24 Aug 2026 CMB International Global Markets | Equity Research | Company Update

Hongqiao Holdings (002379 CH)

Net profit +77% YoY in 1H26, in line with profit alert

Hongqiao Holdings’ net profit came in at RMB15.6bn (up 77% YoY) in 1H26, in line with the profit alert announced in Jul. The results imply 1.2x YoY growth of net profit in 2Q26. The earnings growth in 1H26 was much higher than that of China Hongqiao (1378 HK, BUY), as (1) Hongqiao Holdings’ expense growth was less than that of China Hongqiao, and (2) Hongqiao Holdings does not own bauxite asset (weak bauxite price in 1H26). We revise up our 2026E/27E/28E earnings forecasts by 7%/4%/4%, mainly due to lower minority interest assumptions, which offset the lower forecast on alumina profit. Our TP is slightly lowered to RMB28, based on 12x 2026E P/E, equivalent to unchanged 20% premium to our target multiple (10x) for China Hongqiao (previously RMB29, as we trimmed our target P/E of China Hongqiao).

Key highlights of 1H26 earnings

(RMB mn) 1H25 1H26 Change (YoY) Total revenue 77,270 86,504 12.0% Cost of sales -62,693 -64,551 3.0% Gross profit 14,576 21,953 50.6% Other income and gains -27 392 n/a S&D expenses -26 -19 -25.9% Administrative expenses -1,329 -1,356 2.0% Other expenses -200 -524 162.3% EBIT 12,995 20,446 57.3% Net finance income/(cost) -634 -478 -24.5%

Finance income 208 -21 n/a Finance expenses -842 -457 -45.7%

Change in fair values -8 -34 357.1% Share of profit of JV and associates 15 16 6.5% Pretax profit 12,368 19,949 61.3% Income tax -3,090 -4,303 39.3% After tax profit 9,278 15,645 68.6% MI & discontinued operation -440 0 n/a Net profit 8,838 15,645 77.0% Recurring net profit 8,838 15,645 77.0%

Key ratios Change (ppt)

Gross margin 18.9% 25.4% 6.5 S&D expenses ratio 0.03% 0.02% -0.0 Administrative expense ratio 1.7% 1.6% -0.2 Other expense ratio 0.3% 0.6% 0.3 Net margin 12.0% 18.1% 6.1 Effective tax rate 25.0% 21.6% -3.4

Source: Company data, CMBIGM

Earnings Summary

(YE 31 Dec) FY24A FY25A FY26E FY27E FY28E Revenue (RMB mn) 150,336 156,721 173,106 172,446 175,574

YoY growth (%) na 4.2 10.5 (0.4) 1.8 Adjusted net profit (RMB mn) 17,227.9 17,863.5 30,285.2 27,393.7 25,465.7 EPS (Adjusted) (RMB) na 1.37 2.32 2.10 1.95 Consensus EPS (RMB) na na 2.55 2.79 2.92 P/E (x) na 13.3 7.8 8.7 9.3 P/B (x) na 5.2 3.3 3.1 2.9 Yield (%) na 1.4 9.6 8.6 8.0 Net gearing (%) 27.4 10.7 (24.8) (26.6) (26.3) Source: Company data, Bloomberg, CMBIGM estimates

Hongqiao Holdings (002379 CH)

• Net profit +77% YoY in 1H26, in line with profit alert

Target Price RMB28.00

(Previous TP RMB29.00)

Up/Downside 53.6% Current Price RMB18.23

China Materials Wayne FUNG, CFA

(852) 3900 0826 waynefung@cmbi.com.hk

Jake Zhang

(852) 3900 0849 jakezhang@cmbi.com.hk

Stock Data

Mkt Cap (RMB mn) 237,557.3 Avg 3 mths t/o (RMB mn) 1,021.0 52w High/Low (RMB) 32.53/14.15 Total Issued Shares (mn) 13031.1

Source: FactSet

Shareholding Structure

China Hongqiao 89.0%

Source: HKEx

Share Performance

Absolute Relative 1-mth 1.1% 3.7% 3-mth -11.8% -8.6% 6-mth -39.5% -38.9%

Source: FactSet

12-mth Price Performance

Source: FactSet Related reports:

Aluminium – Upside to our supply forecast following the resumption of EGA production – 13 Aug 2026 (link)

Aluminium – Concerns largely priced in; Attractive valuation – 23 Jun 2026 (link)

A prolonged supply deficit even assuming the end of Iran war – 12 May 2026 (link)

Hongqiao Holdings (002379 CH) - High earnings sensitivity to aluminium price, high dividend payout; initiate with BUY – 12 May 2026 (link)

PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR OR http://www.cmbi.com.hk

