Results Review

3Q25 results in line with our expectationsNanshan Aluminum announced its 1–3Q25 results: Revenuerose 8.66% YoY to Rmb26.33bn; attributable net profit rose8.09% YoY to Rmb3,772mn; and recurring net profit rose10.02% YoY to Rmb3,751mn. In 3Q25, revenue rose 5.75% YoYand 9.14% QoQ to Rmb9,051mn; attributable net profit fell11.85% YoY and rose 24.46% QoQ to Rmb1,147mn. 3Q25results are in line with our expectations.

Falling alumina prices weighed on YoY earnings growth;large special dividend shows confidence. In 3Q25, aluminaprices fell 19% YoY and 3% QoQ, and electrolytic aluminumprices rose 6% YoY and 3% QoQ. The sharp YoY decline inalumina prices weighed on the firm's earnings in 3Q25.

According to corporate filings, the company has launched aspecial dividend plan to reward shareholders, proposing to paya cash dividend of Rmb2.584 (including tax) per 10 shares to allshareholders (about Rmb3bn in total).

Trends to watch

Sales volume of high-end products continued to increase,and revenue contribution of the business rose. The firmcontinued to focus on the development of high value-addedproducts such as automotive sheets and aviation sheets. Weexpect aluminum automotive sheet production capacity togradually expand. According to corporate filings, the firm hasannual production capacity of 200,000t, and its new 200,000t/yrproject is likely to ramp up in the next three years.

The mass production of domestic large aircrafts has boosteddemand for aviation aluminum materials. As China's aviationindustry grows, we expect the company's 50,000t aircraft platecapacity to continue to ramp up, and the proportion of high-endproducts to increase further.

Alumina production line in Indonesia to expand capacity.

The firm's new 2mnt alumina factory in Indonesia is scheduled to come online in early 2026, with total annual productioncapacity of 4mnt. The firm is expanding downstream to build anew aluminum project with annual production capacity of250,000t and supporting facilities such as carbon and docks.

The firm expects the project to be completed and put intooperation in 2027.

Attaching importance to shareholder returns showsconfidence in future growth. According to corporate filing, thecompany has launched a shareholder return plan for 2024–2026. It plans to use its own funds to repurchase shares, andkeep annual dividend ratio of more than 40%.

Financials and valuation

We maintain our 2025 and 2026 earnings forecasts. The stock istrading at 10.0x 2025e and 9.8x 2026e P/E. We maintain anOUTPERFORM rating and raise our TP 16.0% to Rmb5.57,implying 12.2x 2025e and 12.0x 2026e P/E and offering 21.9%upside, considering improving risk appetite and the firm's higherdividend payout ratio.

Risks

Sharp fluctuations in aluminum prices; disappointing progress innew projects and/or downstream demand recovery.