Tianfeng maintains a "buy" rating for CHINAHONGQIAO (01378) as integrated operations stabilize. Dividends and buybacks are both ways to reward shareholders.

Tianfeng released a research report stating that it has adjusted its aluminum price assumptions. It is estimated that CHINAHONGQIAO (01378) will achieve a net profit attributable to shareholders of 33.1 / 35.1 / 37 billion yuan in 2026/2027/2028 (compared to 24.9 / 27.2 billion yuan in 2026/2027), corresponding to a current PE ratio of 10.3 / 9.7 / 9.2x. Assuming a dividend retention rate of 64%, the corresponding dividend yield in 2026 is 6.3%. The "buy" rating is maintained. The main points of Tianfeng's report are as follows: Stable integrated operations, rewarding shareholders with dividends and buybacks Annual performance: In 2025, the company achieved a revenue of 162.35 billion yuan, a year-on-year increase of 4.0%, and a net profit attributable to shareholders of 22.64 billion yuan, a year-on-year increase of 1.2%. In the second half of 2025, revenue was 81.31 billion yuan, a slight increase compared to the previous period, and a net profit of 10.28 billion yuan, with performance basically stable year-on-year. Aluminum electrolysis: Stable sales volume, price increases improve profit margins In 2025, the company achieved sales of 5.824 million tons of aluminum alloy products and 716,000 tons of deep-processed products, which remained basically stable compared to the previous year. The unit selling price of aluminum alloy products was 18,216 yuan per ton (excluding VAT), up 3.8% year-on-year, with a unit cost of 13,034 yuan per ton, down 1.5% year-on-year, and a unit gross profit of 5,183 yuan per ton, an increase of 20.1% year-on-year. The unit selling price of aluminum alloy processed products was 20,874 yuan per ton, up 3.1% year-on-year. The sales volume of aluminum alloy and deep-processed products remained basically stable year-on-year in 2025, benefiting from the price increase of electrolytic aluminum. The gross profit contribution of aluminum alloy products increased by 4.99 billion yuan to 30.2 billion yuan, while the gross profit of processed products decreased by 860 million yuan to 2.87 billion yuan due to cost increases. Expense stability, convertible bonds affecting profits In 2025, various expenses (administrative, financial expenses, etc.) remained relatively stable. The provision for fair value changes in financial instruments was 3.78 billion yuan, an increase of 1.59 billion yuan year-on-year, mainly for the loss provision of the equity portion of convertible bonds after the increase in stock prices (it is only an accounting treatment, not involving cash outflow); the provision for inventory impairment was 720 million yuan, an increase of 460 million yuan year-on-year. Excluding the above non-operating impacts, the company's actual profit level is better. Continued high dividends, dividends and buybacks rewarding shareholders At the end of 2025, the company distributed dividends of 1.65 Hong Kong dollars per share, totaling 14.4 billion yuan, with a dividend rate of 64%, continuing the high dividends. In addition, in 2025, the company repurchased 5.58 billion Hong Kong dollars, equivalent to about 4.9 billion yuan for the full year, rewarding shareholders through dividends and buybacks.