Securities Firm Maintains "Buy" Rating on CHINAHONGQIAO (01378) as Core Products Drive Strong H1 Performance Growth

Stock News
08/28

A securities research report indicates that CHINAHONGQIAO (01378) maintains a "Buy" rating, with projected net profits of RMB 23.5 billion, 25.5 billion, and 26.1 billion for 2025-2027 respectively. On August 15, CHINAHONGQIAO announced its results showing total operating revenue of RMB 81.039 billion for H1 2025, representing an 8.48% year-on-year increase. Pre-tax profit reached RMB 17.764 billion, up 28.07% year-on-year, while net profit achieved RMB 12.361 billion, marking a 35.02% year-on-year growth. The simultaneous increase in both volume and pricing of the company's core products has driven continued business performance improvement.

**Core Business Shows Volume and Price Growth, Driving Performance Gains**

For alumina operations, the company achieved sales volume of 6.368 million tons in H1, representing a 15.6% year-on-year increase, with average pricing rising approximately 10.3% year-on-year to RMB 3,242 per ton (excluding VAT). In electrolytic aluminum, the company recorded aluminum alloy product sales of 2.906 million tons, up approximately 2.4% year-on-year, with average pricing increasing about 2.7% year-on-year to RMB 17,853 per ton (excluding VAT). For aluminum processing products, sales volume reached 392,000 tons, growing approximately 3.5% year-on-year, while average pricing rose about 2.9% year-on-year to RMB 20,615 per ton (excluding VAT). The combined volume and price growth across the company's main product lines has sustained the upward trajectory in business performance.

**Yunnan Electrolytic Aluminum Maintains High Operating Rates, Green Aluminum Strategy Enhances Competitiveness**

Regarding Yunnan's electrolytic aluminum industry operations, operating rates have remained at maximum capacity since June 2024, with related enterprises no longer affected by power supply constraints. The company has further advanced its green energy strategic transformation during the reporting period, enriching diversified coexistence and multi-energy complementary new power supply models to ensure continuously rising clean energy proportions. The company's green aluminum deployment in Yunnan is expected to continuously enhance its competitive position within the industry.

**Share Buyback Program Launched to Boost Market Confidence**

The company recently disclosed a new share buyback plan with an estimated total amount of HKD 234 million, with repurchased shares equivalent to 0.11% of issued shares as of the buyback announcement date. Combined with the current volume and price growth in the company's core business, the timely launch of the share buyback program is expected to further strengthen the company's market image and enhance investor confidence.

**Investment Recommendation**

The company maintains a well-integrated industrial chain that enables profit generation from both upstream and downstream operations within the electrolytic aluminum industry. As the proportion of green electricity aluminum continues to increase, both profitability and social contribution are expected to expand further. Net profits are projected at RMB 23.5 billion, 25.5 billion, and 26.1 billion for 2025-2027 respectively.

**Risk Factors**

Potential intensification of power restrictions and production limitations for Yunnan electrolytic aluminum operations, domestic economic recovery below expectations, and changes in electrolytic aluminum industry policies.

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