Analyst Wayne Fung of CMB International Securities maintained a Buy rating on China Hongqiao Group Ltd. (1378 – Research Report), with a price target of HK$20.60.
Wayne Fung has given his Buy rating due to a combination of factors that highlight the strong financial performance and potential growth of China Hongqiao Group Ltd. The company’s net profit for 2024 saw a significant increase of 95% year-over-year, aligning with the pre-announced growth expectations. This impressive profit growth is further supported by a substantial 63% payout ratio, which translates to an attractive yield of approximately 11% at the current stock price.
Additionally, the company’s revenue from its aluminum alloy products, which constitute a major portion of its income, increased by 8% year-over-year, driven by higher average selling prices and reduced unit costs. The alumina and aluminum fabrication segments also reported notable revenue and profit growth. These positive financial indicators, coupled with the revised earnings forecasts due to favorable aluminum and coal price assumptions, underpin the Buy rating. However, potential risks such as global economic slowdowns and input cost fluctuations are noted as considerations.