Shenwan Hongyuan Group: Maintains "Buy" Rating for CHINAHONGQIAO (01378), Emphasizes Shareholder Returns with High Dividend and Ongoing Share Repurchases.

Shenwan Hongyuan Group has released a research report stating that it maintains a "buy" rating for CHINAHONGQIAO (01378). The company is an integrated aluminum electrolysis production enterprise with significant advantages, leading overseas bauxite resource layout, high alumina and self-sufficiency in power. In the context of the increasing dependence on foreign bauxite resources in China, the company has outstanding cost advantages. The company's dividend payout ratio for 2025 is approximately 65.4%, with a high dividend payout ratio and high stock dividend value highlighted. Domestic aluminum electrolysis capacity is approaching its ceiling, and the Middle East conflict in 2026 may further tighten global primary aluminum supply, with aluminum prices expected to rise. As a result, the profit forecasts for 2026 and 2027 are raised, with a new profit forecast for 2028. It is estimated that the net profit attributable to shareholders in 2026, 2027, and 2028 will be RMB 32.2 billion, 34.4 billion, and 37.8 billion, respectively (the original forecast for 2026 and 2027 was RMB 25.5 billion and 26.5 billion), corresponding to PEs of 10, 9, and 8x. Key points from Shenwan Hongyuan Group are as follows: Event: The company announced its annual performance for 2025, meeting expectations. 1) Performance: In 2025, the company achieved operating income of RMB 162.354 billion, a year-on-year increase of 4.0%, and achieved net profit attributable to shareholders of RMB 22.636 billion, a year-on-year increase of 1.2%. 2) Main reasons for performance growth: Mainly due to the increase in sales prices of aluminum alloy products, sales volume of alumina, and sales volume and prices of aluminum alloy processed products. Multiple projects were put into operation in 2025, and the volume and price of main products rose together 1) Project operation: Yunnan Honghe New Materials Co., Ltd.'s NEUI600+ super electrolytic cell production line, the world's first large-scale application, was successfully put into operation; Yunnan Hongyan New Materials Co., Ltd.'s 250,000-ton high-precision aluminum alloy ingot project officially started production. 2) Sales data: Sales volume of aluminum alloy products was 5.824 million tons, basically flat year-on-year, with an average ex-factory price of RMB 18,216 per ton, up 3.8% year-on-year; sales volume of alumina products was 13.397 million tons, up 22.7% year-on-year, with an average ex-factory price of RMB 2,899 per ton; Sales volume of deep-processed aluminum alloy products was 716,000 tons, basically flat year-on-year, with an average ex-factory price of RMB 20,874 per ton. At the end of 2025, the company plans to distribute a dividend of HKD 0.165 per share, with a dividend payout ratio of approximately 65.4%, and repurchased 306 million shares during the year. The Board of Directors of the company proposed to distribute a dividend of HKD 0.165 per share at the end of 2025. Ex-dividend date is May 22, 2026, and based on the shares outstanding as of December 31, 2025 and the exchange rate, the dividend payout ratio is approximately 65.4% (the company distributed a dividend of HKD 0.161 per share by the end of 2024, with a dividend payout ratio of approximately 63%). Based on the closing price as of April 1, 2026, the dividend yield is approximately 4.5%. As of December 31, 2025, the company has spent a total of HKD 5.58 billion to repurchase a total of 306 million shares and all have been cancelled. Risk warning: The downstream demand for aluminum electrolysis is lower than expected; significant fluctuations in raw material costs; overseas aluminum electrolysis production exceeds expectations.