The Zhitong Finance App learned that Societe Generale Securities released a research report stating that it maintains China's Hongqiao (01378) “buy” rating, and the net profit for 24/25/26 is estimated to be 202.73/204.36/20.56 billion yuan, respectively. Since April, aluminum prices have continued to rise above the 20,000 yuan level, and the cost side has continued to fall. The bank estimates that currently the Hongqiao Shandong Division's net profit per ton is around 3,700 yuan, and the Yunnan division's net profit per ton is close to the level of 3,000 yuan. It will continue to release highly elastic performance in 2024.

Incident: Shandong Hongqiao New Materials Co., Ltd., a subsidiary of Hongqiao in China, announced Q1 results: revenue increased 6.1% year on year to 34.76 billion yuan, and net profit increased 6.3 times year on year to 4.34 billion yuan.

Societe Generale Securities's main views are as follows:

Demand resilience exceeded expectations, driving aluminum prices to continue to rise, and benefiting from declining coal prices & anode & liquid alkali costs, both sides of the profit side of electrolytic aluminum tons continued to expand. In particular, Hongqiao, where outsourced coal accounts for a relatively high proportion, fully unleashed performance flexibility.

Volume: Production capacity remained stable in 24Q1, and the bank estimates that production remained flat month-on-month.

Price: Demand resilience exceeded expectations, driving aluminum prices to continue to rise. The unit price of aluminum tons in the Yangtze River increased by 82 yuan to 1,9047 yuan month-on-month in 24Q1.

Cost & profit: The cost side has continued to decline since the beginning of the year. The unit price of a tonne of thermal coal in Qinhuangdao fell 56 yuan to 902 yuan month-on-month, and the estimated driving cost decreased by about 250 yuan; the unit price of a ton of liquid alkali fell 141 yuan to 1,239 yuan, and the estimated driving ton cost decreased by about 100 yuan; the unit price of an anode ton fell 340 yuan to 5088 yuan month-on-month, and the estimated driving ton cost decreased by about 160 yuan. The bank estimates that the Q1 Shandong division's tonnage cost decreased by about 500 yuan to 12,400 yuan, and the net profit per ton increased by about 400 yuan to 2,500 yuan month-on-month; the net profit per ton of the Yunnan division increased by nearly 200 yuan to nearly 2,000 yuan month-on-month.

The total amount of Q1 fees was basically flat at 1.2 billion yuan month-on-month. The amount of debt at the end of the period increased by 810 million yuan month-on-month to $50.59 billion. Performance flexibility was fully released, and Q1 net profit increased 1.26 billion yuan/ +41% month-on-month to 4.34 billion yuan.

The investment investment in the northern development of the West Monger iron ore mine is expected to be put into operation in 2026, opening up room for the company's long-term growth.

In March 2024, the company announced that it approved a non-wholly-owned subsidiary Weiqiao Aluminum-Electric (holding 94.52% shares) to hold 24% interest in the northern mining area of the Ximandou Iron Mine. The northern part of the Simandou iron ore mine is estimated to have reserves of more than 1.8 billion tons and is expected to be put into operation in 2026.