BofA Securities issued a performance review on Shandong Hongqiao, a subsidiary of CHINAHONGQIAO (01378), maintaining a "Buy" rating and raising the target price from HK$26.00 to HK$35.00. CHINAHONGQIAO reported that its subsidiary Shandong Hongqiao achieved total operating revenue of RMB116.926 billion in the first three quarters of 2025, up 6.23% year-on-year, with net profit reaching RMB19.371 billion, a 23.13% increase. Q3 net profit stood at RMB6.9 billion, rising 18% YoY and 14% QoQ, broadly in line with expectations, while gross margin expanded by 3 percentage points QoQ to 26%.

BofA attributed the earnings growth to two key factors: 1) Margin expansion—industry data showed aluminum profits rose by RMB900/ton QoQ in Q3, while alumina profits increased by RMB200/ton; 2) Contribution from the Wenshan project—the company acquired the remaining 25% stake in Yunnan Wenshan project at the end of Q2, which began consolidation and profit contribution from Q3.

The bank expects China's aluminum sector to remain resilient in Q4, supported by low inventories, stable upstream supply, and seasonal grid demand, with aluminum prices edging higher. Current spot aluminum prices have surpassed RMB21,000/ton, alumina prices hover at RMB2,800–2,900/ton, and aluminum margins expanded to over RMB5,000/ton, bolstering Q4 profitability. Spot aluminum margins further improved by RMB600/ton QoQ.

BofA revised its aluminum price forecasts upward, raising the 2025 estimate to RMB20,600/ton (+RMB100/ton) and 2026/long-term projections to RMB21,000/ton. Consequently, it lifted CHINAHONGQIAO's 2025–2027 earnings forecasts by 5%–23%, projecting 2025 net profit at RMB26 billion (+17% YoY) and 2026 at RMB30 billion (+15% YoY).

Key reasons for maintaining the "Buy" rating include: 1) Constructive outlook on aluminum prices; 2) Attractive dividend yield (6%–7% under a 63% payout ratio assumption); 3) The Simandou project, set for production by end-2025, could contribute ~3% to 2026 earnings, potentially rising to 9% long-term; 4) Ongoing share buybacks to support valuations. The bank noted the target price implies a 2026 P/E of 10x, remaining attractive versus Chinese copper (12–16x) and gold peers (16–17x).