Huaxin Securities: First to Give CHINAHONGQIAO (01378) a "Buy" Rating, Company's Large-scale Buyback Demonstrates Confidence

Huaxin Securities released a research report predicting that CHINAHONGQIAO (01378) will have operating revenues of 1594.80, 1641.10, and 1688.40 billion yuan respectively for the years 2025-2027. The net profit attributable to shareholders will be 253.33, 271.07, and 287.44 billion yuan respectively. The current stock price corresponds to P/E ratios of 8.9, 8.3, and 7.8 times respectively. Considering the strong aluminum price and the company's large-scale share buyback to demonstrate confidence, Huaxin Securities initiates coverage and gives a "buy" investment rating. Key Points by Huaxin Securities: CHINAHONGQIAO released its 2025 semi-annual report In the first half of 2025, the company's operating revenue was 81.039 billion yuan, an increase of 10.1% year-on-year; net profit attributable to shareholders was 12.36 billion yuan, an increase of 35%; the gross profit margin for the first half of 2025 reached 25.7%, an increase of 1.50 percentage points year-on-year; and the net profit margin was 16.7%, an increase of 3.1 percentage points year-on-year. Main business volume and price increase driving year-on-year growth in gross profit In terms of price, the average selling price of aluminum oxide products for the first half of 2025 was approximately 3,243 yuan/ton (excluding VAT), an increase of about 10.3% year-on-year; the average selling price of aluminum alloy products was approximately 17,853 yuan/ton (excluding VAT), an increase of about 2.7% year-on-year; and the average selling price of aluminum alloy processed products was approximately 20,615 yuan/ton (excluding VAT), an increase of about 2.9% year-on-year. In terms of sales volume, the external sales volume of aluminum oxide products for the first half of 2025 was 6.368 million tons, an increase of about 15.6% year-on-year. The external sales volume of aluminum alloy products was 2.906 million tons, an increase of about 2.4% year-on-year. The sales volume of aluminum alloy processed products was 392,000 tons, an increase of about 3.5% year-on-year. From a financial perspective, the company's total revenue for the first half of 2025 was 81.04 billion yuan, an increase of 10.1% year-on-year. The revenue contribution from the four business segments, aluminum alloy products, aluminum oxide, aluminum alloy processed products, and steam, was 64.0%, 25.5%, 10.0%, and 0.5% respectively. The company's total gross profit was 20.81 billion yuan, an increase of 16.9% year-on-year. The gross profit contribution from the three business segments, aluminum alloy products, aluminum oxide, and aluminum alloy processed products, was 62.9%, 28.6%, and 9.0% respectively. Demonstrating confidence through large-scale share buyback The company conducted a significant buyback in the first half of the year, spending 2.6 billion Hong Kong dollars to repurchase 187 million shares. This reflects the board of directors and management team's confidence in the company's long-term strategy and growth. The company's cash flow structure has improved, with operating net cash flow reaching 22.31 billion yuan in the first half of the year. The net outflow of cash flow from investment activities was 9.41 billion yuan, and the net outflow of cash flow from financing activities was 8.97 billion yuan. The company's debt structure is relatively stable, with financial expenses of 1.28 billion yuan in the first half of 2025, a 17.7% decrease year-on-year. The asset-liability ratio is 49.1%, an increase of 0.9 percentage points from December 31, 2024.