UBS has reaffirmed its "Buy" rating on China Hongqiao Group Limited (01378.HK) while raising its target price from HK$16.5 to HK$21. The upward revision reflects three key drivers: robust aluminum price prospects with 2025 full-year average price forecasts lifted to RMB2,832/ton for alumina and RMB17,699/ton for aluminum (tax-inclusive), sustaining the company's earnings stability; an above-60% dividend payout ratio attracting yield-focused investors, particularly following insurance funds' entry; and structural mid-term aluminum demand growth catalysts.

Significant demand drivers include vehicle lightweighting (especially EVs), renewable energy infrastructure expansion such as solar power installations, increased power transmission needs, and packaging material substitution. UBS anticipates these factors will support steady aluminum consumption growth in the medium term, though potentially below the historical 15-year CAGR of approximately 5%. Near-term headwinds could emerge from trade war uncertainties, cooling front-loading purchases due to tariffs, and deceleration in the photovoltaic sector.