1

Results highlights

Figure 1: Key financials in 2Q26

(RMB mn) 1Q25 1Q26 Change YoY 2Q25 2Q26 Change YoY Total revenue 39,662 40,933 3.2% 37,608 45,571 21.2% Cost of sales -31,570 -31,097 -1.5% -31,123 -33,454 7.5% Gross profit 8,092 9,836 21.6% 6,485 12,117 86.8% Other income 77 -6 n/a -105 397 n/a S&D expenses -15 -12 -18.5% -10 -7 -36.5% Administrative expenses -654 -678 3.7% -675 -678 0.4% Other expenses -85 -421 395.9% -115 -103 -10.3% EBIT 7,415 8,719 17.6% 5,580 11,727 110.2% Net finance income/(cost) -500 -218 -56.4% -134 -260 94.7% Change in fair value -15 31 n/a 7 -65 n/a Share of profit of JV and associates 7 5 -31.2% 7 11 44.6% Pretax profit 6,908 8,536 23.6% 5,460 11,412 109.0% Income tax -1,749 -1,780 1.8% -1,341 -2,524 88.2% After tax profit 5,159 6,757 31.0% 4,120 8,889 115.8% MI -246 1 n/a -194 -1 -99.3% Net profit 4,913 6,758 37.6% 3,925 8,887 126.4%

Key ratios Change (ppt) Change (ppt)

Gross margin 20.4% 24.0% 3.6 17.2% 26.6% 9.3 S&D expenses ratio 0.0% 0.0% -0.0 0.0% 0.0% -0.0 Administrative expense ratio 1.6% 1.7% 0.0 1.8% 1.5% -0.3 Other expense ratio 0.2% 1.0% 0.8 0.3% 0.2% -0.1 Net margin 13.0% 16.5% 3.5 11.0% 19.5% 8.6 Effective tax rate 25.3% 20.9% -4.5 24.6% 22.1% -2.4

Source: Company data, CMBIGM estimates

Figure 2: Revenue and gross margin breakdown in 1H26

(RMB mn) 1H25 1H26 Change (YoY) Revenue

Aluminum (alloy products + molten aluminum) 52,122 60,262 15.6% Alumina 15,270 13,261 -13.2% Aluminum fabrication products 7,441 10,397 39.7% Recycled aluminum 328 582 77.6% Others 2,108 2,001 -5.1% Total 77,270 86,504 12.0%

Gross margin Change (ppt) Aluminum (alloy products + molten aluminum) 19.9% 30.7% 10.9 Alumina 18.9% 1.2% (17.7) Aluminum fabrication products 13.6% 25.7% 12.1 Recycled aluminum 41.6% 24.4% (17.1) Others 9.5% 23.4% 13.9 Total 18.9% 25.4% 6.5

Note: Aluminum hydroxide has been included in “others” since 1H26 Source: Company data, CMBIGM estimates

Operating assumptions

Figure 3: Change in key operating assumptions

Old New Change 2026E 2027E 2028E 2026E 2027E 2028E 2026E 2027E 2028E

(RMB mn) Revenue

Aluminum (alloy products + molten aluminum) 127,197 123,381 119,680 127,197 123,381 119,680 0% 0% 0% Alumina 23,743 22,556 22,556 22,379 22,379 22,379 -6% -1% -1% Aluminum fabrication products 17,963 20,711 27,062 18,128 20,901 27,310 1% 1% 1% Recycled aluminum 744 781 820 1,134 1,304 1,500 52% 67% 83% Aluminum hydroxide 1,599 1,679 1,763 1,599 1,679 1,763 0% 0% 0%

• Others 2,669 2,803 2,943 2,669 2,803 2,943 0% 0% 0% Total 173,916 171,911 174,824 173,106 172,446 175,574 0% 0% 0%

Gross margin Change in ppt

Aluminum (alloy products + molten aluminum) 32.2% 31.2% 29.1% 32.6% 30.9% 28.8% 0.38 -0.31 -0.32 Alumina 4.1% -1.0% -1.0% -1.8% -4.1% -4.1% -5.85 -3.06 -3.06 Aluminum fabrication products 13.0% 14.5% 16.0% 22.0% 18.0% 18.0% 9.02 3.50 2.00 Recycled aluminum 21.6% 21.6% 21.6% 21.6% 21.6% 21.6% 0.00 0.00 0.00 Aluminum hydroxide 1.2% 1.2% 1.2% 1.2% 1.2% 1.2% 0.00 0.00 0.00 Others 39.8% 39.8% 39.8% 39.8% 39.8% 39.8% 0.00 0.00 0.00 Blended gross margin 25.6% 24.1% 22.4% 26.2% 23.9% 22.1% 0.62 -0.19 -0.28

