20260320-招银国际-创新实业-02788.HK-Takeaways_from_post-results_meeting_6页_739kb

Chuangxin Industries (2788 HK) Summary

Core Content

Chuangxin Industries (2788 HK) is a company with a focus on aluminum and related products, operating in both China and Saudi Arabia. The company recently hosted a post-results analyst meeting, where key updates were shared regarding its projects and financial performance. Despite a 10% drop in its share price, the report maintains a BUY rating with a target price of HK$32.00, indicating potential for a 25.4% upside from the current price of HK$25.52.

Key Takeaways

• Saudi Aluminum Project:

  • Located in Yanbu, 1,200km from the Persian Gulf.
  • Construction and logistics have not been disrupted.
  • Phase one of the project is expected to produce 500kt and start operations in 1H27.
  • Initial production will be ingots, with alloy products (for Apple supply chain and automotive lightweight materials) following in 2H27.
  • A 10-year power supply agreement with the Saudi Ministry of Energy has been signed.
  • Electricity tariff is US$0.032/kWh, with heavy oil as the power source.
  • All-in production cost in Saudi is expected to be US$1,900/t, RMB1,000/t lower than in China.

• Coal Mine Acquisition:

  • The coal mine to be acquired has an annual capacity of 6mt, aligning with the coal demand of Chuangxin's captive coal power plant.
  • Capex required is RMB3bn, to be spent between 2H27 and 1H28.
  • The mine is expected to commence operations by end-2028.
  • All-in cost for coal is expected to be RMB195/t.

• Capex Plan:

  • In 2026E, RMB1.5bn is budgeted, including RMB1.2–1.3bn for renewable power capacity in China.
  • For the Saudi project, total capex is US$277mn, with US$200mn already spent and US$77mn remaining for end-2026 or early 2027.

Financial Highlights

Revenue and Earnings Growth

Valuation Metrics

Key Risks

• Unexpected removal of capacity cap in China.
• Volatility in aluminum and alumina prices.
• Power shortages.
• Supply chain disruptions.
• New project execution risks in Saudi Arabia.

Earnings Sensitivity

• Aluminum ASP and coal cost significantly impact 2026E net profit.
• A 5% increase in aluminum ASP leads to an increase in net profit from RMB3,616mn to RMB5,852mn.
• A 5% increase in coal cost leads to an increase in net profit from RMB3,428mn to RMB5,665mn.

Shareholding and Performance

• Cui Lixin holds 72.3% of the shares.
• Market Cap: HK$38,280.0mn.
• Share Price Performance (12-month):
  • Absolute: 32.6%.
  • Relative: 33.6%.

Segment Revenue and Gross Profit

Analyst Recommendations

• BUY rating is maintained.
• Target Price: HK$32.00.
• CMBI will host a NDR conference call on 23 Mar (14:00 HKT).

Conclusion

Despite the recent share price drop, the report maintains a BUY rating due to the limited scale of coal mining business and tight supply of aluminum. The Saudi project is progressing well, and the cost advantages in China's renewable power are expected to support profitability. Investors are advised to consider the earnings sensitivity and valuation metrics before making investment decisions.