According to the research report released by Sealand Securities, considering the obvious advantages of integrated operation and good performance elasticity of Chinahongqiao (01378), high dividend and high stock dividend, and the relatively low valuation level, it is given a "buy" rating for the first coverage. The projected revenue for 2024-2026 is 147.4/151.7/157.2 billion yuan, and the net income attributable to the parent company is 20.12/21.35/23.39 billion yuan, equivalent to an EPS of 2.12/2.25/2.47 yuan per share. The company achieved a revenue of 73.59 billion yuan in the first half of 2024, a year-on-year increase of 12%, and a net profit attributable to the parent company of 9.15 billion yuan, a year-on-year increase of 272.7%.

Sealand Securities believes that the substantial growth in the company's performance in the first half of the year is mainly due to the simultaneous increase in the volume and price of aluminum and alumina, as well as the decrease in the procurement prices of coal and anodes, resulting in a reduction in costs. In addition, fair value changes have a certain impact on performance.

The main views of Zhonghai Securities are as follows:

Aluminum: Volume and price increased, costs decreased.

In the first half of 2024, the company's aluminum alloy production volume reached 3.221 million tons, a year-on-year increase of 5.3%, and the sales volume of aluminum alloy products reached 2.837 million tons, a year-on-year increase of 0.5%. The production volume of aluminum alloy processed products reached 0.493 million tons, a year-on-year increase of 30.6%. The unit selling price of aluminum alloy products in the first half of the year was 17,379 yuan/ton, a year-on-year increase of 6.7%, and the unit cost was 13,100 yuan/ton, a year-on-year decrease of 11.9%. The unit gross profit reached 4,279 yuan/ton, a year-on-year increase of 203%. The unit selling price of aluminum alloy processed products was 20,027 yuan/ton, a year-on-year decrease of 1.2%, and the unit cost was 15,815 yuan/ton, a year-on-year decrease of 9.6%. The unit gross profit was 4,212 yuan/ton, a year-on-year increase of 52.4%. In the first half of the year, the company's aluminum alloy production volume increased significantly, and due to the decline in the procurement prices of coal, anodes, and other cost items, the cost of aluminum decreased significantly, while the price of aluminum increased to a certain extent, expanding profit margin. However, the profitability of the aluminum processing segment is relatively weak.

Alumina: Prices rose sharply, increasing profitability.

In the first half of 2024, the company achieved a sales volume of 5.507 million tons of aluminum oxide, +2.4% year-on-year. The unit price of aluminum oxide was 2942 yuan/ton, an increase of +16.9% year-on-year. The unit cost was 2195 yuan/ton, a decrease of -4.3% year-on-year. The unit gross profit reached 748 yuan/ton, an increase of +233% year-on-year. In the first half of the year, due to the significant increase in the price of aluminum oxide, the company's aluminum oxide business has increased its profitability. With the current high price of aluminum oxide, the profit contribution in the second half of the year is expected to be higher.

Dividends: Increase the dividend ratio to 56%.

The company plans to distribute an interim dividend of HKD 0.59 per share. Based on the closing price on August 16, the dividend yield reaches 5.7%. A total of 5.1 billion RMB will be distributed as dividends, and the dividend ratio will reach 56%, an increase compared to previous years.