Huaxin Securities: Initiates "Buy" Rating for CHINAHONGQIAO, Company’s Large-Scale Buyback Demonstrates Confidence

According to the Zhitong Finance APP, Huaxin Securities released a research report predicting that CHINAHONGQIAO (01378) will have operating revenues of 159.48 billion, 164.11 billion, and 168.84 billion yuan for the years 2025-2027, with net profits attributable to shareholders of 25.33 billion, 27.11 billion, and 28.74 billion yuan, respectively. The current stock price corresponds to PE ratios of 8.9, 8.3, and 7.8 times. Considering the strong aluminum prices, the company's large-scale repurchase demonstrates confidence, initiating coverage with a "Buy" investment rating. Key Points from Huaxin Securities: CHINAHONGQIAO Releases 2025 Semi-Annual Report In H1 2025, the company's operating revenue was 81.039 billion yuan, a year-on-year increase of 10.1%; net profit attributable to shareholders was 12.36 billion yuan, a year-on-year increase of 35%; the company's gross profit margin in H1 2025 increased to 25.7%, up 1.50 percentage points year-on-year; net profit margin reached 16.7%, up 3.1 percentage points year-on-year. Main Business Volume and Price Increase, Driving Year-on-Year Gross Profit Growth In terms of selling prices, the average selling price of alumina products in H1 2025 was approximately 3,243 yuan/ton (excluding VAT), an increase of about 10.3% year-on-year; the average selling price of aluminum alloy products was approximately 17,853 yuan/ton (excluding VAT), an increase of about 2.7% year-on-year; the average selling price of aluminum alloy processing products was 20,615 yuan/ton (excluding VAT), an increase of about 2.9% year-on-year. In terms of sales volume, the external sales volume of alumina products in H1 2025 was 6.368 million tons, an increase of about 15.6% year-on-year. The external sales volume of aluminum alloy products was 2.906 million tons, an increase of about 2.4% year-on-year. The sales volume of aluminum alloy processing products was 392,000 tons, an increase of about 3.5% year-on-year. From a financial product perspective, the total revenue in H1 2025 was 81.04 billion yuan, a year-on-year increase of 10.1%, with revenue contributions from aluminum alloy products, alumina, aluminum alloy processing products, and steam accounting for 64.0%, 25.5%, 10.0%, and 0.5%, respectively. The total gross profit was 20.81 billion yuan, a year-on-year increase of 16.9%, with gross profit contributions from aluminum alloy products, alumina, and aluminum alloy processing products accounting for 62.9%, 28.6%, and 9.0%, respectively. Large-Scale Repurchase Demonstrates Confidence Significant repurchase in the first half of the year. The company spent HKD 2.6 billion in the first half to repurchase 187 million shares. This reflects the board of directors and management team's confidence in the company's long-term strategy and growth. The company's cash flow structure is improving. The operating net cash flow in the first half reached 22.31 billion yuan. The net cash outflow from investment activities was 9.41 billion yuan, and the net cash outflow from financing activities was 8.97 billion yuan. The debt structure is relatively stable. In H1 2025, the company's financial expenses were 1.28 billion yuan, a year-on-year decrease of 17.7%. The debt-to-asset ratio was 49.1%, an increase of 0.9 percentage points compared to December 31, 2024