DBS: Raises China Hongqiao (01378) target price to HK$13.9 to “buy”

The Zhitong Finance App learned that DBS released a research report stating that it will upgrade China's Hongqiao (01378) rating to “buy”, raise the earnings forecast per share by 72% and 52% for this year and next two years to reflect the strong trend in aluminum prices, and raise the 2026 earnings forecast per share to 2.27 yuan, and the target price to HK$13.9.

According to the report, China's Hongqiao operates the world's largest aluminum production capacity, accounting for about 14% and 8% of China and the world respectively. In order to meet clean energy requirements, the company chose to use hydropower to reduce production costs. To this end, it has moved 2.03 million tons of aluminum production capacity to Yunnan. Currently, about 1.5 million tons have been fully put into operation.

DBS believes that China's Hongqiao has a stable cost advantage and growth potential. It expects that with the support of rising aluminum and alumina prices, falling raw material costs, and the release of aluminum processed products, profits will continue to accelerate from 2024 to 2026, while production efficiency and capacity utilization will improve.