Global Materials | Industrials | Commodities

Rahul Jain

Equity Bottom-Up

<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

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>Hongqiao’s net profit came in at RMB12.3bn (+35% YoY) in 1H25, which is in line with the pre-announced profit in Jun.</li><li>Excluding the fair value loss of convertible bonds (CB), core net profit in 1H25 would reach RMB14.9bn (+42% YoY).</li><li>While we are a bit surprised that Hongqiao did not propose interim dividends (a change from the practice of interim distribution for many years), it put out a new share buyback scheme with a minimum spending of HK$3bn, which reflects management’s confidence and helps offset the potential dilution of CB conversion, in our view.</li></ul>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.

Hongqiao’s net profit came in at RMB12.3bn (+35% YoY) in 1H25, which is in line with the pre-announced profit in Jun.Excluding the fair value loss of convertible bonds (CB), core net profit in 1H25 would reach RMB14.9bn (+42% YoY).While we are a bit surprised that Hongqiao did not propose interim dividends (a change from the practice of interim distribution for many years), it put out a new share buyback scheme with a minimum spending of HK$3bn, which reflects management’s confidence and helps offset the potential dilution of CB conversion, in our view.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) - Lack of Interim Dividends but New Buyback Scheme to Boost Confidence

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

Senior Credit Analyst, Lucror Analytics

Trung Nguyen

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

<ul>
<li>In today's Morning Views publication we comment on developments of the following high yield issuers: China Hongqiao, Softbank Group, Vedanta Resources, China Oil &amp; Gas, Biocon Biologics</li>
<li>In the US, new home sales jumped 7.4% m-o-m (1.3% e / 3.1% revised p) to an annualised 724 k units in March, driven by a surge in home sales in the South. The March (final) building permits rose 0.5% to an annualised 1.47 mn units.</li>
<li>Separately, the S&amp;P manufacturing PMI edged up to 50.7 (49.0 e / 50.2 p), while the services PMI fell to 51.4 (52.6 e / 54.4 p). The composite PMI declined to 51.2 (52.0 e / 53.5 p).</li>
</ul>


In today's Morning Views publication we comment on developments of the following high yield issuers: China Hongqiao, Softbank Group, Vedanta Resources, China Oil &amp; Gas, Biocon Biologics
In the US, new home sales jumped 7.4% m-o-m (1.3% e / 3.1% revised p) to an annualised 724 k units in March, driven by a surge in home sales in the South. The March (final) building permits rose 0.5% to an annualised 1.47 mn units.
Separately, the S&amp;P manufacturing PMI edged up to 50.7 (49.0 e / 50.2 p), while the services PMI fell to 51.4 (52.6 e / 54.4 p). The composite PMI declined to 51.2 (52.0 e / 53.5 p).


<ul><li>Hongqiao’s net profit came in at RMB22.3bn (+95% YoY), which is in line with the pre-announced profit growth of 95% in Dec 2024.</li><li>This implies 47% net profit growth in 2H24. Excluding the fair value loss of convertible bonds (CB), the core net profit in 2024 would reach RMB24.5bn (+114% YoY).</li><li>Hongqiao proposed final dividends of HK$1.02/share. T</li></ul>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.

Hongqiao’s net profit came in at RMB22.3bn (+95% YoY), which is in line with the pre-announced profit growth of 95% in Dec 2024.This implies 47% net profit growth in 2H24. Excluding the fair value loss of convertible bonds (CB), the core net profit in 2024 would reach RMB24.5bn (+114% YoY).Hongqiao proposed final dividends of HK$1.02/share. TContent 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) - Net Profit in 2024 +95% in Line

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)