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

<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

Chief Executive Officer, Emmer Capital Partners Limited

Manishi Raychaudhuri

Chief Executive Officer

Emmer Capital Partners Limited

Emmer Capital Partners is an Asia Pacific focused financial advisory firm engaging in strategic financial asset allocation advice, bespoke thematic research and advising early-stage companies and connecting them to investors. Emmer Capital provides macro-economic and multi-asset investment strategy inputs to institutions, family offices, private wealth managers, private equity, and corporate boards directly and through independent research platforms. Emmer Capital also advises a wide range of startup companies on fund raising and business strategy. Emmer Capital's active engagement with the print and electronic media reaches a broad spectrum of investors across the globe.

<ul>
<li>Since inception on May 15, our Model Portfolio (up 6.2%) underperformed the MSCI Asia-ex-Japan index (up 7.87%) due to underperforming stock picks in India, ASEAN and China consumer proxies.</li>
<li>The main themes: China's changing consumption and investment patterns, Korea's improving corporate governance, continuing global infrastructure investments and India's earnings disappointment. Korea, HK/China remain overweight; India is downgraded to Neutral.</li>
<li>We exclude Meituan, Titan, Infosys, Bharat Dynamics, Krafton. We include Laopu Gold, Lonking Holdings, China Hongqiao, AIA and Hyundai Engineering and Construction. We are now Neutral Industrials and Underweight Technology.</li>
</ul>


Since inception on May 15, our Model Portfolio (up 6.2%) underperformed the MSCI Asia-ex-Japan index (up 7.87%) due to underperforming stock picks in India, ASEAN and China consumer proxies.
The main themes: China's changing consumption and investment patterns, Korea's improving corporate governance, continuing global infrastructure investments and India's earnings disappointment. Korea, HK/China remain overweight; India is downgraded to Neutral.
We exclude Meituan, Titan, Infosys, Bharat Dynamics, Krafton. We include Laopu Gold, Lonking Holdings, China Hongqiao, AIA and Hyundai Engineering and Construction. We are now Neutral Industrials and Underweight Technology.


Asian Equity: Changes to Model Portfolio: Korea, HK/CN Overweight. India Neutral; ASEAN Underweight

China

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

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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