Following CHINAHONGQIAO's (01378) announcement of interim results and share buyback program, Jefferies has issued a research report reiterating its "Buy" rating on CHINAHONGQIAO and raising the target price to HK$26.9. Jefferies stated that net profit for the first half of 2025 reached 12.4 billion yuan (up 35% year-on-year), with relatively stable production costs due to achieved vertical integration. Unit gross profit for aluminum/alumina increased by 225/185 yuan per ton year-on-year, primarily benefiting from higher average selling prices (ASP). The highlight of these results is the planned share buyback of at least HK$3 billion in addition to the HK$2.6 billion already repurchased in the first half of 2025, along with an annual dividend exceeding 60%, further demonstrating management's confidence in the company's performance. Jefferies believes in CHINAHONGQIAO's solid operational performance. CHINAHONGQIAO reported net profit of 12.4 billion yuan for the first half of 2025, up 35% year-on-year. Aluminum ASP increased 2.7% year-on-year to 17,853 yuan per ton, consistent with market trends, while alumina ASP grew 10.3% to 3,243 yuan per ton, significantly outpacing overall market price movements. Unit cost of goods sold (COGS) remained well-controlled and competitive. Aluminum costs rose modestly by 2%, or 200 yuan to 13,300 yuan per ton, likely due to higher carbon anode prices (up 900 yuan year-on-year) offsetting savings from lower coal/electricity costs. Alumina costs increased 5%, or 100 yuan to 2,300 yuan per ton, partially due to rising caustic soda prices (up nearly 600 yuan year-on-year), while bauxite benefited from vertical integration. Jefferies also noted the further emphasis on shareholder returns. Alongside the interim results, another share buyback program worth at least HK$3 billion was announced, indicating management's confidence in company performance. In the first half of 2025, the company repurchased and subsequently canceled over 187 million shares (approximately 2% of issued shares), with a total value of about HK$2.6 billion. On the other hand, CHINAHONGQIAO adjusted its dividend payment method from semi-annual to annual, meaning no interim dividend will be paid this year. However, the commitment to shareholder returns remains unchanged, with final dividend payments maintaining at least the previous level of over 60%. According to management, the reason for paying dividends once annually instead of twice is to stabilize expected dividend levels and avoid disparities between first and second half dividends (for example, 63% for full year 2024, 56% for 1H24, and 67% for 2H24). This should not significantly impact long-term investors as dividends remain stable. More importantly, if the HK$3 billion buyback is completed in the second half of 2025, total 2025 buybacks will reach at least HK$5.6 billion, meaning at least an additional 20% dividend payment on top of the base 60%.