Global Fortune Securities has issued a research report forecasting China Hongqiao's net profit attributable to shareholders for 2025-2027 to reach RMB 18.675 billion, RMB 25.299 billion, and RMB 27.176 billion respectively. Based on comparable company valuations and considering the company's leading position in the electrolytic aluminum industry warranting a valuation premium, the firm assigned a 16x P/E ratio for 2026. Using an exchange rate of 0.89 HKD/RMB, this corresponds to a target price of HK$45.58, supporting a "Buy" rating.

The report highlights that the company's projected net profit for 2025 is expected to be between RMB 17.0 billion and RMB 20.0 billion, compared to an adjusted net profit of RMB 17.228 billion in 2024. This follows a significant asset restructuring by Hongqiao Holdings, which acquired a 100% stake in Shandong Hongtuo Industrial through a share issuance. The transaction was completed on December 31, 2025, with Hongtuo Industrial subsequently consolidated into Hongqiao Holdings' financial statements. As both entities are under common ultimate control, the merger is treated as a business combination under common control, leading to retrospective adjustments of 2024 financial data.

Notably, electrolytic aluminum production costs have declined, significantly expanding corporate profits. In January 2026, aluminum prices exceeded expectations, reaching record highs, while alumina spot prices experienced a slight decline, remaining at relatively low levels. This resulted in reduced production costs for aluminum smelters and a marked improvement in profit margins. As of January 30, the arithmetic average production cost for Chinese electrolytic aluminum producers was approximately RMB 15,747.31 per ton, down RMB 149.18 from the previous month, representing a month-on-month decrease of 0.94% and a year-on-year decline of 19.26%. Industry-wide average profits reached RMB 8,295.19 per ton, increasing by RMB 2,266.98 from the prior month, up 37.61% month-on-month and surging 1,354.91% year-on-year. The weighted average production cost stood at RMB 14,804.09 per ton, down RMB 177.55 from the previous month, a decrease of 1.19%.

Currently, production capacity with costs below RMB 16,000 per ton totals 35.722 million tons, accounting for 81.21% of the total. Capacity with costs between RMB 16,000-17,000 per ton amounts to 8.155 million tons (18.54%), while capacity in the RMB 17,000-18,000 per ton range is 112,000 tons (0.25%). There is currently no capacity with costs between RMB 18,000-19,000 per ton or exceeding RMB 19,000 per ton.

The electrolytic aluminum market is entering a new cycle amid shifts in the global dollar system. The beginning of 2026 witnessed historic market movements, with prices hitting record highs in early January before experiencing a sharp pullback later in the month due to fluctuations in the US dollar, precious metals, and geopolitical factors. The core driver of this volatility has been the significant weakening of the US dollar. Policy shifts during Trump's second term, including tariff disputes, pressure on the Federal Reserve, and geopolitical rule-breaking, have accelerated global de-dollarization. Precious metals have been at the forefront, influencing base metal fluctuations. Since Trump took office, the US dollar has begun its downward trajectory, with de-dollarization and monetary diversification processes accelerating. Within this transition away from the dollar-dominated system, commodities with strong fundamental structures and value storage characteristics, such as precious metals, copper, and aluminum, are likely to remain resilient.

Looking ahead, aluminum prices may continue experiencing wide fluctuations after recent peaks and retreats. Following the recent concentrated emotional release, market sentiment may stabilize around the Chinese New Year period. However, weak fundamentals could exert pressure, potentially keeping aluminum prices range-bound. Overall, the trading range for February is expected to widen to RMB 23,000-24,500 per ton.

China's electrolytic aluminum capacity has shown modest growth from 2021 to 2025, increasing from 43.769 million tons to 45.158 million tons, with a five-year average growth rate of 1.01%. Strictly constrained by a 45-million-ton capacity "ceiling" and dual-carbon goals, approvals for new capacity have tightened significantly. Industry development now primarily focuses on capacity replacement and regional relocation, with production shifting from eastern and central regions to northwest and southwest China. In 2025, completed capacity increased by only 0.44%, while operational capacity steadily improved. With current capacity already at the mandated ceiling, future capacity additions will be limited. Under rigid capacity constraints and dual-carbon targets, the industry's evolution will continue to emphasize capacity swaps and regional transfers.