Changjiang Securities Company Limited issued a research report maintaining a "Buy" rating on CHINAHONGQIAO (01378). The stock has surged 124.49% since the beginning of 2025 (as of August 22, 2025), ranking among the top ten performers in the non-ferrous metals sector this year with continued stellar performance. The company achieved an average dividend yield of 10.48% from 2020-2024, with the 2024 annual dividend yield reaching 13.69%. Its dividend attributes have been validated over multiple years, with both dividend payout ratio and yield continuing to rise, offering excellent value for dividend allocation. The electrolytic aluminum sector is entering an era of high dividends, and the company has become the first high-dividend target through its global integrated industrial chain layout, cost advantages, and reduced capital expenditure center.
Looking ahead, transitioning from cyclical to dividend focus, from volatility to resilience, the electrolytic aluminum sector is expected to experience a resonance of both earnings and valuation improvements.
Changjiang Securities' main viewpoints are as follows:
Why has the company's performance been remarkable? Since the March 2020 low, CHINAHONGQIAO has accumulated gains of 1316.85% (as of August 22, 2025), emerging as a standout performer from the metals sector's transformation. The company's 124.49% gain since the beginning of 2025 (as of August 22, 2025) places it among the top ten performers in the non-ferrous metals sector, continuing its impressive performance. Breaking it down: (1) The company's net profit attributable to shareholders increased 35.02% year-over-year in the first half of this year. Despite high alumina prices falling back and stable aluminum prices, profits continued to improve at high levels due to declining coal prices and relatively low base from last year's impairment provisions; (2) The company's valuation has recovered significantly. On one hand, the integrated industrial chain layout fully ensures operational stability; on the other hand, as the first electrolytic aluminum company to achieve high dividends, with an average dividend yield of 10.48% from 2020-2024 and 13.69% for 2024, its dividend attributes have been validated over years with further improvements in both payout ratio and yield, offering excellent dividend allocation value.
Why did CHINAHONGQIAO become the first high-dividend electrolytic aluminum company? In the mid-term strategy report "High-Quality Scarce Assets, Dividend Value Highlighted" and special report "What Level is the Electrolytic Aluminum Dividend Yield in the Overall Market?", the firm proposed that the electrolytic aluminum sector is entering an era of high dividends. CHINAHONGQIAO became the first high-dividend target because: (1) As a high-quality global private aluminum company, the company's raw material, energy, and management costs are all at leading levels. Under the aluminum industry recovery wave since 2020, the company's net operating cash flow increased from 17.779 billion yuan in 2020 to 33.983 billion yuan in 2024; (2) The company's global layout covers the complete aluminum industrial chain from "bauxite-alumina-electrolytic aluminum-aluminum processing," effectively hedging against price fluctuations of different products. For example, despite significant increases in alumina and bauxite prices in 2024, the company's operating performance remained relatively stable as an integrated leader; (3) Capital expenditure center has shifted downward. Possibly due to capacity reduction in 2017 and disruptions from Yunnan relocation electricity prices and dry seasons, the company deeply understands the stability and continuity of energy consumption as key factors in electrolytic aluminum construction. Unlike peers expanding overseas aluminum operations, it only maintains minimal Yunnan relocation and new energy projects plus routine expenditures, resulting in capital expenditure/net operating cash flow of only about 38%, with further downward potential.
How will the future unfold? From cyclical to dividend focus, from volatility to resilience, the electrolytic aluminum sector is expected to experience resonance between earnings and valuation improvements: (1) From a cyclical perspective, electrolytic aluminum equity allocation cycles typically evolve through three stages: "slowing rate cuts - end of rate cuts - early rate hikes." Fed rate cuts and possible enhanced growth-stabilizing policies both confirm short-term demand weakness while helping medium-term economic recovery. Considering that equity valuations already embed considerable pessimistic expectations and aluminum prices have been tested by dual impacts from real estate and photovoltaic sectors, this should be viewed as a starting point for aluminum cycle allocation; (2) From a dividend perspective, as long-term bond yields decline, the electrolytic aluminum sector's average dividend yield exceeds 5%, ranking among the top dividend sectors market-wide. The sector still has room for further dividend yield growth as aluminum prices and dividends improve. Global economic structural mismatches have significantly reduced aluminum price volatility, and "long money" from insurance funds entering the market strengthens marginal incremental capital inflows and pricing power, facilitating value recovery in the aluminum sector.
CHINAHONGQIAO, as a high-quality integrated leader, continues to lead the wave of earnings and valuation recovery. Considering aluminum price increases offsetting alumina declines, if we simply annualize the first half's net profit attributable to shareholders at 24.72 billion yuan and reference last year's dividend payout ratio of 62.03%, the corresponding dividend yield would be 7.09%. Combined with large-scale share buybacks (2.612 billion HK dollars in the first half with plans for 3+ billion HK dollars), this demonstrates long-term dividend value.