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. This, together with the interim dividend of HK$0.59/share, representing ~63% full-year payout ratio, which is a positive surprise. We revise up our 2025E-26E earnings forecasts by 26%/25%, due to higher aluminium price (tight industry supply with utilisation reaching 98%) and lower coal price assumption. We estimate every 1% increase in Al price will boost Hongqiao’s earnings by 3%, while 1% decrease in coal price will increase earnings by 0.5%. The current price offers an attractive yield of ~11%. We revise up our TP to HK$20.6 (from HK$19.6) after rolling over the valuation base to 2025E, based on 7.2x 2025E P/E (0.5SD above historical average) plus dividend payable of HK$1.02/shr. Maintain BUY.
　　Aluminum alloy products (66% of revenue in 2024): The segment revenue in 2024 increased ~8% YoY to RMB102bn (sales volume +1.5% YoY to 5.84mn tonnes; ASP +6.6% to RMB17,549/t). This, together with a 3% YoY decrease in unit cost, boosted the unit gross profit by 51% YoY to RMB4,317/t.
　　Alumina segment (24% of revenue): The segment revenue increased ~41% YoY to RMB37.3bn (sales volume +5% YoY to 10.6mn tonnes; ASP +34% to RMB3,420/t). We calculated the unit gross profit surged 3.2x YoY to RMB1,212/t.
　　Aluminum fabrication products (10% of revenue): The segment revenue increased ~35% YoY to RMB15.6bn (sales volume +32% YoY to 766mn tonnes; ASP +2.5% to RMB20,328/t). The unit gross profit surged 76% YoY to RMB4,959/t.
　　Key risks: (1) A slowdown of global economy that affects the aluminium price; (2) sharp rebound in input costs such as bauxite and coal.