Net finance expense -1,016 -892 -856 -1,010 -894 -871 -1% 0% 2%

S&D expense ratio 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0 0.0 0.0 Administrative expense ratio 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 0.0 0.0 0.0 Other expense ratio 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 0.0 0.0 0.0 Profit from JV/Associates (RMB mn) 24 26 28 24 26 28 0% 0% 0% Minority interest -1,409 -1,311 -1,224 0 0 0 -100% -100% -100% Recurring net profit (RMB mn) 28,208 26,240 24,517 30,285 27,394 25,466 7% 4% 4%

Source: Company data, CMBIGM estimates

Figure 4: Key operating assumptions

2025 2026E 2027E 2028E Sales volume (000 tonnes)

Aluminum alloy products 5,871 6,071 6,071 6,071 Alumina 11,141 10,124 10,124 10,124 Aluminum fabrication products 717 789 929 1,238 Change YoY

Aluminum alloy products 0.2% 3.4% 0.0% 0.0% Alumina 27.9% -9.1% 0.0% 0.0% Aluminum fabrication products 1.1% 10.2% 17.6% 33.3%

ASP (RMB/t) ex-VAT

Aluminum alloy products 18,217 20,950 20,322 19,712 Alumina 2,696 2,210 2,210 2,210 Aluminum fabrication products 20,875 22,962 22,503 22,053 Change YoY

Aluminum alloy products 4.0% 15.0% -3.0% -3.0% Alumina -16.5% -18.0% 0.0% 0.0% Aluminum fabrication products 3.1% 10.0% -2.0% -2.0%

Unit cost (RMB/t)

Aluminum alloy products -14,206 -14,118 -14,037 -14,037 Alumina -2,368 -2,250 -2,300 -2,300 Aluminum fabrication products -18,165 -17,911 -18,452 -18,083 Change YoY

Aluminum alloy products -1.0% -0.6% -0.6% 0.0% Alumina 1.1% -5.0% 2.2% 0.0% Aluminum fabrication products 3.8% -1.4% 3.0% -2.0%

Unit gross profit (RMB/t)

Aluminum alloy products 4,012 6,832 6,285 5,675 Alumina 327 -40 -90 -90 Aluminum fabrication products 2,710 5,052 4,051 3,970 Change YoY

Aluminum alloy products 26.7% 70.3% -8.0% -9.7% Alumina -63.0% -112.1% 126.3% 0.0% Aluminum fabrication products -1.0% 86.4% -19.8% -2.0%

Source: Company data, CMBIGM estimates

Earnings sensitivity

Figure 5: Earnings sensitivity (annualized) to 5% change in aluminium ASP & coal cost

Source: CMBIGM estimates

Figure 6: Earnings sensitivity (annualized) to 5% change in aluminium ASP & external tariff

Source: CMBIGM estimates

Figure 7: Earnings sensitivity (annualized) to 5% change in alumina ASP & bauxite cost

Source: CMBIGM estimates

Key risks: (1) unexpected removal of capacity cap in China; (2) faster-than-expected overseas capacity ramp-up for the industry as a whole; (3) slowdown of the global economy; (4) sharp increases in costs of input such as bauxite and coal.

Financial Summary

INCOME STATEMENT 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Revenue 150,336 156,721 173,106 172,446 175,574 Cost of goods sold (120,165) (126,392) (127,794) (131,152) (136,786) Gross profit 30,171 30,328 45,313 41,294 38,789 Selling expense (56) (47) (52) (52) (52) Admin expense (2,594) (2,667) (2,946) (2,935) (2,988) R&D expense (2,176) (1,500) (1,657) (1,650) (1,680) Other income 164 422 466 517 527 Other gains/(losses) 24 (43) 0 0 0 Share of (losses)/profits of associates/JV 15 25 24 26 28 EBITDA 29,351 30,787 45,553 41,779 39,349 Depreciation 3,842 4,250 4,429 4,604 4,754 EBIT 25,509 26,537 41,125 37,175 34,595 Interest income (184) (98) 281 387 401 Interest expense (1,613) (1,563) (1,291) (1,281) (1,272) Net Interest income/(expense) (1,797) (1,661) (1,010) (894) (871) Pre-tax profit 23,751 24,858 40,139 36,306 33,751 Income tax (5,678) (6,102) (9,854) (8,913) (8,285) Minority interest (845) (892) 0 0 0

Adjusted net profit 17,228 17,864 30,285 27,394 25,466 Gross dividends 0 3,258 22,714 20,545 19,099

