HK Stock Market Move | CHINAHONGQIAO(01378) rises over 5%; Morgan Stanley says the company has multiple core positives, and Guinea bauxite exports to China bring cost advantages.

CHINAHONGQIAO(01378) rose over 5%, up 5.05% as of press time to HK$18.93, with turnover of HK$834 million. On the news front, a Morgan Stanley research report noted that CHINAHONGQIAO has multiple core positives: China's 45 million-ton electrolytic aluminum capacity cap imposes a hard constraint on domestic supply, and combined with potential supply disruptions in the southwest region, industry supply is generally tight. CHINAHONGQIAO benefits from capacity relocation, with electricity and coal costs optimized, effectively driving a recovery in corporate profit margins. The company has established a full industry chain integrated layout from upstream raw materials to downstream deep processing, solidifying its earnings base. Although the stock price has already risen to some extent, the company's current valuation still offers allocation value, and its dividend return is also quite attractive. Citi said that in recent years, Guinea has become an important source of China's imported bauxite. Citi noted that most of the growth in Guinea's bauxite output and exports comes from the SMG/WAP project led by CHINAHONGQIAO, the world's largest aluminum producer. With the project coming into operation, the actual third-party bauxite market size has shrunk. The bank believes that Chinese smelters' de facto "upstream integration" has reduced demand for traded bauxite, thereby structurally depressing bauxite prices, which is conducive to profit margins.