Bank of America bullish on China aluminum prices hitting 22,500 yuan/ton, industry's first to recommend CHINAHONGQIAO (01378) with target price of 45 Hong Kong dollars.

The latest research report released by Bank of America stated that aluminum will be listed as the "preferred recommended variety" for its 2026 Chinese basic materials industry. It is expected that the price of aluminum in China will rise to 22,500 yuan/ton, a year-on-year increase of 9%, and the industry will see historically high profit margins. As a global leader in the aluminum industry, CHINAHONGQIAO (01378) has become one of Bank of America's top 5 recommended stocks in the entire bulk commodity sector in China due to its low cost advantage and high dividend yield, with a target price of 45 Hong Kong dollars. The aluminum market has multiple positive factors, with supply and demand gaps supporting price strength In the report, Bank of America pointed out that the rise in aluminum prices in 2026 will benefit from the following core logic: on the supply side, China's aluminum production capacity has reached the 45 million ton limit, Indonesia's new capacity expansion is slow due to power constraints, and smelters in overseas production areas such as Iceland and Mozambique are facing production risks, leading to a continuous tight global aluminum supply. On the demand side, investments in power grids, energy storage systems, electric vehicles, and artificial intelligence infrastructure construction have become key drivers, with an expected annual demand growth rate of 3%. In addition, the high copper-aluminum price ratio has pushed downstream industries such as home appliances to accelerate copper-aluminum substitution, further opening up aluminum demand space. On the cost side, Chinese aluminum companies benefit from significant electricity cost advantages, with domestic smelters having electricity costs 1200-3600 yuan/ton lower than overseas ones. Against the background of global energy price fluctuations, this advantage will continue to expand industry profit margins, with Chinese aluminum companies expected to achieve aluminum profit margins of 6000-7000 yuan/ton. CHINAHONGQIAO's multidimensional advantages highlight its potential for valuation reconstruction As the aluminum industry leader recommended by Bank of America, CHINAHONGQIAO's investment value is concentrated in three dimensions: strong short-term earnings visibility, excellent long-term cost and dividend situation. Bank of America stated that in the short term, with aluminum prices remaining strong (Bank of America forecasts Chinese aluminum prices to be 22,500 yuan/ton in 2026), CHINAHONGQIAO's profitability will continue to expand; meanwhile, the Simandou iron mine project started production in November 2025, shipping the first batch of goods, and is expected to contribute to profits from 2026; after completing a 11.5 billion Hong Kong dollar rights issue and ongoing share buybacks, the company's balance sheet has been optimized. In the long term, CHINAHONGQIAO's unique vertical integration model positions it in the lowest range of the global cost curve, with strong profitability and a structural high dividend payout ratio (>60%) across cycles, with an estimated dividend yield of around 7% in 2026. Bank of America believes that the company, as a high-quality core asset with high dividend yields, strong cash flow generation, and high profit resilience, has the potential for valuation reconstru...