Wayne Fung, an analyst from CMB International Securities, maintained the Buy rating on China Hongqiao Group Ltd.. The associated price target was raised to HK$39.00.
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Wayne Fung has given his Buy rating due to a combination of factors that position China Hongqiao Group Ltd. favorably in the market. The company is benefiting from nearly full utilization of its aluminum capacity in China, coupled with a slow ramp-up of capacity overseas, which creates a favorable supply-demand dynamic. Additionally, the demand for aluminum remains strong in sectors like electric vehicles, power, and electronics, while raw material costs remain relatively stable, enhancing the company’s profitability.
Furthermore, Wayne Fung has revised the earnings forecasts for 2025 to 2027 upwards by 4-5%, driven by higher aluminum prices. The target price for the stock has been increased to HK$39, based on a 12x price-to-earnings ratio, indicating potential for further re-rating. The company’s strong free cash flow generation supports a 60% dividend payout ratio and is expected to bring the balance sheet close to a net cash position by 2026. Despite recent share price increases, the stock still offers an attractive yield of approximately 6%, making it a compelling buy.
Fung covers the Industrials sector, focusing on stocks such as J&T Global Express Limited, Sany Heavy Equipment International Holdings Co, and Ehang Holdings. According to TipRanks, Fung has an average return of 17.6% and a 55.56% success rate on recommended stocks.
In another report released on October 31, TR | OpenAI – 4o also reiterated a Buy rating on the stock with a HK$34.00 price target.