Bank of China International: CHINAHONGQIAO (01378) expects steady performance in the first half of 2026, in line with expectations. The dividend yield is attractive, with a target price of HKD 40.71.

On August 24, 2026, China International Capital Corporation (CICC) released a research report on CHINAHONGQIAO (01378), maintaining a "Buy" rating with a target price of HKD 40.71. The industry rating was set to "Overweight," with high dividends as the core investment logic. CICC stated in the report that CHINAHONGQIAO's net profit for the first half of 2026 increased by 39% year-on-year to RMB 17.2 billion, close to the bank's forecast of RMB 17.8 billion. The main growth driver is the spike in aluminum prices due to supply disruptions in the Middle East, which significantly boosted the average selling price of downstream aluminum products. The bank expects that as aluminum prices return to normal, the company's net profit in the second half of 2026 will decline by 11% sequentially. After the financial report was disclosed, the bank lowered its profit forecasts for 2026-2028 by 2-3% and adjusted the target price to HKD 40.71. Nonetheless, the bank reaffirmed the "Buy" rating, estimating that the companys dividend yield could still reach 9.6-10.6% over the next three years, which is quite attractive given the 64% dividend payout ratio. The bank noted that due to supply interruptions from the Middle East, the average spot price of aluminum in Shanghai rose by 19% year-on-year in the first half of 2026, reaching RMB 24,141 per ton. This drove up the average selling prices of Hongqiao's aluminum alloy products and deep-processed products by 19% and 14%, respectively. Although alumina prices have declined, the companys overall gross profit margin improved from 25.7% in the first half of 2025 to 31.5% in the first half of 2026. Looking ahead, the report indicates that as supply disruptions in the Middle East ease and aluminum prices return to normal, the average spot price of aluminum in Shanghai is expected to drop by 5% in the second half of 2026. Additionally, the company typically confirms more costs in the second half of the year; in the first half, the company recorded a fair value gain of RMB 953 million from financial instruments, which is expected to be nonexistent in the second half. Multiple factors will contribute to a sequential decline in profits for the second half of the year. Following the financial report update, the bank lowered its profit forecasts for 2026-2028 by 2-3%. The company's A-share listed subsidiary, Shanghai Hongqiao Aluminum (002379.SZ), plans to issue additional A-shares to raise RMB 12 billion. On one hand, the bank made a slight downward adjustment to profit forecasts; on the other hand, with the rise in the yield of the 10-year U.S. Treasury bonds, the bank increased the assumed target dividend yield used for valuations from 5.5% to 5.7% for 2026-2028.