According to a research report released by Guosheng Securities, CHINAHONGQIAO (01378) delivered impressive performance in the first half of 2025, achieving revenue of 81.04 billion yuan, representing a year-on-year increase of 10.1%, and net profit attributable to shareholders of 12.36 billion yuan, up 35% year-on-year. The company's significant performance growth was primarily driven by "volume and price increases" in aluminum products and substantial cost reductions resulting from significantly lower electricity prices compared to the previous year. Considering that capacity realization and cost reduction efficiency are key competitive factors at the current juncture, the company is expected to achieve leapfrog growth through overseas expansion and deep vertical integration. Guosheng Securities maintains a "Buy" rating for CHINAHONGQIAO.

Guosheng Securities noted that in terms of "volume," CHINAHONGQIAO's electrolytic aluminum sales reached 2.906 million tons in H1 2025, up 2.4% year-on-year; alumina sales totaled 6.368 million tons, increasing 15.6% year-on-year; and aluminum processing product sales were 392,000 tons, rising 3.5% year-on-year.

Regarding "price," the company's electrolytic aluminum selling price (excluding tax) averaged 17,900 yuan per ton in the first half of 2025, up 2.7% year-on-year; alumina selling price (excluding tax) was 3,243 yuan per ton, increasing 10.3% year-on-year; and aluminum processing product selling price (excluding tax) reached 20,600 yuan per ton, up 2.9% year-on-year.

On the cost front, the power generation cost (including tax) for Shandong's captive power plants in H1 2025 was 0.33 yuan per kWh, decreasing 31% year-on-year and 21% quarter-on-quarter.

In terms of capacity, on March 18, CHINAHONGQIAO shut down the 241,000-ton capacity of Series C in the Binzhou Hongnuo 723,000-ton primary aluminum production line project, replacing it with the startup of Hongtai Series E's 121,470-ton capacity and Series D's 119,060-ton capacity. On July 1, the company permanently retired 448,000 tons of capacity, replacing it with the startup of 69,750 tons of Series D capacity at subsidiary Yunnan Hongtai and 160,700 tons of Series B capacity at Yunnan Honghe.

Additionally, CHINAHONGQIAO increased its shareholding ratio in Yunnan Hongtai to 90.07%. With Yunnan Hongtai possessing 2.03 million tons of electrolytic aluminum capacity, CHINAHONGQIAO will benefit from the increased equity ratio, with its electrolytic aluminum equity capacity growing by 457,000 tons.

Based on firm confidence in the company's future prospects and long-term investment value, and considering the company's financial condition and operational performance, CHINAHONGQIAO plans to conduct share repurchases with a total amount of no less than HK$3 billion.

Guosheng Securities believes that capacity realization and cost reduction efficiency are key competitive factors at the current time, and the company is expected to achieve leapfrog growth through overseas expansion and deep vertical integration capabilities.