BALANCE SHEET 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Current assets 56,192 59,325 84,390 86,048 90,633 Cash & equivalents 15,221 18,473 41,190 43,497 44,398 Account receivables 3,506 2,839 4,170 2,812 4,296 Inventories 32,588 32,411 33,309 34,138 36,206 ST bank deposits 0 0 0 0 0 Other current assets 4,876 5,603 5,722 5,600 5,733 Non-current assets 51,834 51,963 54,584 56,999 58,298 PP&E 29,662 37,162 39,926 42,515 43,954 Deferred income tax 2,680 2,857 2,857 2,857 2,857 Investment in JVs & assos 257 296 314 334 356 Intangibles 6,423 6,547 6,369 6,191 6,013 Goodwill 80 0 0 0 0 Financial assets at FVTPL 0 0 0 0 0 Other non-current assets 12,731 5,101 5,116 5,100 5,118 Total assets 108,026 111,288 138,974 143,046 148,931

Current liabilities 49,497 48,997 49,655 49,048 50,013 Short-term borrowings 19,878 8,831 8,631 8,431 8,231 Account payables 8,831 8,161 9,019 8,612 9,776 Tax payable 3,807 3,189 3,189 3,189 3,189 Other current liabilities 16,981 28,816 28,816 28,816 28,816 Non-current liabilities 13,830 16,727 16,727 16,727 16,727 Long-term borrowings 7,048 14,531 14,531 14,531 14,531 Other non-current liabilities 6,782 2,196 2,196 2,196 2,196 Total liabilities 63,327 65,724 66,383 65,776 66,740

Total shareholders equity 42,690 45,571 72,599 77,278 82,199 Minority interest 2,010 (8) (8) (8) (8) Total equity and liabilities 108,026 111,288 138,974 143,046 148,931

CASH FLOW 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Operating Profit before taxation 23,751 24,858 40,139 36,306 33,751 Depreciation & amortization 3,842 4,250 4,429 4,604 4,754 Tax paid (5,678) (6,102) (9,854) (8,913) (8,285) Change in working capital (402) (1,503) (1,505) 259 (2,538)

• Others 3,769 2,492 986 868 844 Net cash from operations 25,282 23,995 34,195 33,125 28,525

Investing Capital expenditure (9,091) (5,345) (7,000) (7,000) (6,000) Acquisition of subsidiaries/ investments 0 (20) 0 0 0 Others 448 (912) 271 378 392 Net cash from investing (8,642) (6,277) (6,729) (6,622) (5,608)

Financing Dividend paid 0 0 (3,258) (22,714) (20,545) Net borrowings 0 (3,563) (200) (200) (200) Proceeds from share issues 0 0 0 0 0 Others (11,027) (11,519) (1,291) (1,281) (1,272) Net cash from financing (11,027) (15,083) (4,749) (24,195) (22,017)

Net change in cash

Cash at the beginning of the year na 15,221 18,473 41,190 43,497 Exchange difference na 616 0 0 0 Cash at the end of the year 15,221 18,473 41,190 43,497 44,398

GROWTH 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Revenue na 4.2% 10.5% (0.4%) 1.8% Gross profit na 0.5% 49.4% (8.9%) (6.1%) EBITDA na 4.9% 48.0% (8.3%) (5.8%) EBIT na 4.0% 55.0% (9.6%) (6.9%) Adj. net profit na 3.7% 69.5% (9.5%) (7.0%)

PROFITABILITY 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Gross profit margin 20.1% 19.4% 26.2% 23.9% 22.1% EBITDA margin 19.5% 19.6% 26.3% 24.2% 22.4% Adj. net profit margin 11.5% 11.4% 17.5% 15.9% 14.5%

GEARING/LIQUIDITY/ACTIVITIES 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Net debt to equity (x) 0.3 0.1 (0.2) (0.3) (0.3) Current ratio (x) 1.1 1.2 1.7 1.8 1.8 Receivable turnover days na 7.4 7.4 7.4 7.4 Inventory turnover days na 93.9 93.9 93.9 93.9 Payable turnover days na 24.5 24.5 24.5 24.5

VALUATION 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

P/E na 13.3 7.8 8.7 9.3 P/B na 5.2 3.3 3.1 2.9 Div yield (%) na 1.4 9.6 8.6 8.0

Source: Company data, CMBIGM estimates. Note: The calculation of net cash includes financial assets.

Disclosures & Disclaimers

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CMBIGM or its affiliate(s) have investment banking relationship with the issuers covered in this report in preceding 12 months.

CMBIGM Ratings

BUY : Stock with potential return of over 15% over next 12 months HOLD : Stock with potential return of +15% to -10% over next 12 months SELL : Stock with potential loss of over 10% over next 12 months NOT RATED : Stock is not rated by CMBIGM

OUTPERFORM : Industry expected to outperform the relevant broad market benchmark over next 12 months MARKET-PERFORM : Industry expected to perform in-line with the relevant broad market benchmark over next 12 months UNDERPERFORM : Industry expected to underperform the relevant broad market benchmark over next 12 months

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