CICC: Maintains Outperform rating on NANSHAN AL INTL (02610), lowers target price to HKD 65.37.

Zhongjin Securities released a research report stating that they maintain a rating of outperform for NANSHAN AL INTL (02610), considering a decrease in profits. They have lowered the target price by 16% to HKD 65.37, corresponding to a 2026/2027 P/E ratio of 13/11x. This represents a 25% upside potential from the current stock price, which corresponds to a 2026/2027 P/E ratio of 10/9x. The bank has lowered the net profit forecast for 2026/2027 by 20%/9% to USD 403 million/USD 455 million. According to the announcement, the company has completed the construction of an annual production capacity of 4 million tons of alumina, and has started the construction of an annual production capacity of 250,000 tons of electrolytic aluminum, with plans for an additional 500,000 tons. This signifies the company's official transformation into an integrated producer of electrolytic aluminum, and it is expected to benefit from the upward trend in aluminum and alumina prices due to geopolitical tensions. The company has disclosed its 2025 performance, with operating income of USD 1.14 billion, a year-on-year increase of 11.9%; gross profit of USD 478 million, a year-on-year decrease of 7.5%; and net profit attributable to the parent company of USD 408 million, a year-on-year increase of 1.6%. Benefiting from long-term price guarantees, the financial performance in 2025 exceeded the bank's expectations. In terms of volume and price, the sales volume of alumina in 2025 was 2.64 million tons, a year-on-year increase of 23%; the selling price of alumina was USD 432 per ton, a year-on-year decrease of 9%. In terms of gross profit, the cost per ton of alumina increased by 8% year-on-year, mainly due to the increase in production capacity and rising raw material costs; facing price and cost pressures, the gross profit per ton of alumina decreased to USD 181, a year-on-year decrease of 24%, and the gross profit margin decreased to 41.9%, a year-on-year decrease of 8.8 percentage points. According to the announcement, due to global anti-tax base erosion rules, the company's income tax rate increased to 12.8%, a year-on-year increase of 4.1 percentage points. In terms of dividends, considering the financial situation and development plans, the company plans to distribute a 20% dividend to shareholders annually.