BofA Lifts China Hongqiao Target to HK$48
Bank of America issued a bullish report on March 3, identifying aluminum producer China Hongqiao (01378) as a top pick and increasing its price target to HK$48. The bank's valuation model anticipates a compelling 9x 2026 estimated price-to-earnings ratio and a 7% dividend yield, supported by a payout ratio projected to exceed 60%.
This upgrade reflects BofA's confidence in Hongqiao's vertically integrated model, which positions it in the lowest quartile of the global cost curve. The report also highlights the company's commitment to shareholder returns through high dividend payouts and share buybacks as key reasons for the optimistic outlook.
Aluminum Profits Seen Reaching RMB 7,000/Ton
Bank of America's analysis anchors the 2026 aluminum price at RMB 23,000 per ton, a level it believes will propel industry-wide profits into the historical high range of RMB 6,000 to RMB 7,000 per ton. This robust profitability stems from a combination of supply constraints and demand resilience.
The report identifies five key drivers for the aluminum market. These include China's domestic production nearing its ~45 million ton capacity ceiling, sluggish supply growth from overseas producers like Indonesia, and relentless demand from AI data centers, energy storage, and electric vehicles. Furthermore, the high price of copper is driving material substitution, while China's power cost advantages enhance producer margins.
Copper Deficit to Reach 600,000 Tons as Electrification Grows
The bullish sentiment extends beyond aluminum to the broader metals complex. Bank of America projects a global copper supply deficit of 500,000 to 600,000 tons by 2026-2027. This shortfall is directly linked to the global electrification trend, with demand stemming from grid upgrades, EV manufacturing, and the rapid build-out of AI computing infrastructure.
For China specifically, the bank forecasts copper demand to grow by approximately 2.5% in 2026. The report also notes that potential government stockpiling could act as another powerful catalyst for prices, reinforcing the bank's strong conviction in the metals sector.
