Daily Investment Strategy
Daily focus：China Hongqiao（1378）
China Hongqiao delivered exceptional financial performance in 2024, achieving record net income of Rmb22.4bn (+95% YoY) and revenue growth of 17% to Rmb156bn. The aluminum segment saw sales volume increase 4% to 6.6mt with 7% higher ASP at Rmb17,871/t, while gross profit per ton surged 54%. Alumina segment results were even more impressive with sales volume up 5% and ASP rising 34%, driving a 325% increase in gross profit per ton. Strong cash flow generation reduced net gearing to 21%. Looking ahead to 2025, management maintains a bullish outlook on aluminum prices, forecasting average China aluminum prices at Rmb20,500-21,500/t. This positive outlook is underpinned by anticipated strong demand from automotive and home appliances sectors, while supply remains constrained by China's capacity cap policy. With current aluminum capacity at 6.46 mntpa and no plans to purchase additional quota due to limited market availability, the company expects 2025 capex to remain flat year-over-year at approximately Rmb12.6bn, primarily for Yunnan relocation, renewable energy projects, and maintenance. The industry-wide capacity constraints should support continued strong aluminum smelting margins throughout 2025.
The performance of the U.S. manufacturing and housing markets is stable
The U.S. economic data showed that industrial production in February increased by 0.7% MoM, surpassing the market expectation of 0.2%, indicating an improvement in manufacturing activity. Additionally, manufacturing output rose by 0.9% MoM, signaling a faster recovery in the sector. In the housing market, February housing starts reached 1.501 million units, up 11.2% MoM and significantly exceeding the forecast of 1.38 million units, reflecting strong demand for residential construction. Regarding trade prices, February import prices rose by 0.4% MoM, while export prices edged up by only 0.1%, suggesting inflationary pressures remain moderate. Overall, data indicate robust performance in the U.S. manufacturing and housing markets, though attention should be paid to future trends in inflation and consumer demand and their potential impact on the economy.
Southbound Stock Connect recorded a net outflow of HK$11 billion on Tuesday, with Xiaomi Group (1810) recording the largest net inflow at HK$915 million, followed by China Mobile (941). Tracker Fund (2800) recorded the largest net outflow at HK$2.12 billion, followed by Alibaba (9988).
Cheung Cho Shing, Joseph is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to:https://apps.sfc.hk/publicregWeb/indi/ACQ030/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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