CHINAHONGQIAO (01378) subsidiary reports a further increase of 30% in profits under high base in Q1, globally leading in both growth and dividends distribution.

After the turn of April, major aluminum companies in the capital market have already disclosed their performance for 2025. According to GMTEight's analysis, among the world's leading listed aluminum companies, CHINAHONGQIAO (01378) listed on the Hong Kong stock exchange, with a net profit of 22.64 billion yuan, has the largest profit scale globally, rightfully earning the title of "profit king" in the global aluminum industry. Although only entering the fifth month of 2026, this year has seen significant changes in the global macroeconomic climate, with geopolitical tensions surpassing those of the previous year. Amidst this, on one hand, the aluminum industry's high prosperity has not been affected by external factors, with supply constraints intensifying and demand outweighing supply expected to remain the norm. On the other hand, based on public information, it is highly likely that CHINAHONGQIAO will continue to hold the title of "profit king" in the global aluminum industry this year. According to the first quarter performance disclosed by CHINAHONGQIAO's subsidiary, Shandong Hongqiao New Materials Co., Ltd. (referred to as "Shandong Hongqiao"), during Q1, Shandong Hongqiao's revenue continued to increase by 3.4% to 41.552 billion yuan compared to the same period last year, and more impressively, the company's net profit grew by 30% year-on-year under a high base. Considering that Shandong Hongqiao is the core operating entity of CHINAHONGQIAO and owns all of CHINAHONGQIAO's domestic business, Shandong Hongqiao's performance can undoubtedly be seen as a leading indicator of CHINAHONGQIAO's performance. However, it is worth noting that the performance of both cannot be entirely equated, as CHINAHONGQIAO also holds diversified overseas assets, including an alumina project in Indonesia and bauxite projects in Guinea, a country in West Africa. Taking into account CHINAHONGQIAO's domestic and overseas assets, the author estimates that the company's net profit attributable to the parent company in the first quarter will fall between 7.7 billion to 8 billion yuan, a profit performance that is expected to continue to place the company ahead of its global aluminum counterparts. Subsidiary's first quarter profit increased by base of 30% Although 2026 has not yet reached the halfway point, it can be said that it is a tumultuous year. Against the backdrop of ongoing geopolitical tensions, aluminum prices fluctuated strongly in the first quarter, with the center of gravity shifting upwards. Data shows that the average spot aluminum price in the first quarter increased by 18% and 12% on a month-on-month and year-on-year basis, respectively. During the quarter, the highest price exceeded 25,000 yuan per ton, and the lowest price was also above 23,000 yuan per ton. Taking a closer look, in January, monetary liquidity and supply-demand balance resonated, leading to a steady increase in aluminum prices; in February, influenced by expectations of the Federal Reserve, aluminum prices temporarily fell slightly; as March arrived, Middle East geopolitical conflicts attracted global attention, and major commodities, including aluminum, were pricing dominated by geopolitics, with aluminum prices experiencing a rollercoaster of high and low levels. Under the industry trend of rising aluminum prices, Shandong Hongqiao, as the core operating entity of CHINAHONGQIAO in the domestic market, has maximized its profit elasticity during the industry's favorable period due to its integrated layout and cost advantages. As mentioned earlier, in the first quarter of this year, Shandong Hongqiao's net profit increased by over 30% year-on-year despite a marginal increase in revenue and a high base of profits from last year. According to Hong Kong stock rules, quarterly reports are voluntary disclosure items for listed companies. Although CHINAHONGQIAO has not released its first quarter report, the strong profit growth trajectory of Shandong Hongqiao in the first quarter, combined with a reasonable estimation of the profit contribution of CHINAHONGQIAO's diverse overseas assets, suggests that CHINAHONGQIAO's net profit attributable to the parent company in the first quarter of this year is likely to fall in the range of 7.7 billion to 8 billion yuan. In comparison with peers, this profit scale of CHINAHONGQIAO clearly places it in a leading position in the global aluminum industry in 2026. Value growth stocks focusing on growth and dividends In the secondary market, investors tend to categorize companies like CHINAHONGQIAO in the cyclical stock category, and then further explore the individual targets' growth and dividend characteristics within this framework. However, from the author's perspective, as supply constraints in the aluminum industry transition from expectations to reality, and the degree of supply restrictions intensifies, the profitability of aluminum companies has been significantly prolonged. Especially for world-class aluminum giants like CHINAHONGQIAO, with its integrated industrial layout and significant cost advantages, the company's cyclical properties have likely been greatly weakened, and it is closer to a value growth stock with both outstanding growth and dividend characteristics. Looking at growth, at the current point in time, it can be said that the electrolytic aluminum industry has entered a new phase of "prolonged profitability". Domestically, the "ceiling" of 45 million tons of capacity has been reached, and under the current situation of full production, future additional capacity can only be achieved through equivalent or even reduced replacement, limiting the net increase in capacity in the coming years. If the supply constraints domestically were within expectations, a series of geopolitical conflicts this year have had an even more severe and unexpected impact on the overseas aluminum supply side. According to a research report on the aluminum market by the international investment bank JP Morgan, global primary aluminum is facing the largest supply gap since 2000 in 2026. With supply limitations becoming a certainty, aluminum demand has shown considerable elasticity. In recent years, the rapid development of emerging sectors such as energy storage, low-altitude aircraft, and aluminum replacing copper trends have injected new incremental demand for aluminum. In a situation where limited supply cannot match the continuous growth in demand, it is difficult to imagine a realistic basis for sustained aluminum price declines. GMTEight believes that CHINAHONGQIAO will continue to achieve continuous self "evolution" with the advantage of its integrated industrial chain in such an environment, ensuring the company's growth momentum is undeniable. In terms of dividend characteristics, according to information from CHINAHONGQIAO's 2025 performance briefing, the company's dividend payout ratios from 2021 to 2025 were 48%, 49%, 47%, 63%, and 65%, showing a significant increase in the central range of dividend payout ratios; in 2025, the company repurchased 306 million shares, with a repurchase amount reaching HK$5.58 billion for the full year. In terms of both shareholder returns and sustainability, CHINAHONGQIAO is at the top level in the industry. Furthermore, the basis for CHINAHONGQIAO's continuous high dividend payouts has been further strengthened. According to the financial report of its subsidiary Shandong Hongqiao, the company's construction in progress has decreased from nearly 17 billion yuan at the beginning of last year to about 6.3 billion yuan at the end of the first quarter of this year, marking the end of the peak period of project construction and significantly reducing capital expenditure pressure. With Shandong Hongqiao's reduced capital expenditure, it can be inferred that CHINAHONGQIAO's ability and willingness to pay dividends will continue to increase in tandem. With the "prolonged profitability" of the aluminum industry, world-class aluminum leaders like CHINAHONGQIAO are expected to continue releasing their growth potential; at the same time, CHINAHONGQIAO's characteristics as a dividend asset will be further strengthened with the weakening of cyclicality and enhancing of growth. As China accelerates into the era of equity investment, CHINAHONGQIAO, as a unique and globally competitive high-quality asset in the aluminum industry, not only has high growth visibility and great growth potential, but also has a highly attractive dividend policy, attracting more and more investors' attention in the future.