East Money Information Securities: CHINAHONGQIAO(01378) demonstrates outstanding integrated advantages and high dividend attributes, receiving an initial "Buy" rating.

East Money Information Securities released a research report stating that CHINAHONGQIAO (01378) has outstanding integrated advantages and high dividend attributes. It is covered for the first time and given a "buy" rating. The bank expects the company's net profit attributable to shareholders for the years 2025-2027 to be 22.64/24.21/25.39 billion yuan, corresponding to EPS of 2.44/2.61/2.73 yuan. The bank believes that the company's complete industry chain layout through vertical integration and forward-looking layout of overseas bauxite and alumina resources will enhance the company's risk resistance and performance stability. The company is committed to becoming a world-leading century-old manufacturing enterprise, similar to Shenhua's consistent high dividend returns to investors, with prominent high dividend attributes (company's dividend yield for 2022-2024 is 6.7%/10%/13.6%, Shenhua H corresponding dividend yield is 12.7%/9.3%/7.3%). East Money Information Securities' main points are as follows: - The company has formed a complete aluminum product industry chain and is one of the world's leading aluminum product manufacturers. - The company continues to build and improve the complete closed-loop industry chain from bauxite-alumina-primary aluminum-aluminum deep processing, whole vehicle dismantling, scrap aluminum-recycled aluminum-automobile components, and white body. Currently, the company has completed the integrated layout of the entire industry chain. Through the integrated aluminum power grid and direct supply of aluminum, the company can fully leverage the business advantages of vertical integration and industrial cluster advantages. The company currently has an electrolytic aluminum production capacity of 6.459 million tons (second only to Aluminum Corporation Of China's 7.81 million tons domestically) and an alumina production capacity of 21 million tons (19 million tons domestically + 2 million tons in Indonesia). - The company's electrolytic aluminum production capacity advantage is obvious, and it is gradually implementing the "Northern Aluminum Southward" strategy to comply with the green trend. - The company began to have a production capacity of 6.459 million tons of electrolytic aluminum in 2017 and has maintained this scale since then. Currently, the production capacity in Shandong/Yunnan is 4.971/1.488 million tons. The Binzhou base in Shandong is the largest aluminum industry cluster globally. Yunnan Hongtai is the chain-leading enterprise of the Yunnan Green Aluminum project in Yanshan County, creating the largest single-scale green aluminum project globally. The integrated advantages of the industrial cluster are obvious. The company is currently promoting the relocation and replacement of electrolytic aluminum production capacity from Shandong to Yunnan. It is expected that the production capacity in Shandong/Yunnan will reach 3.451/3.08 million tons by 2027. The company's primary aluminum production uses large prebaked anode electrolytic cells with a current intensity of 400KA and liquid aluminum alloy as the company's main product, accounting for about 90% of the primary aluminum production, which is conducive to saving casting costs. In terms of costs, the company started constructing a self-owned thermal power plant in 2005, and the current power self-sufficiency rate is around 50%; the aluminum oxide required for production in Shandong is mainly self-produced, while that in Yunnan is mainly purchased from external sources; bauxite is mainly imported from the company's investment in Guinea, and stable supply channels have been established in Australia and Indonesia. - The company's alumina production capacity provides high elasticity, and its stake in Guinea's "Winning Alliance" ensures stable upstream bauxite supply. - The company's existing alumina production capacity is 21 million tons, including 19 million tons in Shandong, China, and 2 million tons in Indonesia. The company's Indonesian alumina project is the first large-scale alumina smelting plant built by a Chinese company overseas. The company established Indonesia Hongfa Weili Alumina Company (currently 61% equity) in 2012, with a substantial increase in revenue and profit in 2024, achieving main business revenue/gross profit of 7.41/3.95 billion yuan, a year-on-year increase of +34.7%/+142.2%. In 2015, the company innovatively formed the "Winning Alliance" in three countries and four directions to develop new bauxite supply bases. By 2023, bauxite production reached 44.188 million tons, with Guinea's bauxite production accounting for 35.9%, ranking first in the local production volume. - The company's aluminum deep processing technology is internationally leading, actively developing recycled aluminum and circular economy projects. - By 2024, the company will have an aluminum processing capacity of 1.5665 million tons, and aluminum products are widely used in various fields, with significant breakthroughs in high-precision aluminum plates and other high-end aluminum materials. The Phase 1 of the Binzhou, Shandong automotive lightweight large-scale integrated die-casting project was completed and put into operation in the same year, creating a lightweight material base. The company is actively developing recycled aluminum and circular economy projects. In 2020, a joint venture was established to create the Sino-German Hongshun Recycling Technology Park, and in 2023, a 200,000-ton aluminum scrap recycling project was completed and put into operation, aiming to become the most competitive enterprise in the green aluminum metal packaging industry.