External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>We believe aluminum (Al) is one of the sectors that is highly sensitive to the launch of the series of forceful pro-market policies in China.</li><li>This, together with the weakness of dollar as a results of the start of rate-cut cycle in the US and a relatively limited new supply of Al, will likely boost the near-term Al price which will serve as key catalyst of Hongqiao.</li><li>We revise up our 2024E-26E earnings forecast by 9-12%, largely due to higher price assumption of Al and alumina. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

We believe aluminum (Al) is one of the sectors that is highly sensitive to the launch of the series of forceful pro-market policies in China.This, together with the weakness of dollar as a results of the start of rate-cut cycle in the US and a relatively limited new supply of Al, will likely boost the near-term Al price which will serve as key catalyst of Hongqiao.We revise up our 2024E-26E earnings forecast by 9-12%, largely due to higher price assumption of Al and alumina. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Hongqiao (1378 HK) - Expect Higher ASP Following China’s Stimulus

<ul><li>Hongqiao’s net profit came in at RMB9.16bn (+2.7x YoY), which is better than the pre-announced profit growth of 2.2x in Jun.</li><li>Excluding the fair value loss of convertible bonds (CB), the core net profit would be even higher at RMB10.5bn (+3.3x YoY).</li><li>The strong profit growth was driven by higher-than-expected unit gross margin expansion for both aluminum (Al) (+2x YoY to RMB4,277/t) and Alumina (+2.3x to RMB748/t).</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Hongqiao’s net profit came in at RMB9.16bn (+2.7x YoY), which is better than the pre-announced profit growth of 2.2x in Jun.Excluding the fair value loss of convertible bonds (CB), the core net profit would be even higher at RMB10.5bn (+3.3x YoY).The strong profit growth was driven by higher-than-expected unit gross margin expansion for both aluminum (Al) (+2x YoY to RMB4,277/t) and Alumina (+2.3x to RMB748/t).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Hongqiao (1378 HK) - Net Profit 1H24 +2.7x YoY, Beat Expectations

<ul><li>Resume coverage with BUY. On the back of tight global aluminum (Al) supply (capacity control in China &amp; disruption of bauxite supply) but rising demand (growth of EV &amp; solar power + stabilisation of construction demand following China’s U-turn on property policy), we forecast Al / alumina price to increase 4.5%/10% 2024E and to stay high in 2025E.</li><li>We believe Hongqiao (~9% global market share in terms of Al output in 2023) is set to benefit from unit margin expansion, thanks to its vertically integrated model with overseas bauxite equity interest, captive power plant and high percentage of molten Al products.</li><li>We forecast Hongqiao to deliver earnings growth of 61%/5% in 2024E/25E (6%/4% above Bloomberg consensus).</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Resume coverage with BUY. On the back of tight global aluminum (Al) supply (capacity control in China &amp; disruption of bauxite supply) but rising demand (growth of EV &amp; solar power + stabilisation of construction demand following China’s U-turn on property policy), we forecast Al / alumina price to increase 4.5%/10% 2024E and to stay high in 2025E.We believe Hongqiao (~9% global market share in terms of Al output in 2023) is set to benefit from unit margin expansion, thanks to its vertically integrated model with overseas bauxite equity interest, captive power plant and high percentage of molten Al products.We forecast Hongqiao to deliver earnings growth of 61%/5% in 2024E/25E (6%/4% above Bloomberg consensus).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Hongqiao (1378 HK) - A Key Beneficiary of Tight Aluminum Supply Trading

<ul><li>China Hongqiao announced its FY22 profit warning stating an approximately 40% YoY bottom-line decline, largely in line with market expectations.</li><li>Two factors have contributed to such earnings drop including (i) rising raw materials and (ii) FX loss arising from the significant depreciation of RMB.</li><li>However, we believe the profit of the aluminum industry is expected to rebound in 2023E given the marginal cost improvement. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

China Hongqiao announced its FY22 profit warning stating an approximately 40% YoY bottom-line decline, largely in line with market expectations.Two factors have contributed to such earnings drop including (i) rising raw materials and (ii) FX loss arising from the significant depreciation of RMB.However, we believe the profit of the aluminum industry is expected to rebound in 2023E given the marginal cost improvement. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Hongqiao (1378 HK) – Expect a profit turnaround in 2023E

<div><div><div><div><ul><li>China Hongqiao announced its 1H22 results. Top-line rose by 31% YoY to RMB68.7bn while bottom-line declined by 3.6% YoY to RMB7.8bn.</li><li>The Company declared an interim dividend of HK$0.41 per share, representing a 42% of payout ratio. The stock is currently trading at 3.4x 2022E P/E with a potential full year dividend yield of over 14%.</li><li>We believe that the Company's valuation remains attractive which provides a good investment choice amid turbulent market condition.</li></ul></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

China Hongqiao announced its 1H22 results. Top-line rose by 31% YoY to RMB68.7bn while bottom-line declined by 3.6% YoY to RMB7.8bn.The Company declared an interim dividend of HK$0.41 per share, representing a 42% of payout ratio. The stock is currently trading at 3.4x 2022E P/E with a potential full year dividend yield of over 14%.We believe that the Company's valuation remains attractive which provides a good investment choice amid turbulent market condition.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Hongqiao (1378 HK) – A Potential Beneficiary of EU Energy Crisis

China

China Hongqiao Group Ltd. manufactures aluminum products. The Company's aluminum products consist of molten aluminum alloy, aluminum alloy ingots and aluminum busbars.

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China Hongqiao (1378 HK)