JPMorgan has reaffirmed an "Overweight" stance on China Hongqiao (01378), setting a target price of HK$30 after reviewing its latest financial performance. The company's attributable net profit for the first half of 2026 reached approximately RMB 17.21 billion, marking a 39% year-on-year increase that landed in line with market expectations.

The bank's optimistic outlook is anchored on several key drivers, starting with record-breaking profitability in its aluminum segment. Gross profit per tonne of electrolytic aluminum hit RMB 8,100, surging 78% year-on-year and 43% sequentially, while the blended average selling price climbed to RMB 21,500 per tonne, up 18% year-on-year and 10% quarter-on-quarter. This pushed total gross profit to RMB 27.5 billion, a 32% year-on-year improvement, with margins expanding to 31.5%—a rise of 5.8 percentage points annually and 6.0 percentage points sequentially. Notably, sales volumes of electrolytic aluminum remained largely stable, confirming that the earnings boost came from margin expansion rather than higher shipment counts.

Interest costs and deleveraging have further enhanced earnings quality. Net interest expenses dropped to RMB 594 million, down 23% year-on-year and 59% sequentially, while net debt shrank to RMB 17.2 billion, reflecting a 38% annual decline. The net leverage ratio improved to 12%, a clear improvement from 13% at the end of fiscal 2025 and 24% in the first half of 2025.

Ongoing share buybacks continue to underpin the stock. During the first half of 2026, China Hongqiao repurchased and cancelled 159.3 million shares for approximately HK$5.29 billion, with its controlling shareholder also increasing its stake by 41.5 million shares over the same period.