CICC has released a research report maintaining its 2025/2026 profit forecasts for NANSHAN AL INTL (02610) unchanged. Considering rising product prices, the firm has raised its 2027 net profit forecast by 15% to $500 million. The current share price corresponds to 2025/2026/2027 P/E ratios of 14.7x, 11.1x, and 10.9x, respectively. The firm maintains an Outperform rating. It also reiterates a target price of HK$77.76, implying 2026/2027 P/E ratios of 12.0x and 11.7x, and representing an 8% upside potential from the current share price. CICC's key views are as follows:
Recent Company Developments According to an announcement on the evening of January 19, the company plans to commence construction of a 250,000-ton annual electrolytic aluminum project in 2026, with an investment of $437 million and a construction period of two years. From a medium to long-term development perspective, the company plans to formulate plans for an additional 500,000-ton annual electrolytic aluminum project to further expand its production capacity. Strategically, the company aims to gradually increase its electrolytic aluminum capacity to achieve better alignment with its existing alumina production capacity.
A Leading Southeast Asian Alumina Producer Transitioning to an Integrated Electrolytic Aluminum Manufacturer The announcement states that the company has already built an annual alumina production capacity of 4 million tons in Indonesia, making it the largest alumina producer in Southeast Asia. The initiation of the 250,000-ton electrolytic aluminum project and the planning of an additional 500,000-ton project signify the company's official transition towards becoming an integrated electrolytic aluminum producer, which is expected to further enhance its profitability.
Three Major Advantages Accelerating Industrial Chain Expansion First is the advantage in raw material costs. Due to Indonesia's abundant bauxite and coal resources, the company benefits from low-cost bauxite supply and short-distance transportation advantages. Concurrently, to support capacity expansion, the company is expanding a 70,000-ton deep-water port to further strengthen logistics efficiency and reduce costs. To consolidate the cost advantages of its existing operations, the company is actively seeking opportunities for upstream business expansion. Second is the regional advantage. The company's project is located in the Karawang Economic Special Zone in Indonesia, where the park can enjoy tax incentives for up to 20 years. Furthermore, its proximity to the Strait of Malacca allows its alumina and electrolytic aluminum products to reach the entire Southeast Asian region and provides convenient access to Eurasia. Third is the advantage of synergies across the upstream and downstream industrial chain. The firm believes that as the company's electrolytic aluminum capacity is gradually released, it is expected to form an integrated industrial chain from alumina to electrolytic aluminum, creating synergies and enhancing its risk resilience.
Risk Warnings: Significant fluctuations in product prices; project construction progress falling short of expectations; geopolitical risks in the country where the overseas project is located.