20260318-招银国际-创新实业-02788.HK-2025_profit_+33_YoY_surprising_dividend_6页_653kb

Chuangxin Industries (2788 HK) Summary

Core Content

Chuangxin Industries (2788 HK) reported a strong financial performance in 2025, with net profit growing by 33% YoY to RMB2.73bn, slightly above expectations but below the Bloomberg consensus. The company also proposed a final dividend of HK$0.77 per share, which is higher than expected. Key highlights include:

• Revenue Growth: Increased by 23% YoY to RMB18.7bn.
• Gross Margin Expansion: The aluminium business saw a 3.3ppt increase in gross margin to 30.2%, while the blended gross margin narrowed by 3.4ppt to 24.8% due to the low-margin growth in alumina and alumina hydroxide.
• Net Debt to Equity Ratio: Reduced to 56% by end-2025 from 466% by end-2024, aided by strong earnings and an IPO.
• Acquisitions: Chuangxin announced the acquisition of the remaining 41.5% interest in Shandong Chuangyuan (alumina refinery) for RMB526mn and a coal mining business for RMB1bn.
• Target Price: Maintained at HK$32.00 with a 17.0% upside from the current price of HK$27.34.

Main Points

• 2025 Performance: Strong net profit growth and revenue expansion were driven by the aluminium and alumina segments.
• Dividend Policy: A final dividend of HK$0.77 per share was proposed, higher than expected.
• Acquisitions:
  • Shandong Chuangyuan: Acquisition of 41.5% stake for RMB526mn, increasing alumina exposure. The valuation implies a 4.7x 2025 P/E.
  • Coal Mining Business: Acquisition of a coal mining business for RMB1bn, which is seen as slightly negative due to the company's shift to renewables.
• Valuation: The company maintains a positive outlook despite the coal acquisition, citing strong capacity growth in Saudi Arabia and cost advantages in China.
• Earnings Sensitivity:
  • Revenue and EBITDA are highly sensitive to changes in aluminium prices and coal costs.
  • The company's net profit is significantly affected by these variables, with a 5.3% growth expected in 2026E.
• Key Risks:
  • Unexpected removal of capacity cap in China.
  • Volatility in aluminium and alumina prices.
  • Power shortages.
  • Supply chain disruptions.
  • New project execution risks in Saudi Arabia.

Key Information

• Earnings Summary:

  • Revenue: RMB18.7bn for 2025, up 23.2% YoY.
  • Adjusted Net Profit: RMB2.73bn for 2025, up 33% YoY.
  • EPS: RMB1.76 for 2025, higher than the Bloomberg consensus of RMB1.80.
  • P/E Ratio: 13.6x for 2025, with a target of 11.0x for 2026E.
  • P/B Ratio: 5.2x for 2025, decreasing to 3.9x for 2026E.

• Shareholding Structure:

  • Cui Lixin holds 72.3% of the shares.

• Stock Data:

  • Market Cap: HK$41,010.0mn.
  • Average 3 Months Turnover: HK$146.2mn.
  • Total Issued Shares: 1,500.0mn.

• Earnings Sensitivity:

  • Aluminium ASP: A 5% increase in aluminium price can lead to significant net profit growth.
  • Coal Cost: A 5% decrease in coal cost can improve net profit.

• Valuation:

  • The company's valuation is not considered attractive for the coal mining business, but the overall company is viewed positively.

• Analyst Rating:

  • BUY: Maintained with an unchanged target price of HK$32.00.

Financial Highlights

Summary of Key Figures

• 2025 Net Profit: RMB2.73bn (+33% YoY).
• 2025 Revenue: RMB18.7bn (+23% YoY).
• Blended Gross Margin: 24.8% (down from 28.2% in 2024).
• Net Debt to Equity: Reduced to 56% from 466%.
• Dividend Yield: 2.9% for 2025.
• Target Price: HK$32.00 (13x 2026E P/E).

Key Risks

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

Analyst Certification

• The analyst certifies that all views reflect his or her personal views.
• No compensation was directly or indirectly related to the views expressed.
• The analyst has not traded in the stock within 30 days prior to the report's issue and will not trade within 3 business days after.

Important Disclosures

• This report is not investment advice.
• Past performance does not guarantee future results.
• CMBIGM may have investment banking relationships with the companies mentioned.
• There is a potential conflict of interest, and the report is for the use of intended recipients only.