Guosheng Securities has issued a research report reaffirming its "Buy" rating on CHINAHONGQIAO (01378). The firm projects attributable net profits of RMB 35.3 billion, RMB 33.9 billion, and RMB 32.2 billion for fiscal years 2026 through 2028, corresponding to forward P/E multiples of 6.4x, 6.7x, and 7.1x, respectively.

The company's first-half 2026 results showed revenue of RMB 87.51 billion, representing year-on-year growth of 8%, while net profit surged 39% to RMB 17.21 billion. Earnings per share climbed 32% to RMB 1.734. The revenue expansion was driven primarily by higher average selling prices for aluminum alloy products, increased sales volumes of deep-processed aluminum alloy products, and elevated selling prices for those products. Guosheng believes that cost reduction and operational efficiency are the key competitive differentiators at this stage, and the company is well-positioned to achieve leapfrog growth through deep upstream and downstream synergy.

Key Highlights from the Guosheng Report:

Sharp Rise in Electrolytic Aluminum Prices Boosts Profitability Significantly

1) Volume: During the first half of 2026, the company sold approximately 2.811 million tonnes of aluminum alloy products and around 6.917 million tonnes of alumina products, up 8.6% year-on-year. Sales of deep-processed aluminum alloy products reached roughly 444,000 tonnes, representing a 23.2% increase. 2) Price (excluding tax): The average selling price of aluminum alloy products rose approximately 18.7% year-on-year to RMB 21,192 per tonne, while deep-processed aluminum alloy products saw an average price hike of about 13.4% to RMB 23,436 per tonne. 3) Profit: Gross profit for alumina reached RMB 146 per tonne in the first half of 2026. Aluminum alloy products generated gross profit of RMB 8,161 per tonne, up 81% year-on-year, while deep-processed products delivered RMB 7,658 per tonne, a 74% increase.

Commitment to Carbon Neutrality and Green Development

The company remains steadfast on its green development pathway, prioritizing carbon reduction within its production management framework. Against the backdrop of national policy supporting low-carbon growth, CHINAHONGQIAO has been methodically relocating its electrolytic aluminum capacity to Yunnan Province. As of June 30, 2026, approximately 2.2802 million tonnes of electrolytic aluminum capacity had been put into operation in the region. This strategic relocation leverages Yunnan's abundant hydropower and renewable energy resources to increase the share of clean energy in production, achieve green and low-carbon development, and effectively serve the aluminum consumption demand of southern China's market.

Driving Innovation to Foster New Productive Forces

The company places great emphasis on the research and application of electrolytic aluminum production technologies and has secured numerous patents spanning process optimization, energy consumption reduction, and environmental emission control. It commissioned the world's first industrialized 600kA extra-large electrolytic aluminum production line in 2014 and, in 2023, successfully developed a next-generation aluminum electrolysis iterative technology, the "Integrated Aluminum Electrolysis Copper-Carbon Composite Cathode Technology." These accomplishments place the company at the industry forefront in both technological capability and green development performance.

Risk Disclosure

Risks include substantial fluctuations in metal prices, global political instability and foreign exchange volatility, and risks related to market competition and demand fluctuations.