GF Securities issued a research report stating that rising aluminum prices will enhance company profits. It forecasts China Hongqiao's earnings per share for 2025-2027 at RMB 2.20, RMB 3.28, and RMB 3.29 per share, respectively. Based on comparable company valuations, a 12x P/E ratio for 2026 is applied, deriving a target price of HK$44.25 per share, thus maintaining a "Buy" rating. (Exchange rate: HK$1 = RMB 0.89)

The key points from GF Securities are as follows:

Rising aluminum prices are expected to drive profit flexibility for the company. Against a backdrop of improving demand for primary aluminum, strong constraints on supply will become more pronounced, making the upward potential of aluminum prices significant. According to media reports, the average price of Shanghai aluminum futures in 2025 was RMB 20,750 per ton (including tax), a year-on-year increase of 4%. As of February 8, 2026, the average price for 2026 Shanghai aluminum futures had already reached RMB 24,117 per ton (including tax). Based on China Hongqiao's financial reports and the credit rating report of its subsidiary, Shandong Hongqiao New Materials Co., Ltd., the company had a primary aluminum production capacity of 6.459 million tons as of the end of March 2025, with stable production and sales and declining costs. The rising aluminum prices in 2026 are anticipated to be a key driver of the company's core profit flexibility.

Continuation of a high dividend payout ratio is anticipated. Media reports indicate the company's annual cash dividend payout ratios for 2022-2024 were 49%, 48%, and 64%, respectively. Assuming an aluminum price of RMB 23,000 per ton including tax, the company's net profit attributable to shareholders in 2026 could reach RMB 32.74 billion. Assuming the 64% dividend payout ratio continues, the calculated dividend yield based on the market capitalization as of February 9 would be 6.7%.

Risk warnings include potential downside risks in downstream demand, overseas primary aluminum production exceeding expectations, costs for bauxite, anodes, and electricity rising more than anticipated, and supply of recycled aluminum exceeding expectations.