Global Materials | Industrials | Commodities

Rahul Jain

Equity Bottom-Up

<ul>
<li>Equity placing strengthens Hongqiao’s balance sheet, cuts refinancing risk, and supports Yunnan’s low-carbon capacity migration.</li>
<li>FY25–27 forecasts updated: modest EPS dilution offset by lower interest costs and improved cash generation.</li>
<li>Valuation remains discounted vs global peers despite first-quartile costs, rising renewable mix, and improving aluminium market fundamentals.</li>
</ul>


Equity placing strengthens Hongqiao’s balance sheet, cuts refinancing risk, and supports Yunnan’s low-carbon capacity migration.
FY25–27 forecasts updated: modest EPS dilution offset by lower interest costs and improved cash generation.
Valuation remains discounted vs global peers despite first-quartile costs, rising renewable mix, and improving aluminium market fundamentals.


China Hongqiao: Capital Raise De-Risks the Balance Sheet Into a Strengthening Aluminium Cycle

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-hongqiao-group-ltd" target="_blank" data-smartkarma-citation="entities:1909:1" rel="noopener">China Hongqiao (1378 HK)</a> is looking to raise US$1.2bn via a top-up placement at an indicative price of HK$29.2/share, a 9.6% discount from the last close.</li>
<li>There will be limited passive buying from global index trackers at the time of settlement of the placement shares. However, there are a couple of potential index inclusions in December.</li>
<li>Then there will be more passive buying from trackers of a global index, <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index (HSI INDEX)</a> and <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> next year.</li>
</ul>



China Hongqiao (1378 HK) is looking to raise US$1.2bn via a top-up placement at an indicative price of HK$29.2/share, a 9.6% discount from the last close.
There will be limited passive buying from global index trackers at the time of settlement of the placement shares. However, there are a couple of potential index inclusions in December.
Then there will be more passive buying from trackers of a global index, Hang Seng Index (HSI INDEX) and Hang Seng China Enterprises Index (HSCEI INDEX) next year.


China Hongqiao (1378 HK): Index Impact of US$1.2bn Placement

APAC IPOs & Placements, Aequitas Research

Nicholas Tan

APAC IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-hongqiao-group-ltd" target="_blank" data-smartkarma-citation="entities:1909:1" rel="noopener">China Hongqiao (1378 HK)</a> is looking to raise around US$1.2bn from a primary placement.</li>
<li>This represents 9.1 days of the stock’s three month ADV, and 2.9% of total shares outstanding.</li>
<li>In this note, we will talk about the placement and run the deal through our ECM framework.</li>
</ul>



China Hongqiao (1378 HK) is looking to raise around US$1.2bn from a primary placement.
This represents 9.1 days of the stock’s three month ADV, and 2.9% of total shares outstanding.
In this note, we will talk about the placement and run the deal through our ECM framework.


China Hongqiao Placement: Good Valuation but Likely Opportunistic, on the Back of Chuangxin Listing

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.

<ul><li>On the back of (1) almost full utilisation rate of aluminium capacity in China along with slow capacity ramp-up in overseas, (2) resilient end-demand such as EV, power and electronics, and (3) relatively stable raw materials costs, Hongqiao is at sweet spot and is set for further re-rating.</li><li>We revise up our 2025E-27E earnings forecasts by 4-5%, largely due to higher aluminium price fuelled by favourable supply/demand profile.</li><li>We revise up our TP to HK$39 (from HK$27), based on 12x P/E (previously 8.6x) which is derived from 2SD above the historical average. </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>

On the back of (1) almost full utilisation rate of aluminium capacity in China along with slow capacity ramp-up in overseas, (2) resilient end-demand such as EV, power and electronics, and (3) relatively stable raw materials costs, Hongqiao is at sweet spot and is set for further re-rating.We revise up our 2025E-27E earnings forecasts by 4-5%, largely due to higher aluminium price fuelled by favourable supply/demand profile.We revise up our TP to HK$39 (from HK$27), based on 12x P/E (previously 8.6x) which is derived from 2SD above the historical average. 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) - Further re-rating is possible

<ul>
<li>China Hongqiao has delivered steady ~6 Mt volumes, ~25% EBITDA CAGR, and 15–27% ROCE over the last three years, supported by integration and energy transition gains.</li>
<li>China Hongqiao is relocating 4 Mt of capacity to Yunnan to tap low-carbon hydropower, advancing its green aluminium transition.</li>
<li>China Hongqiao offers strong earnings visibility backed by low-cost operations, while trading at attractive valuations relative to peers.</li>
</ul>


China Hongqiao has delivered steady ~6 Mt volumes, ~25% EBITDA CAGR, and 15–27% ROCE over the last three years, supported by integration and energy transition gains.
China Hongqiao is relocating 4 Mt of capacity to Yunnan to tap low-carbon hydropower, advancing its green aluminium transition.
China Hongqiao offers strong earnings visibility backed by low-cost operations, while trading at attractive valuations relative to peers.


China Hongqiao (1378 HK): Leading the Low-Cost, Low-Carbon Aluminium Shift

China

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

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

China Hongqiao (1378 HK)

China Hongqiao: Capital Raise De-Risks the Balance Sheet Into a Strengthening Aluminium Cycle

Equity placing boosts Hongqiao's financial position, lowers refinancing risk, and backs Yunnan's green energy transition. Updated forecasts show...

Rahul Jain