Although the first quarter of 2026 is not yet over, global macroeconomic conditions have already delivered significant shocks to investors. Geopolitical tensions have emerged in South America and the Middle East, with the complex and volatile political and economic environment greatly increasing asset price fluctuations. In this context, sectors and companies offering higher growth certainty and stronger dividend characteristics are undoubtedly gaining favor among a broader investor base. During the earnings season, a review of listed companies that have disclosed their reports reveals China Hongqiao as a rare high-quality stock that combines stable growth with substantial dividends.
According to its annual report, China Hongqiao's revenue for 2025 increased by 4% year-on-year to RMB 162.354 billion, with a gross profit of RMB 41.505 billion, maintaining a relatively high gross margin of 25.6%. During the same period, the company's net profit attributable to shareholders reached RMB 22.636 billion, growing by 1.2% from the previous year’s high base. Against a backdrop of external uncertainty, maintaining steady growth is no small feat. More notably, the company announced a final dividend of 165 Hong Kong cents per share. Based on China Hongqiao’s closing price on March 20, the dividend yield approaches 5%. Considering the current interest rate environment, the attractiveness of this yield is evident.
Moreover, this marks the third consecutive year that China Hongqiao has increased its per-share dividend, demonstrating that as the company continues to deliver on its growth expectations, it is also enhancing returns to investors.
In 2025, the aluminum industry faced both challenges and opportunities. Global aluminum prices remained high, while prices of related raw materials and energy also exhibited significant volatility. Data shows that the average price of three-month aluminum on the London Metal Exchange was approximately USD 2,641 per ton, up 7.5% year-on-year, while the average price on the Shanghai Futures Exchange was around RMB 20,698 per ton, an increase of 3.5% from the previous year.
Capitalizing on the strong industry conditions, China Hongqiao’s various business segments continued to perform well in 2025. For the full year, thanks to higher selling prices of aluminum alloy products, revenue from this segment rose 3.6% year-on-year to RMB 106.096 billion, accounting for 65.3% of total revenue. Revenue from alumina increased by 4% to RMB 38.834 billion, representing 23.9% of total revenue. Meanwhile, revenue from deep-processed aluminum products grew by 4% to RMB 14.956 billion, maintaining a 9.2% share.
While achieving orderly growth, China Hongqiao leveraged its integrated upstream-downstream industrial chain and early strategic investments in overseas bauxite resources to convert its cost advantages into strong profitability. The company’s comprehensive gross margin remained at a relatively high level of 25.6% during the reporting period. The gross margin for its core aluminum alloy business reached 28.5%, an increase of 3.9 percentage points from the previous year, underscoring the company’s competitiveness and profit resilience as a leading player in the aluminum industry.
Globally, top Chinese aluminum producers like China Hongqiao have established significant competitive strength. Industry data shows that China, as the world’s largest producer of primary aluminum, accounts for over 50% of global output. While leading the industry toward high-quality development, China Hongqiao is also committed to converting industry benefits into shareholder returns.
As mentioned, the company maintained its high-dividend policy in 2025, proposing a final dividend of 165 Hong Kong cents per share, higher than the total dividend of 161 Hong Kong cents per share for the previous year. At the current share price, China Hongqiao’s dividend yield nears 5%, solidifying its status as a genuine dividend asset. Over a longer horizon, the company’s payout ratio has risen from nearly 45% in 2019 to over 60% today, reflecting its strong emphasis on shareholder returns.
The first quarter of this year has seen numerous "gray rhino" events, with macroeconomic disruptions significantly impacting global asset trends. In an era defined by uncertainty, assets that combine growth and defensive qualities represent optimal investment choices. An analysis of China Hongqiao’s fundamentals and future prospects positions the company as a prime candidate offering both growth and safety.
In terms of growth, the primary aluminum business is supported by solid supply-demand dynamics. On the supply side, domestic primary aluminum capacity is nearing a ceiling of 45 million tons, with 2026 potentially being the last year of capacity growth. Overseas capacity expansions face challenges due to power supply constraints, compounded by escalating geopolitical tensions in the Middle East, further clouding the supply outlook. On the demand side, structural drivers such as lightweight transportation, grid construction, energy storage, and aluminum substitution for copper continue to expand. Industry forecasts suggest global demand growth of 1.5 to 2 million tons in 2026. Given the current supply-demand balance, the primary aluminum market deficit may widen this year, providing strong support for higher aluminum prices. As an integrated industry leader, China Hongqiao stands to benefit significantly.
Another often overlooked growth driver is the company’s involvement in the Simandou iron ore project overseas. The project in Guinea commenced operations in November last year, with both northern and southern blocks each having an annual capacity of 60 million tons. Production is expected to reach 30 million tons per block in the first year, with full capacity achieved in the second year. The first shipment of iron ore was successfully dispatched on December 3. China Hongqiao holds an effective 21.36% stake in the northern block. Given the high quality of the ore, the project is expected to contribute meaningfully to earnings and enhance the company’s resource profile.
To support domestic and international projects and meet debt obligations, China Hongqiao completed a share placement in November, raising over HKD 11 billion. According to disclosures, approximately 60% of the proceeds will be allocated to new energy projects, the Simandou iron ore project, the relocation of production capacity to Yunnan, and lightweight materials projects. The successful implementation of this strategic placement is expected to significantly bolster the company’s long-term growth prospects.
Regarding defensive attributes, as China Hongqiao is currently in a high capital expenditure phase due to capacity relocation to Yunnan, capital spending is expected to decline noticeably after the relocation is completed by the end of next year. Starting in 2027, free cash flow is projected to improve, enhancing the company’s ability to increase dividends. A future China Hongqiao with stronger dividend characteristics will undoubtedly appeal to value-oriented long-term investors.
In summary, a review of China Hongqiao’s latest financial report reveals a clear value proposition: the company has demonstrated resilience and flexibility through steady performance across industry cycles, while consistently increasing dividends to reward investors. For secondary market investors, in an era rife with uncertainty, companies like China Hongqiao that can navigate cyclical challenges are becoming increasingly scarce. Their investment value is likely to be further recognized over time.