HSBC Holdings PLC released a research report stating that CHINAHONGQIAO (01378) is expected to achieve further profit growth in the fourth quarter of 2025, driven by higher aluminum prices and strict cost control. The bank maintained its "Buy" rating and raised the target price to HK$37.4.

HSBC noted that after a year of controlled raw material costs in 2024, the aluminum sector will enter 2025 with a structurally tighter balance, supported by lower alumina and bauxite prices and sustained downstream demand. Domestic aluminum production remains capped below 45 million tons, with inventories still at low levels.

For 2026, HSBC forecasts a 6% year-on-year increase in aluminum prices, with potential upside as the market tightens further while cost risks remain manageable. Ample supply of alumina, bauxite, and carbon anodes, along with stable electricity tariffs due to structurally controlled coal prices, contribute to this outlook. The combination of tight supply and structurally supported demand provides an optimistic outlook for pricing and profitability.

Long-term, HSBC remains bullish on CHINAHONGQIAO's multi-year earnings trajectory, underpinned by solid aluminum fundamentals, low global inventories, resilient grid-related spending, and steady electric vehicle (EV) demand. The bank estimates an 18% compound annual growth rate (CAGR) for its earnings from 2024 to 2027.

HSBC highlighted that CHINAHONGQIAO's valuation is more attractive than peers, offering a dividend yield of around 7%. The bank also expects the recently completed share placement to effectively reduce the company's leverage.