...August 22, 2024 This report does not constitute a rating action. HONG KONG (S&P Global Ratings) Aug. 22, 2024--Supportive industry conditions will strengthen China Hongqiao Group Ltd.'s financial metrics but its reliance on short-term financing will remain a key watchpoint. Hongqiao's revenue and cash flow will derive support from the solid price of aluminum, stemming from the tight supply and strong demand for its application in the global energy transition. S&P Global Ratings assumes aluminum prices to be US$2,300 a ton for the rest of 2024 and US$2,400 in 2025. The prices have declined from the 2022 peak but will still stay 14%- 19% above the 10-year average. We expect Hongqiao's ratio of funds from operations (FFO) to debt will improve to 45%-60% in 2024-2025, from 39% in 2023. The company's profitability will also continue to benefit from two key factors. First, lower power costs amid moderating prices for domestic thermal coal; and secondly, a gradual ramp-up of the company's lower-tariff...
