UBS: The fundamentals of copper and aluminum metals are stable and improving, raising the target price for CHINAHONGQIAO to HKD 28

According to the Zhitong Finance APP, UBS has released a research report stating that the fundamentals of China's copper and aluminum metal industry are stable, with a positive outlook. At the same time, UBS has raised the earnings expectations and target prices for related concept stocks; among them, UBS reiterated its "Buy" rating for CHINAHONGQIAO (01378) and raised the target price from HKD 26.8 to HKD 28. UBS pointed out that the normalization of purchasing behavior before the tariff cancellation and market distortions (especially in the case of copper) led to a "soft period" in metal demand, but this situation did not occur in the third quarter as feared. Industrial metal prices were supported by positive macroeconomic factors (rather than physical market supply tightness), including: interest rate cuts in the U.S. and a weaker dollar, confidence in aluminum trade, China's "counter-cyclical" policies, and possible additional stimulus measures from China. The improved macroeconomic backdrop (along with stable fundamentals and increased M&A activity) supports the shift of funds towards miners. UBS believes that the overall outlook for industrial metals is improving, the risk of demand slowing in the short term has eased, and the fundamentals for copper/aluminum remain attractive in the medium term. The energy transition (supported by AI/defense) will continue to support the demand-supply relationship but may face challenges. In developed markets, the replenishment potential may provide support as traditional end markets (automotive/construction/manufacturing) recover. Copper Outlook: Favorable Fundamentals and Macroeconomics The spot market fundamentals remain stable, with prices supported by macroeconomic factors, despite reduced trade due to U.S. tariffs in the third quarter. UBS expects that the fundamentals will continue to provide support in 2026/2027 due to: 1) limited growth in mine supply; 2) pressure on refined output; 3) strong long-term growth drivers (electrification, technology, etc.); and 4) recovery of traditional demand drivers, leading to price increases. UBS's global metals and mining team has raised its copper price forecast for 2025/2026 from USD 4.24/USD 4.68 per pound to USD 4.37/USD 4.80 per pound (USD 9,634/USD 10,582 per ton). Aluminum Outlook: Supply Constraints Continue to Support Prices Aluminum demand performance is mixed, but supply is constrained, with production in China limited and supply growth elsewhere being limited. UBS's global metals and mining team has raised its aluminum price forecast for 2025/2026 from USD 1.11/USD 1.16 per pound to USD 1.17/USD 1.18 per pound (USD 2,579/USD 2,600 per ton). Therefore, after considering higher price forecasts for copper, aluminum, and gold, UBS has raised the earnings expectations and target prices for related concept stocks. Among them, the bank has raised the earnings expectations for CHINAHONGQIAO in 2026 by 5%, while also raising the target price by 4% to HKD 28