China Hongqiao Group Limited (Surveillance Report)

Lianhe Ratings Global Limited (“Lianhe Global”) has affirmed ‘BB+’ global scale Long-term Issuer and Issuance Credit Ratings of China Hongqiao Group Limited; Issuer Rating Outlook remains Positive

The Issuer Rating reflects China Hongqiao Group Limited’s (1378.HK) (“China Hongqiao” or “the company”) established leading market position, cost advantage backed by its vertically integrated production platform and economy of scale, as well as the solid financial performance supported by the prevailing high aluminum prices. However, China Hongqiao’s rating is constrained by the cyclical nature of the aluminum industry and its regulation and concentration risks.

The Positive Outlook reflects our expectation that China Hongqiao will maintain its operating performance and improve its operating efficiency, given its strong cash generation capability and its advanced cost advantage. Moreover, the production volume of migrated capacity in Yunnan Province is expected to ramp up smoothly without compromising China Hongqiao’s operating efficiency.