Annual Report Revelation of CHINA HONGQIAO (01378): Firm Growth as the Foundation, Strengthening Dividend Attributes Further

The first quarter of 2026 has not yet passed, but the global macro "climate" has already had a significant impact on investors. Geopolitical tensions have continued to escalate in South America and the Middle East, and the complex and volatile political and economic environment has greatly increased the volatility of various assets. Against this backdrop, sectors and companies with higher certainty of development and stronger dividend attributes will undoubtedly be more favored by a wider range of investors. During the earnings season, among the listed companies that have disclosed their financial reports, CHINAHONGQIAO (01378) can be considered as a rare high-quality blue-chip stock with stable growth and high dividend characteristics. According to Hongqiao's annual report, in 2025, the company's revenue increased by 4% year-on-year to 162.354 billion yuan, gross profit was 41.505 billion yuan, and the corresponding gross profit margin remained at a relatively high level of 25.6%; during the same period, the company's net profit attributable to shareholders was 22.636 billion yuan, an increase of 1.2% from the high base of the previous year. In an era of external uncertainty, it is already very difficult for CHINAHONGQIAO to maintain a stable growth trend, and even more rare is the company's announcement in the annual report that it will distribute a final dividend of 1.65 Hong Kong cents per share. Based on CHINAHONGQIAO's closing stock price on March 20, the company's dividend yield has approached 5%; considering the current interest rate environment, the high "gold content" of CHINAHONGQIAO's dividend yield is self-evident. Furthermore, looking at a longer period of time, this is already the third consecutive year that CHINAHONGQIAO has increased its dividend per share, indicating that as the company continues to fulfill growth expectations, CHINAHONGQIAO is also increasing its focus on rewarding investors. Steady realization of growth expectations In 2025, the aluminum industry faced challenges and opportunities. During the year, global aluminum prices remained high, while related raw material and energy prices also showed high volatility. Data shows that the average price of aluminum futures on the London Metal Exchange in March was about $2,641 per ton, a 7.5% increase year-on-year; the average price of aluminum futures on the Shanghai Futures Exchange in March was about 20,698 yuan per ton, a 3.5% increase year-on-year. Seizing the opportunity of maintaining a high level of prosperity in the aluminum industry, CHINAHONGQIAO's various businesses continued to develop positively in 2025. For the whole year, benefiting from the rise in sales prices of aluminum alloy products, Hongqiao's aluminum alloy products achieved revenue of 106.096 billion yuan, a year-on-year increase of 3.6%, accounting for 65.3% of total revenue; alumina revenue reached 38.834 billion yuan, an increase of 4%, accounting for about 23.9%. At the same time, revenue from deep-processed aluminum alloy products contributed 14.956 billion yuan, with a similar scale increase of 4%, maintaining a share of 9.2%. While achieving orderly growth, CHINAHONGQIAO continued to transform its outstanding cost advantage into strong profitability with its prominent "upstream and downstream integrated industry chain" model and strategic foresight in early overseas bauxite resource layout. During the reporting period, CHINAHONGQIAO's comprehensive gross profit margin remained at a relatively high level of 25.6%. Among them, the gross profit margin of the core business of aluminum alloy products reached 28.5%, an increase of 3.9 percentage points compared to the same period last year, once again confirming CHINAHONGQIAO's competitiveness and profit elasticity as a leading company in the aluminum industry. On a global scale, China's top aluminum companies represented by CHINAHONGQIAO already have outstanding global competitiveness. Reflecting on industry data, China as the world's largest producer of electrolytic aluminum, already accounts for over 50% of global production. While leading the wave of high-quality industry development, CHINAHONGQIAO is also actively fulfilling the role of industry leader, continuously converting industry dividends into shareholder returns. As mentioned earlier, in 2025, CHINAHONGQIAO continued its high dividend policy, with the company planning to distribute a final dividend of 165 Hong Kong cents per share, higher than last year's full-year dividend of 161 Hong Kong cents; calculating based on the current price, CHINAHONGQIAO's dividend yield approaches 5%, making it a truly dividend-paying asset; and looking further ahead, the company's dividend payout ratio has also increased from nearly 45% in 2019 to over 60% today, demonstrating the company's strong commitment to shareholder returns. The "common denominator" of growth and hedging In the first quarter of this year, gray rhino events have been emerging one after another, and macro disturbances have had a significant impact on the trend of various assets globally. In an era dominated by uncertainty, assets that combine growth and hedging characteristics will undoubtedly be the best investment options. Examining the fundamentals and future development of CHINAHONGQIAO, the company can be seen as one of the "common denominators" of growth and hedging. First, in terms of growth, in the main business of electrolytic aluminum, CHINAHONGQIAO's growth certainty is supported by solid supply and demand logic. On the supply side, China's electrolytic aluminum capacity has approached the 45 million ton ceiling, and this year may be the final year of capacity growth; new overseas capacity is already limited by power supply, facing challenges in implementation, and now compounded by the continued escalation of geopolitical tensions in the Middle East, the supply outlook is even less optimistic. On the demand side, structural increments such as lightweight transportation, grid construction, energy storage, and aluminum substituting copper continue to be released, with some institutions predicting global demand growth of 1.5-2 million tons in 2026. From the current supply-demand situation, the electrolytic aluminum supply-demand gap this year might further expand, providing strong support for the future strong rise in aluminum prices. Positioned in this context, as a leading integrated company, CHINAHONGQIAO will undoubtedly benefit significantly. In addition, a growth expectation that is easily overlooked for CHINAHONGQIAO lies in the overseas Simandou iron ore project. In November last year, the Simandou iron ore project in Guinea held its commissioning ceremony, which includes two blocks in the north and south, each with a capacity of 60 million tons per year. It is expected that in the first year of production, the project will produce 30 million tons of iron ore, reaching full production in the second year; on December 3 of that year, the first shipment of iron ore from the Simandou project was successfully dispatched. It is reported that CHINAHONGQIAO holds a 21.36% stake in the Simandou North project, considering the superior quality of the mine, it is expected to continuously contribute to the company's performance, while the company's resource attributes will also be enhanced. To support the orderly progress of domestic and foreign projects and meet debt repayment needs, in November last year, CHINAHONGQIAO successfully raised over 11 billion Hong Kong dollars through an allocation transaction. According to the relevant announcement, sixty percent of the funds raised will be invested in CHINAHONGQIAO's new energy projects, the Simandou iron ore project, Yunnan production capacity relocation project, and lightweight materials project. Looking ahead, the successful implementation of this strategic allocation is likely to significantly enhance CHINAHONGQIAO's future growth momentum. Furthermore, in terms of hedging attributes, considering that the past two years have been big years for CHINAHONGQIAO's capital expenditure, following the completion of the transfer of production capacity to Yunnan by the end of next year, it is expected that CHINAHONGQIAO's capital expenditure will significantly decrease starting from 2027, leading to a further improvement in free cash flow, and the company's ability to pay dividends is expected to "rise to a new level." A CHINAHONGQIAO that will have stronger dividend attributes in the future will obviously be a long-term investment target not to be missed by value investors. Finally, looking back at the latest financial report of CHINAHONGQIAO, it is not difficult to see the clear value proposition of the company: it has proven its resilience and elasticity in the industry cycle through steady growth performance, and has also continuously increased dividends to reward a large number of investors. For secondary market investors, in an era filled with various uncertainties, companies like CHINAHONGQIAO that can navigate across cycles are destined to become increasingly rare, and their investment value will inevitably be further explored with the passage of time.