China Hongqiao Plummets 12% as Margin Contraction Sours Earnings

Shares Drop 12.35% as Earnings Miss Analyst Forecasts

Shares of China Hongqiao Group (01378.HK) fell 12.35% to close at HKD30.24 after the company's fiscal year 2025 earnings failed to meet analyst expectations. The stock opened down 8.41% and bottomed out at HKD30.18 during the session, with trading volume reaching 71.99 million shares valued at HKD2.246 billion. The negative sentiment was solidified after prominent investment banks, including Morgan Stanley, JPMorgan, and UBS, signaled that the results were lower than they had projected. Short interest in the stock was notable, with short selling volume hitting HKD269.97 million, representing a ratio of 17.826% as of March 20, 2026.

Alumina Margin Contraction Signals Profitability Pressure

While China Hongqiao reported top-line growth, underlying metrics revealed significant weakness. For fiscal year 2025, revenue increased a modest 4% year-over-year to RMB162.354 billion, while net profit grew just 1.2% to RMB22.636 billion. The primary concern for investors was a 1.4 percentage point decline in the company's overall gross profit margin to 25.6%. The company attributed this erosion directly to a lower gross profit margin from its alumina products. This suggests that despite a growing top line, the company is facing pricing or cost control challenges that are directly impacting its core profitability.

Company Struggles Contrast with 8% Projected Sector Growth

The firm's performance issues stand in sharp contrast to the bullish long-term outlook for the aluminum industry. The global aluminum extrusion market, valued at USD 93.41 billion in 2025, is projected to expand to USD 202.23 billion by 2035, reflecting an 8.03% compound annual growth rate. This growth is driven by rising demand for lightweight and sustainable materials in the automotive and construction sectors. While China Hongqiao is a key player in this expanding market, its recent earnings miss indicates that it is struggling with internal execution, preventing it from fully capitalizing on these strong industry tailwinds.