China Hongqiao (01378) Fayingxi Citi maintains a “buy” rating with a target price of HK$21

The Zhitong Finance App learned that Citibank released a research report saying that China's Hongqiao (01378) expects net profit to increase by about 35% year-on-year in the first half of 2025. The bank maintains a “buy” rating for China's Hongqiao. The target price is HK$21.00. Based on the 20225 price-earnings ratio (PE) valuation of 8.4 times, there is room for an increase of nearly 32% compared to the stock's closing price on June 23.

According to the news, China's Hongqiao announced that net profit for the first half of 2025 is expected to increase by about 35% compared to the same period last year. The increase was mainly due to year-on-year increases in sales prices and sales volume of aluminum alloy and alumina products, which led to an increase in the gross profit of related products.

Citibank estimates that China Hongqiao's net profit attributable to shareholders for the first half of 2025 was RMB 12.3 billion, up 34% year on year and down 7% month on month. Citi said that since China's Hongqiao stock price has risen by about HK$5.2 since the beginning of 2025 and HK$5.72 in the first half of 2024, it is expected that the company may confirm a fair value loss for convertible bonds in the first half of 2025, just like the first half of 2024. Excluding fair value losses and the impact of overseas business profits, it is estimated that the net profit of the company's domestic subsidiary in the second quarter of 2025 was RMB 5.3 billion, up 3% year on year and down 11% month on month, slightly higher than the bank's previous expectations. Assuming a 60% dividend ratio, the expected interim dividend is HK$0.86 per share.