Jefferies: CHINAHONGQIAO (01378) benefits from the rise in aluminum prices, target price raised to 43.8 Hong Kong dollars.

Jefferies released a report stating that CHINAHONGQIAO (01378) will be one of the main beneficiaries of the rebound in aluminum prices. The firm reiterated its "buy" rating and raised its target price from HK$34.1 to HK$43.8. Jefferies stated that the stock prices of the copper and aluminum sectors have not fully reflected the current strength of commodity prices, while the valuation of the lithium sector seems more reasonable. Considering the limited supply and demand driven by energy transformation, AI themes, and recent macroeconomic and geopolitical factors, the firm remains optimistic about the long-term prospects and is bullish on copper and aluminum. The firm pointed out that CHINAHONGQIAO, as one of the world's leading aluminum producers, has a core advantage in its extremely strong cost competitiveness, ranking in the top tier of China's aluminum production cost curve. This "moat" is mainly built on two dimensions: 1) complete self-sufficiency in key raw materials: the company has achieved full self-sufficiency in bauxite and alumina, greatly hedging against the risk of rising upstream raw material prices, ensuring stability in profit margins; 2) efficient production, the company has achieved lower unit energy consumption through technological optimization. In addition, the company provides significant shareholder returns through dividends (with a payout ratio of over 60%) and buybacks.