Guosheng Securities: Maintains "Buy" rating on CHINAHONGQIAO, 25H1 performance exceeds expectations, integrated cost advantages are significant

According to the Zhitong Finance APP, Guosheng Securities released a research report stating that it is expected that from 2025 to 2027, CHINAHONGQIAO (01378) will achieve a net profit attributable to the parent company of 21.7 billion, 23.1 billion, and 25 billion yuan, corresponding to PE ratios of 6.8, 6.4, and 5.9 times, maintaining a "buy" rating. At the current point in time, capacity realization and cost reduction and efficiency enhancement are key to competition. The company is expected to achieve leapfrog growth through overseas expansion and deep empowerment of upstream and downstream. As a Hong Kong stock, it has a significant undervaluation advantage.

The main points of Guosheng Securities are as follows:

Event: The company will release its performance forecast on June 23, 2025, and it is expected that the net profit for the first half of 2025 will reach 12.36 billion yuan, a year-on-year increase of 35%. The significant year-on-year growth in performance is mainly due to the increase in sales prices of aluminum alloy products and the corresponding increase in sales volume, coupled with the decline in electricity prices.

The significant growth in the company's performance is mainly due to the year-on-year increase in aluminum prices and the substantial decrease in electricity prices leading to cost reductions.

Price: According to SMM data, as of June 23, the price of electrolytic aluminum in the first half of 2025 was 20,300 yuan/ton, a year-on-year increase of 2.5%; the price of alumina was 3,449 yuan/ton, a year-on-year decrease of 1%.

Cost: As of June 20, the cost of self-supplied electricity generation in Shandong for the first half of 2025 (including tax) was 0.34 yuan/kWh, a year-on-year decrease of 30% and a quarter-on-quarter decrease of 20%. According to SMM data, the tax-inclusive electricity price for purchased electricity in Shandong for the first half of 2025 was 0.62 yuan/kWh, a quarter-on-quarter decrease of 1.1%; the tax-inclusive electricity prices in Yunnan for the first quarter and second quarter of 2025 were 0.44 yuan/kWh and 0.42 yuan/kWh, respectively, a quarter-on-quarter decrease of 4.5%.

Profit: According to SMM statistics, the profit for electrolytic aluminum in the first half of 2025 was 2,851 yuan/ton, a year-on-year increase of 8%.

The transfer project of electrolytic aluminum capacity in Yunnan is accelerating.

On March 18, 2025, the company shut down the C series of the Binzhou Hongnuo 723,000-ton primary aluminum production line project with a capacity of 241,000 tons, replacing it with the startup of the Hongtai E series with a capacity of 121,470 tons and the D series with a capacity of 119,060 tons. The 723,000-ton primary aluminum production line project of Binzhou Hongnuo New Materials Co., Ltd. is located south of Huanghe Fifth Road in the Binzhou Economic and Technological Development Zone and west of the Binbo Expressway, with a registered capacity of 723,000 tons (666 sets of 400kA electrolytic cells), and consists of three series: A, B, and C. Among them, the 482,000-ton capacity of series A and C belongs to the 2.03 million tons of capacity that is being transferred out, and the 241,000-ton capacity of series C (222 sets of 400kA electrolytic cells) has been completely shut down. The power supply connection line for the 241,000-ton capacity of series C has been completely dismantled, the cover plates of the electrolytic cells have all been removed, the anode carbon blocks for the assembly of the electrolytic cells are being dismantled, and the main equipment of the electrolytic cells has been dismantled to the point that it no longer meets the conditions for resumption of production