Aluminum price running at high levels + expected dividend yield exceeding 10% CHINAHONGQIAO (01378) welcomes the golden opportunity for allocation.

Driven by the dual drivers of the global green energy revolution and the recovery of the manufacturing industry, the aluminum market is expected to continue its structural bull market in 2024. The LME aluminum prices have been fluctuating at high levels in the range of $2600-2800 per ton, achieving a cumulative increase of nearly 80% compared to the lows of 2020. As the world's largest producer of electrolytic aluminum, CHINAHONGQIAO (01378) is poised to enter a golden period of development with rising prices and production capacity due to its cost advantage and capacity release. The current dynamic dividend yield is expected to exceed 10%, highlighting an excellent risk-return ratio. The upward trend in aluminum prices has become a certainty According to the latest report from CRU, global aluminum demand is expected to increase by 4.2% to 71.8 million tons in 2024, while the supply side can only maintain a growth rate of 2.8% due to energy constraints. The widening gap between supply and demand is leading to continued inventory declines, with the latest LME aluminum inventory at 566,050 tons as of February 12, 2025, at a relatively low level compared to the past two years. Structural driving factors are more profound: The amount of aluminum used in new energy vehicles is 40% higher than in traditional fuel vehicles, and the demand for aluminum in new energy infrastructure such as photovoltaic brackets and ultra-high voltage power grids exceeds tens of thousands of tons per GW. The International Aluminum Association predicts that the GREEN ECONOMY sector will add 9 million tons of aluminum demand by 2025. On the supply side, production capacity in Europe is difficult to restore due to high energy costs, and domestic policies with a ceiling of 45 million tons of capacity have strengthened supply rigidity. Restrictions on RUSAL exports continue to fuel the LME inventory game. High dividend commitments solidify safety margins According to the profit announcement released by CHINAHONGQIAO on the evening of December 17, the company expects the net profit for 2024 to increase by around 95% year-on-year. This also means that after achieving a net profit of 11.461 billion yuan in 2023, the net profit of CHINAHONGQIAO in 2024 is expected to further increase to the range of 22-23 billion yuan. With a median net profit of 22.5 billion yuan and a dividend ratio of 50% estimated (average dividend ratio of 47.2% in the past five years), the expected total dividend amount reaches 11.25 billion yuan, corresponding to a current price of 12.2 Hong Kong dollars, a dividend yield of over 10%. If aluminum prices remain at their current levels, the dividend yield in 2025 is expected to continue to rise, creating a rare "dividend + growth" opportunity. In terms of historical valuation, the central range of CHINAHONGQIAO PE is 6-8 times, and the current valuation of 3.8 times is at a historical low. Compared to global peers, the dynamic PE of American Aluminum (AA) is 47.8 times, RUSAL (00486.HK) dynamic PE is 17.4 times, while CHINAHONGQIAO's current dynamic PE is only 5.8 times. Conclusion: When industry sentiment, corporate profitability, and shareholder returns resonate, it often generates excellent investment opportunities. CHINAHONGQIAO's current dividend yield of over 10% has built a solid safety cushion, while the long-term upward trend in aluminum prices and production capacity release will open up profit potential. With the restoration of risk appetite in the Hong Kong stock market, this globally undervalued leader in the aluminum industry is at its best entry point.