Citigroup: Multiple factors bullish, raised target price of CHINAHONGQIAO (01378) to 15 Hong Kong dollars.

Citigroup released a report stating that due to the stronger-than-normal apparent consumption, the firm aluminum prices, and the possibility of higher-than-expected stock buybacks and dividends, they maintain a "buy" rating for CHINAHONGQIAO (01378) and have raised the target price from HK$14.8 to HK$15. On January 16, the spot price of alumina in Henan Province was 4560 RMB/ton, a decrease of 19% from the beginning of the year; the SHFE 1M aluminum price was 20265 RMB/ton, an increase of 2% from the beginning of the year. As of January 17, the alumina futures contract (February delivery) has fallen by 19% since the beginning of the year, to 3868 RMB/ton. Citigroup points out that despite the decline in alumina prices, Chinese aluminum prices remain firm due to low inventory and significantly higher-than-normal seasonal consumption. Citigroup expects that the apparent consumption of aluminum in the short term may remain resilient compared to the same period last year. With the decline in alumina prices, the aluminum price differential is expected to improve. Due to little new capacity added in 2025, Citigroup expects aluminum smelting profit margins to be supported. In 2025, Citigroup estimates that CHINAHONGQIAO will significantly reduce its total debt levels. The company's recent stock buybacks will also help boost investor sentiment.