Core Viewpoint - HSBC's report indicates that China Hongqiao's strong performance in the second half of 2024 aligns with market expectations, driven by rising bauxite and aluminum prices, as well as ongoing bauxite shortages [1] Group 1: Financial Performance - China Hongqiao reported a net profit after tax (NPAT) of approximately RMB 22.4 billion for 2024, representing a 95% year-on-year increase, with the second half profit around RMB 13.2 billion, up 47% year-on-year [2] - The strong performance is attributed to a significant increase in alumina prices (up 78% year-on-year) due to bauxite shortages, and a 14% year-on-year rise in aluminum prices in the second half of 2024 [2] - The overall gross profit margin improved to 29.5% in the second half of 2024, up from 24.2% in the first half, with alumina profit margins increasing 4.2 times [2] Group 2: Dividend and Shareholder Returns - China Hongqiao proposed a final dividend of HKD 1.02 per share, in addition to an interim dividend of HKD 0.59 per share, resulting in a total payout ratio of 63% for 2024, compared to approximately 47% in 2023 [2] - The expected dividend yield is over 11%, exceeding HSBC's expectations [2] Group 3: Future Outlook - HSBC forecasts capital expenditures for 2025 to be between RMB 10 billion and RMB 13 billion, similar to 2024, with aluminum prices expected to stabilize between RMB 20,500 and RMB 21,500 per ton [3] - China Hongqiao does not plan to expand aluminum production capacity, with more capacity expected to be relocated to Yunnan before the rainy season in 2025 [3] - Despite an anticipated 8% decline in profits for 2025, HSBC identifies strong upward catalysts, including recovering demand and supportive domestic consumption policies [3] Group 4: Valuation and Target Price - HSBC raised the target price for China Hongqiao from HKD 16.00 to HKD 17.10, maintaining a "Buy" rating [4] - The target price is based on a forward P/E ratio of 7.5x applied to the estimated earnings per share of RMB 2.16 for 2025, reflecting a significant upside potential given the robust fundamentals and a dividend yield exceeding 10% [4]
汇丰：基本面稳固+估值具吸引力 上调中国宏桥(01378)目标价至17港元