提高收入和TP在更高铝价上

higher aluminium price Raising earnings and TP on higher aluminium Target PriceHK$45.00(Previous TPHK$39.00)Up/Downside27.5%Current PriceHK$35.30 We maintain our positive stance on Hongqiao as our latest sector analysissuggest that the global aluminium deficit will continue in 2026-27(see oursectornotepublished today).We revise up our aluminium ASP forecast by 12%/7% in2026E/27E, while revisingdown our bauxite price forecast by 16%/18% due tosufficient supply.Accordingly, we revise up our 2026E/27E earnings forecast by27%/12%.We revise up our TP to HK$45 (from HK$39), based on 11x 2026EP/E which is equivalent to the historical average plus 2SD (methodology China Materials Wayne FUNG, CFA(852) 3900 0826waynefung@cmbi.com.hkStock Data Global deficit to continue.Our latest analysis on global aluminium supplyand demand suggeststhat the global deficit will continue in 2026E, due to(1) almost full utilisation rate in China (~99% of the policy capacity cap of45mt in Dec 2025), and (2)limited new capacity overseas.We forecastaluminium price to gain 15% YoY in 2026E. While we see more potential Earnings forecast.We forecast Hongqiao to deliver RMB26.2bn of corenet profit (excluding fair value change) in 2025E, up 7% YoY.We expectnet profit growthtoaccelerate to 34% YoY in 2026E, driven largely by higher Earnings sensitivity.We estimate every 1% increase in aluminium pricewill boost 2026E earnings by 2.3%, while a 1% decrease in coal price will Key risks:(1) unexpected removal of capacity cap in China;(2) faster-than-expectedoverseas capacity ramp-up;(3) slowdown of global economy; (4) Source: FactSet Related reports:Material sector–Aluminium price to be fuelled by tight supply throughout 2026–4Feb 2026 (link) China Hongqiao (1378 HK)–Further re-rating is possible–12 Nov 2025 (link) China Hongqiao–Lackof Interimdividends but new buyback scheme toboost confidence–18 Aug 2025 (link) Valuation Source:Bloomberg,company data, CMBIGM estimates Source:Bloomberg,company data, CMBIGM estimates Operating assumptions Source: Company data,CMBIGM estimates Source: Company data, CMBIGMestimates Source: Company data,CMBIGM estimates Source: Company data, CMBIGMestimates Earnings sensitivity Disclosures& Disclaimers Analyst Certification The research analyst who is primary responsible for the content of this research report, in whole or in part, certifies that with respect to the securities or issuerthat the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conductissued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to thedate of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3) serve as an officer of any of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies coveredin this report.CMBIGM or its affiliate(s) have investment banking relationship with the issuers covered in this report in preceding 12 months. Important Disclosures There are risks involved in transacting in any securities. The information contained in this report may not be suitable forthe purposes of all investors.CMBIGMdoes not provide individually tailored investment advice. This report has been prepared without regard to the individual investment objectives, financial positionor special requirements. Past performance has no indication of future performance, and actual events may differ materially from that which is contained in thereport.The value of, and returns from, any investments are uncertain and are not guaranteed and may fluctuate as a result of their dependence on the This report or any information contained herein, have been prepared by theCMBIGM, solely for the purpose of supplying information to the clients ofCMBIGMor its affiliate(s) to whom it is distributed. This report is not and should not be construed asan offer or solicitation to buy or sell any security or any interest insecurities or enter into any transaction.NeitherCMBIGMnor any of its affiliates, shareholders, agents, consultants, directors, officers or employees shall be CMBIGMhas exerted every effort in its capacity to ensure, but not to guarantee, their accuracy, completeness, timelinessor correctness.CMBIGMprovidesthe information, advices and forecasts on an "AS IS" basis.The information and contents are subject to change without notice.CMBIGMmay issue otherpublications having information and/ or conclusions differe