Guosen Securities released a research report stating that with the help of this round of the high prosperity cycle of electrolytic aluminum and the opportunity of capacity transfer, Chinahongqiao (01378) will have more sustainable development capabilities in the future, maintaining an "outperform the market" rating. The company's full industry chain layout and sufficient ore guarantee benefit from the tight supply of bauxite and the substantial increase in alumina prices. The company's profit capabilities have significant elasticity to the price of aluminum and alumina. In recent years, there have been huge fluctuations in energy-related raw material prices, and in the future, fluctuations in energy costs will decrease, making the company's profit capabilities more robust.
Guosen Securities pointed out that Shandong Hongqiao, a subsidiary of Chinahongqiao, released unaudited balance sheets and income statements for the third quarter of 2024. In the third quarter of 2024, Shandong Hongqiao's revenue was 38.02 billion yuan (+13.9% year-on-year, +2.0% quarter-on-quarter), and net income was 5.96 billion yuan (+38.0% year-on-year, +9.4% quarter-on-quarter).
According to the announcement, in terms of operation, the main profit items are as follows: In the third quarter, the alumina price in Shandong was 3920 yuan/ton, an increase of 300 yuan/ton compared to the previous quarter. Shandong Hongqiao has equity alumina production capacity of 16.68 million tons and equity aluminum production capacity of 5.67 million tons. Calculated at 1.92 tons of alumina per ton of aluminum, Shandong Hongqiao sells 5.79 million tons of alumina externally per year, equivalent to 1.45 million tons in a quarter. A simple calculation of the increase in profit from alumina prices quarter-on-quarter is 0.4 billion yuan. In the third quarter, Yunnan's hydropower cost decreased by 0.12 yuan/kWh compared to the second quarter, resulting in a 0.4 billion yuan increase in profit from lower electricity costs. The price of prebaked anodes for the third quarter decreased by 250 yuan/ton compared to the previous quarter, resulting in a profit increase of 0.15 billion yuan.
