Citi said in a research report released recently that in recent years, China's aluminum industry has become increasingly dependent on imported bauxite. Since 2020, China's bauxite imports have grown rapidly, with a growth rate far exceeding that of aluminum output (the end use of bauxite). Against the backdrop of Chinese companies advancing projects at an unprecedented pace to supply the Chinese market, Guinea has become an important source of China's imported bauxite. According to data from the United States Geological Survey, Guinea holds nearly one-quarter of the world's known bauxite resources. Therefore, as the main supplier to the world's largest bauxite market, Guinea has long had the potential to become a major supplying country. However, due to years of political instability and slow progress in project execution, before 2016 Guinea only occasionally exported bauxite to China. But this situation has changed. China's bauxite imports from Guinea have grown for eight consecutive years, and on an annualized basis in the first eight months of 2026, imports reached 187 million tonnes. In 2025, China's total bauxite imports increased 26% year on year. Among them, bauxite imported from Guinea rose 35% year on year, lifting Guinea's share of China's bauxite imports to 74%, up from 69% in 2024. In the first eight months of 2026, China's bauxite imports increased 10% year on year. Among them, bauxite imported from Guinea rose 16% year on year, accounting for 80% of China's total bauxite imports during the period. Citi pointed out that most of the growth in Guinea's bauxite output and exports came from the SMG/WAP project led by China Hongqiao (01378), the world's largest aluminum producer. The SMG/WAP project was launched in 2015 and added more than about 50 million tonnes of export capacity around 2018. With the project coming into operation, the scale of the genuine third-party bauxite market has shrunk. Citi added that the "upstream integration" actually achieved by Chinese smelters has reduced demand for traded bauxite, thereby structurally depressing bauxite prices, which is favorable for profit margins. Citi gives China Hongqiao (01378) a target price of HK$48.0, corresponding to an expected price-to-earnings ratio of 13.0 times for 2026, in line with the average level of its Chinese peers.