Citi has maintained its "Buy" rating on CHINAHONGQIAO (01378) and raised its target price from HK$25.2 to HK$36, reiterating the stock as its top pick. The company’s management reaffirmed its commitment to enhancing shareholder returns through dividends and share buybacks.

According to management, CHINAHONGQIAO is actively pursuing cleaner power supply solutions in China, a strategy also adopted by its peer Aluminum Corporation of China. Meanwhile, the company’s chairman remains cautious about the expansion prospects of aluminum capacity in Indonesia.

Citi remains bullish on the aluminum sector, viewing it as one of its most favored industries. The bank expects aluminum supply to stay tight due to China’s production cap policy (annual capacity of 45.2 million tons) and limited explosive capacity growth in Indonesia, which should sustain high aluminum margins in the long term.

Citi has raised its 2025/26/27 earnings forecasts for CHINAHONGQIAO by +2%/+5%/+7% to RMB24.4 billion, RMB27.9 billion, and RMB30.3 billion, respectively, reflecting higher aluminum and alumina sales volumes as well as an upward revision in average aluminum prices.

Notably, the company is prioritizing shareholder returns by maintaining a high dividend payout ratio and share repurchases. Despite strong year-to-date stock performance, CHINAHONGQIAO’s projected 2026 dividend yield remains attractive at 6.7% as of the November 4 closing price.

Citi expects CHINAHONGQIAO to continue benefiting from sustained high aluminum margins and anticipates further valuation re-rating for the stock.