Guosheng Securities released a research report stating that at the current stage, capacity realization and cost reduction are key competitive factors. CHINAHONGQIAO (01378) is expected to achieve leapfrog growth through overseas expansion and deep integration across the upstream and downstream sectors.

The report cautiously assumes aluminum prices for 2025-2027 at RMB 20,000/20,500/21,000 per ton, with alumina prices at RMB 3,300/3,000/2,900 per ton. It forecasts net profits attributable to shareholders of RMB 24.0/25.5/27.1 billion for 2025-2027, corresponding to P/E ratios of 11.9x/11.2x/10.5x, maintaining a "Buy" rating.

Key highlights from Guosheng Securities: - **Event**: The company disclosed Q3 2025 results for its subsidiary Shandong Hongqiao. - Revenue for the first three quarters of 2025 reached RMB 116.93 billion, up 6% YoY. - Net profit stood at RMB 19.37 billion, up 23% YoY. - By quarter: Q1/Q2/Q3 revenues were RMB 40.2/38.0/38.7 billion (+16%/+2%/+2% YoY), with Q3 up 2% QoQ. - Net profits for Q1/Q2/Q3 were RMB 6.4/6.1/6.9 billion (+47%/+11%/+18% YoY), with Q3 up 14% QoQ.

**Strong Profitability in Aluminum Smelting, Outstanding Q3 Performance** 1) **Prices**: According to SMM data, Q3 average aluminum prices were RMB 20,711/ton (+6% YoY, +3% QoQ), while alumina prices were RMB 3,165/ton (-19% YoY, +4% QoQ). 2) **Costs**: Q3 fully allocated costs for Shandong aluminum smelting were RMB 15,299/ton; Yunnan costs were RMB 15,445/ton. 3) **Profits**: Aluminum smelting industry profits reached RMB 4,125/ton (+128% YoY, +22% QoQ), while alumina profits were RMB 292/ton (+166% QoQ).

**Smooth Progress in Aluminum Capacity Relocation Plan** Per Hongchuang Holdings’ restructuring draft, CHINAHONGQIAO plans to relocate 448,000/241,000/831,000 tons of capacity from Shandong to Yunnan in 2025-2027. Post-2028, total capacity in Shandong and Yunnan will stabilize without further adjustments.

**Issuance of $300M Convertible Bonds and Share Repurchase** On March 17, 2025, the company entered into a convertible bond subscription agreement to issue $300M in 1.5% bonds due 2030, with an initial conversion price of HKD 20.88/share. Net proceeds of approximately $290M will be used for offshore debt refinancing and general corporate purposes. Funds were fully utilized as announced on March 18, 2025.