The Zhitong Finance App learned that Dongwu Securities released a research report saying that in 2026, China's Hongqiao (01378) H1 achieved operating income of 87.506 billion yuan, +8.0% year over year; net profit to mother was 17.210 billion yuan, +39.2% year over year. The results were in line with previous forecasts. The bank maintains China's Hongqiao “buy” rating, and is optimistic that the company's entire aluminum industry chain layout will advance steadily, that collaborative upstream, middle and downstream development will drive the company's performance improvement, and slightly raise the net profit attributable to shareholders of the parent company in 2028 to 34.8 billion yuan (originally estimated at 33.729 billion yuan).
The main views of Dongwu Securities are as follows:
The upward trend in aluminum prices boosts the company's performance, and the share of high-value-added product business continues to rise
1) Volume: 2026H1, the company's aluminum alloy product sales volume is 2,811 million tons; aluminum oxide sales volume is 6.917 million tons, +8.6% year over year; sales volume of aluminum alloy deep processing products is 444,000 tons, the share of high value-added products business continues to increase; 2) Price: 2026H1, the average sales price of the company's aluminum alloy products is about 21,192 yuan/ton (excluding VAT), up about 18.7% year on year; 3) gross profit margin: Benefiting from the rise in aluminum prices, the company's gross margin of aluminum alloy products increased to 38.5%, and the gross margin of aluminum alloy deep processing products was 32.7%.
The company continues to repurchase shares and increase shareholders' holdings
In the first half of 2026, the company continued to promote shareholder returns. The company repurchased a total of 159.3 million shares, with a total consideration of about HK$5.286 billion, and all repurchased shares were cancelled; the controlling shareholder, China Hongqiao Holdings, increased its total holdings by 41.5 million shares in the secondary market on June 8 and 10, with average transaction prices of HK$26.4641 and HK$26.3676 respectively, reflecting the firm confidence of the majority shareholders in the company's development prospects.
Laying out the Simandou iron ore project, the return on investment is expected to significantly increase the company's profits
The company invested in the Simandou iron ore project for the first time in November 2025. Public data estimates show that the annual production capacity of the project has now exceeded 40 million tons. As production capacity gradually climbs, it is expected to contribute new profit increases to the company and open up a second growth curve in the medium to long term.
The global 2027-2028 electrolytic aluminum supply and demand pattern may still maintain a tight balance, and the aluminum price center is expected to remain high
The bank estimates that the overseas supply growth rate in 2027-2028 is about 11.49%/7.91%, and the global supply growth rate is about 4.51%/3.31%; at the same time, considering the further recovery of the global manufacturing industry, the bank estimates that the global demand growth rate is 1.99%/3.03%. The overall supply and demand pattern will shift from a sharp shortage in 2026 to a tight balance. Considering the upward shift in the complete cost center of European and American electrolytic aluminum companies, and the hard demand for overseas inventory replenishment, the bank believes that aluminum prices have the fundamentals of long-term high levels.
Risk warning: Downstream demand falls short of expectations, macro disturbances exceed expectations, and the company's high dividends fall short of expectations.