CICC has released a research report stating that considering NANSHAN AL INTL's (02610) increased production and sales volume along with rising prices, the firm has raised its 2025/2026 net profit forecasts by 7%/9% to US$374 million/US$500 million respectively. The current A-share price corresponds to 9x/6x P/E for 2025/2026. CICC maintains its outperform industry rating and, considering the upward revision in earnings and improved market sentiment, has raised the target price by 58% to HK$52.59, corresponding to 11x/8x P/E for 2025/2026, representing a 25% upside potential from the current share price.
The company announced its interim results, with 1H25 revenue of approximately US$597 million, up 41.0% year-on-year; profit attributable to company shareholders reached approximately US$248 million, up 124.2% year-on-year. The company's 1H25 performance slightly exceeded expectations, primarily due to higher-than-expected selling prices.
**Volume and Price Growth in 1H25 Alumina Business Drives Record Performance**
From a volume and price perspective, 1H25 alumina sales volume reached 1.127 million tons, up 3.0% year-on-year; 1H25 alumina selling price averaged US$529 per ton, up 36.9% year-on-year. In terms of gross profit, on the cost side, 1H25 alumina unit operating cost was US$260 per ton, up 16.3% year-on-year, mainly due to rising prices of raw materials such as liquid caustic soda. Benefiting from volume and price increases and appropriate cost control, gross profit increased 70.1% year-on-year, with gross profit margin reaching 50.9%, up 8.7 percentage points year-on-year.
**Income Tax Increase Due to Pillar Two Tax Rules, First Interim Dividend Since Listing**
According to the announcement, starting from January 1, 2025, the company must comply with the Global Anti-Base Erosion Rules (Pillar Two Income Tax) issued by the Organization for Economic Cooperation and Development, raising the company's income tax to 15%, an increase of approximately 6 percentage points compared to 2024. Regarding dividends, considering the current stable financial position and to reward shareholders, the company declared its first interim dividend since listing, with a payout ratio of approximately 20%.
**Leading Alumina Producer in Southeast Asia with Ahead-of-Schedule Project Construction**
As of August 2025, according to the announcement, the company has built 3 million tons per year of alumina production capacity. The construction progress of the second 1 million tons per year capacity under the new alumina production project is ahead of schedule, with the company expecting commissioning in Q4 2025 or Q1 2026. CICC believes that after the second phase capacity comes online, the company will become the largest alumina producer in Southeast Asia, further enhancing its market influence in the region.
**Three Key Advantages Supporting Accelerated Industrial Chain Expansion**
First is cost advantage. Due to Indonesia's abundant bauxite and coal resources, the company enjoys low-cost bauxite supply and short-distance transportation advantages. Meanwhile, the company is expanding supporting capacity and constructing a 70,000-ton deep-water port to further enhance logistics efficiency and reduce costs. To consolidate existing business cost advantages, the company is actively seeking upstream business expansion opportunities.
Second is regional advantage. The company's project is located in the Karangbantung Special Economic Zone, which enjoys tax incentives for up to 20 years, while alumina products can serve the entire Southeast Asian region.
Third is shareholder advantage. The company's three major shareholders have strong industrial advantages in midstream alumina production, downstream alumina consumption, and upstream bauxite supply respectively, enabling industrial chain synergy and complementary advantages.
**Risk Factors:** Significant product price volatility, project production ramp-up falling short of expectations, geopolitical risks in overseas project host countries.