CICC has maintained its "outperform industry" rating on Nanshan Aluminum International (02610) but lowered its target price by 16% to HK$65.37, citing reduced earnings expectations. The new target implies a 25% upside from the current share price and corresponds to 2026/2027 P/E multiples of 13x and 11x, respectively, compared to the current valuation of 10x and 9x. The firm also cut its net profit forecasts for 2026 and 2027 by 20% and 9% to US$403 million and US$455 million, respectively.

According to company announcements, Nanshan Aluminum has completed an annual alumina production capacity of 4 million tons and initiated construction of a 250,000-ton annual aluminum electrolysis facility, with an additional 500,000 tons planned. This marks the company’s transition into an integrated aluminum producer, positioning it to benefit from rising aluminum and alumina prices amid geopolitical tensions.

The company reported 2025 revenue of US$1.14 billion, up 11.9% year-on-year, while gross profit fell 7.5% to US$478 million. Net profit attributable to shareholders increased 1.6% to US$408 million, outperforming expectations due to long-term contract price protections. In terms of volume and price, alumina sales reached 2.64 million tons, up 23% year-on-year, though the average selling price dropped 9% to US$432 per ton.

Gross profit per ton of alumina declined 24% to US$181, as costs rose 8% due to new capacity and higher raw material expenses. The gross margin fell 8.8 percentage points to 41.9%, pressured by price and cost factors. The effective income tax rate increased 4.1 percentage points to 12.8%, influenced by global anti-tax base erosion rules. Reflecting its financial position and development plans, the company distributed an annual dividend payout ratio of 20% to shareholders.