising aluminum prices have boosted profits for CHINAHONGQIAO (01378). The firm forecasts earnings per share for CHINAHONGQIAO for 2026-2028 to be RMB 3.31, RMB 3.34, and RMB 3.36 per share, respectively. Based on comparable company valuations, a 2026 price-to-earnings ratio of 12 times is applied, deriving a reasonable value of HKD 45.15 per share. The "Buy" rating is maintained.
The report highlights that the company's net profit attributable to shareholders saw a slight year-on-year increase in 2025, meeting expectations. CHINAHONGQIAO's 2025 performance announcement showed revenue reached RMB 162.4 billion, a 4.0% increase year-on-year, while net profit attributable to shareholders was RMB 22.6 billion, up 1.2% year-on-year. The share of profit from associates was RMB 2.63 billion, a significant 50% increase. A decrease in fixed asset impairments led to a 58% reduction in other expenses, which fell to RMB 1.22 billion. By the end of 2025, the company's asset-liability ratio had decreased by 6.0 percentage points to 42.2%.
In 2025, sales volume for the company's primary aluminum products remained stable, and rising aluminum prices contributed to an increase in gross profit. According to the 2025 results, sales volumes for aluminum alloy, alumina, and deep-processed aluminum products were 5.82 million tons, 13.40 million tons, and 0.72 million tons, respectively, representing changes of -0.2%, +54%, and -3% year-on-year. The average selling prices per ton for aluminum alloy and alumina were RMB 18,217 and RMB 2,899, up 4% and down 15% year-on-year, respectively. The cost per ton was RMB 13,034 and RMB 2,256, down 1% and 18% year-on-year, resulting in gross profit per ton of RMB 5,183 and RMB 643, representing increases of 20% and a decrease of 1%, respectively.
CHINAHONGQIAO continued its high dividend distribution policy in 2025. The company announced a proposed final cash dividend of HKD 1.65 per share for 2025, a 2.5% increase year-on-year. Based on the latest share capital, the cash dividend payout ratio reached 64%.
The report also outlines risk factors, including potential weaker-than-expected downstream demand, overseas primary aluminum production exceeding expectations, and costs for bauxite, anodes, and electricity rising more than anticipated. Increased supply of recycled aluminum is also noted as a potential risk.
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