The Zhitong Finance App learned that CICC released a research report stating that considering the drop in alumina prices, Nanshan Aluminum International (02610)'s 2026/2027 net profit was reduced by 50%/32% to US$2.03/309 million. The current stock price corresponds to 2026/2027 11/7x P/E. The bank maintained an outperforming industry rating. Considering the decline in profit, the bank lowered its target price by 47% to HK$34.81, corresponding to 14/9x P/E in 2026/2027, with 25% upside compared to the current stock price.
CICC's main views are as follows:
1H26 results fall short of expectations
The company announced 1H26 results: operating income of US$415 million, or -30.5% YoY; net profit to mother of US$63 million, -74.8% YoY. Due to the drop in alumina prices, the company's 1H26 performance was lower than expected.
The volume and price of 1H26 alumina increased and fell, and the performance declined markedly year-on-year
In terms of price, the average price of 1H26 alumina fell from 529 US dollars/ton to 320 US dollars/ton, or -39.5% year-on-year. Alumina sales increased from 1.127 million tons to 1.296 million tons, +15.0% year over year. In terms of cost, the average cost of 1 H26 ton of alumina is 270 US dollars, which is about 9 US dollars higher than in 2025, mainly due to underproduction capacity and rising bauxite prices. In terms of gross profit, due to the combination of falling prices and rising costs, 1H26 gross profit was -79% year over year; gross profit margin was 16%, -35ppt year over year.
Pay an interim dividend and continue to give back 20% to shareholders
The company paid an interim dividend of HK$0.16 per share, corresponding to a total dividend of US$126.61 million, with a corresponding dividend rate of about 20%, continuing the 2025 dividend ratio.
Lay out electrolytic aluminum production capacity to create a second growth curve
Relying on the already built Indonesian base with an annual production capacity of 4 million tons of alumina, the company plans to expand the downstream industrial chain and plan to lay out electrolytic aluminum and related raw materials and supporting businesses. 1H26 announced the launch of the first phase of the electrolytic aluminum project with an annual output of 250,000 tons. The investment amount is about US$440 million, the construction period is about 2 years, and plans to add an additional electrolytic aluminum project with an annual output of 500,000 tons in the medium to long term, marking the official start of the transformation of the alumina-electrolytic aluminum integrated producer.
Explore opportunities in the whole industry chain to achieve an integrated aluminum layout
According to the announcement, the company plans to further expand upstream and downstream in due course, promote the Indonesian park to build a short-distance, complete aluminum industry chain with upstream resources — midstream smelting — downstream processing, replicate the Shandong Longkou Park model, maximize internal synergies, and enhance operational efficiency and risk resistance.