沙特阿拉伯的产能增长 + 中国在低绿色能源成本上的卓越成本优势

Arabia + superb cost advantageon low green energy cost inChina Capacity growth in Saudi Arabia + superb costadvantage on low green energy cost in China Target PriceUp/Downside We believe Chuangxin offers unique growth story in the aluminium sector.Onthe cost side, theon-goingcommencement of wind & solar captive power sourcewillfurther push the cost down in 2026E-27E, from the already low cost ofelectricity at present. On the growth side, Chuangxin’s aluminium capacityconstruction in Saudi Arabia, with the new round of investment fromPublic Current Price China Materials Investment Fund(PIF,the sovereign wealth fund of Saudi Arabia), offersconfidenceinproject execution.Sector-wise, we believe the tight supply will lendstrong supporttothe aluminium price (see oursector note).We estimate every1% increase in aluminium price will boost Chuangxin’s 2026E earnings by 2.5%. WayneFUNG, CFA(852) 3900 0826waynefung@cmbi.com.hk Jake Zhang(852) 3900 0849jakezhang@cmbi.com.hk Company background.Foundedin 2012and listed ontheHKEX in Nov2025,Chuangxin isprimarilyengaged in electrolytic aluminum smelting(capacity by end-2025:788kt, 100% stake)andaluminarefining(1.2mt,58.5%stake).According to CRU,Chuangxin’s aluminum smelter in Huolinguole,Inner Mongolia,was the 4th largest production base of Expanding capacity in Saudi Arabia.Chuangxin currently has 788ktelectrolytic aluminum capacityin China. To further expand capacity againstthe backdrop of capacity cap in China,Chuangxinhas initiateda 500 ktaluminum project in Saudi Arabia, through forming a JV(25.2%equity Substantial cost reduction ahead through the use of green energy. Chuangxin’s cost leadershipcomesfrom(1) thehigh self-sufficiencyofelectricity (87% in5M25,higher thantheindustry average of<60%), and (2)theproprietary low-cost electricity (RMB 0.33/kWhin 5M25, lower thantheindustryaverageof RMB0.40/kWh).More importantly,Chuangxinis buildinga total of1,750MW captive wind & solar power plants(640MW completedin Dec 2025)to replace the existing coal power.The low WTG and solarmodule cost, togetherwith high utilization hoursin the region, will enable Related report:Material sector–Aluminium price to be fuelled by tight supply throughout 2026–4Feb2026(link) Valuation Initiate with BUY and TP of HK$32.We derive the valuation for Chuangxin based on P/Eratio (2026E), due to the cyclical nature of the commodity sector.We assign 13x targetmultiple, which is basedon ~20% premium over ourtarget multiple forChina Hongqiao(1378 HK, BUY)as we see higher volume growth and cost reduction potential for Investment theme Aluminium-Capacitygrowth through Saudi Arabia project In China,Chuangxincurrently has788 kt of electrolyticaluminum production capacityin operationin Huolinguole, Inner Mongolia, equipped with 500kA aluminum electrolysis Meanwhile,Chuangxin,through a JV (namely Red Sea JV), co-invested in an integratedelectrolytic aluminum project withtargetedintegratedaluminiumannualproductioncapacity of 500kt in Yanbu, Saudi Arabia.In 2025,the JVwas indirectly held by In Jan 2026, Public Investment Fund (PIF), the sovereign wealth fund of Saudi Arabia,signed a cooperation agreement with Red Sea JV. Upon the signing, PIF will own 25%interest in Red Sea JV, while Chuangxin’s interest will be reduced from 33.6% to 25.2%. Theprojecthasobtained relevant land use right and permits, local construction permitsand essential licenses, and ODI-related approval from the NDRC.Chuangxintargets to The rich reserves of petroleum and natural gas in the Middle East provide cost-effectiveand stable energy supply to aluminum smelting. According to CRU, in 2024, the cash costproportion relative to total revenue for the four recognized aluminum smelters in the Gulf Alumina–Capacity expansion calcined from aluminium hydroxideinChina Chuangxincurrently has1,200 kt of alumina production capacity in operation inBinzhou, Shandong. Binzhou is the largest import city for bauxite by volume in China. Thealumina refinery is 40 km away from Huanghua Port(the second largest bauxite logistics Thealumina productsareprimarily used forthe Company’sin-housealuminum smelting.In 2022/23/24/5M25,thealumina self-sufficiency ratewere47%/90%/84%/70%. Besides,Chuangxinhas alreadyobtained regulatory approval for 6,000 kt of aluminaproduction capacity, calcined from aluminum hydroxide,in Huolinguole, Inner Mongolia. understand that the actual capacity reached 2,800kt by end-2025, andforecast the capacitywill reach 3,200kt by end-2026E. At present, Chuangxinhasno plan toutilisetheremaining4,000 kt of approved quota. Aluminum hydroxide is often produced as an intermediate in the Bayer process andcan becalcined to produce alumina.Chuangxin’s aluminum hydroxide produced was primarily Chuangxin has 2,980 kt of aluminum hydroxide production capacityin Binzhou,Shandong,among which 1,480 kt has been in operation.The remaining 1,500ktcommencedtrialproduction in Dec 2024andput intofull operation inApr2025. Sou