Minsheng Securities: Due to the rise in prices, the profit of CHINAHONGQIAO (01378) Q3 alumina plate sector has increased, maintaining a "recommended" rating.

Minsheng Securities released a research report stating that CHINAHONGQIAO (01378) is expected to achieve a net profit attributable to the parent company of 22.57 billion yuan, 25.145 billion yuan, and 26.259 billion yuan in 2024-2026 respectively, with corresponding PEs of 5, 4, and 4 times based on the current price, maintaining a "buy" rating. Minsheng Securities pointed out that CHINAHONGQIAO has a strong guarantee capacity for aluminum ore resources, coupled with a significant increase in performance elasticity due to the rise in aluminum prices, green energy transformation aiding long-term development, and the potential to increase the company's valuation. The main points of Minsheng Securities are as follows: The company released the third quarter financial data of its subsidiary Shandong Hongqiao New Materials Co., Ltd. Shandong Hongqiao is mainly engaged in CHINAHONGQIAO's domestic electrolytic aluminum, alumina, and aluminum processing businesses. In 2024 Q1-Q3, Shandong Hongqiao achieved revenue of 110.68 billion yuan, a year-on-year increase of 12.47%; a net profit attributable to the parent company of 15.754 billion yuan, a year-on-year increase of 141.43%. Looking at the quarter alone, in 2024 Q3, revenue was 38.023 billion yuan, a year-on-year increase of 13.86% and a quarter-on-quarter increase of 1.99%; net profit attributable to the parent company was 5.961 billion yuan, a year-on-year increase of 38.01% and a quarter-on-quarter increase of 9.35%. In Q3, the price of alumina rose, leading to increased profitability in the alumina sector. Volume: In terms of electrolytic aluminum, Shandong's expected full production capacity in Q3 2024 is 1.243 million tons, with Yunnan region expected to achieve 372,000 tons in full production; in terms of alumina, domestic and Indonesian alumina capacity is expected to operate at full capacity. Price: In Q3 2024, the aluminum price in the market decreased by 975 yuan/ton, while the alumina price in Shandong increased by 290 yuan/ton, the prebaked anode price decreased by 183 yuan/ton, and the price of thermal coal decreased by 1 yuan/ton. The bank calculated the pre-tax profit of electrolytic aluminum in Shandong in Q3 to be 1454 yuan/ton (excluding upstream alumina profits). Furthermore, with the increase in alumina prices, the profitability of the company's alumina sector has strengthened both domestically and internationally. In Q3, the pre-tax profit of the electrolytic aluminum industry decreased by 1,098 yuan/ton compared to the previous quarter, while the pre-tax profit of the alumina industry increased by 162 yuan/ton. Future highlights: 1) Improvement in the integration of the industrial chain layout. The company's electrolytic alumin...