China Hongqiao

(Stock Code：1378)

Benefit from Pro-cyclical Aluminum Price Growth, Cost Optimisation of Green Transformation, and

Remarkable Results of Vertical Integration,

Net Profit Attributable to Owners Increased Significantly by 72.3%

(5^th March 2021——Shandong) The board (“Board”) of directors (the “Directors”) of China Hongqiao Group Limited (the “Company” or “China Hongqiao”; Stock Code: 1378.HK) is pleased to announce the audited consolidated annual results of the Company and its subsidiaries (collectively as the “Group”) for the year ended 31^st December 2020 (the “Year” or the “Year Under Review”).

In 2020, due to the adverse effects of the COVID-19 pandemic (“Pandemic”), the uncertainty of world economic growth has increased, thus the world economy will take a long time to recover to pre-pandemic levels. Nevertheless, the PRC government actively adopted measures to take the lead in controlling the Pandemic, resuming business and production, and achieving remarkable results in economic growth. Under these global economic conditions, the Group managed to further strengthen the leadership in the aluminum industry by leveraging its core competitive advantages, its business model and proactive business development strategies.

During the Year under Review, the Group’s revenue amounted to approximately RMB86,144,641,000, representing a year-on-year increase of approximately 2.3%; gross profit amounted to approximately RMB19,355,188,000, representing a year-on-year increase of approximately 17.6%; net profit attributable to owners of the Company amounted to approximately RMB10,495,936,000, representing a year-on-year increase of approximately 72.2%; and basic earnings per share amounted to approximately RMB1.2210 (same period in 2019: approximately RMB0.7087). During the Year, the Board has approved the payment of an interim dividend of HK15 cents per share for the first time since the Company’s listing (same period in 2019: Nil). The Board recommended payment of a final dividend of HK50 cents per share for 2020 (same period in 2019: HK34 cents).

During the Year under Review, the Group’s total output of aluminum alloy products and aluminum fabrication products were approximately 5.622 million tons and 0.622 million tons respectively, basically maintained at the similar level as last year. The Group’s sales volume of aluminium alloy products was approximately 5.060 million tons, maintained at similar level as the same period last year. The average sales price of aluminium alloy products increased by approximately 2.2% to RMB12,501/ton (excluding value-added tax) compared with the same period last year. The Group’s sales volume of aluminium fabrication products was 0.601 million tons, representing a decrease of approximately 3.6% compared with the same period last year. The Group’s sales volume of alumina products was approximately 6.734 million tons, representing a year-on-year increase of approximately 27.6%. The increase in sales volume of alumina products was mainly because the Group actively seized the opportunities to develop the domestic alumina product market under the premise of satisfying self-consumption alumina, resulting in the increase in sales volume of alumina products.

For the year ended 31 December 2020, the Group’s revenue derived from aluminum alloy products was approximately RMB63,257,199,000, accounting for approximately 73.4% of the revenue of the Group; the revenue of alumina products was approximately RMB13,486,945,000, accounting for approximately 15.7% of the revenue of the Group. The revenue derived from aluminum fabrication products amounted to approximately RMB8,781,080,000, accounting for approximately 10.2% of the total revenue of the Group. The Group’s proportion of revenue by product category for the year ended 31 December 2020 has no significant change as compared with the same period last year. Besides, the Group’s overall gross profit margin of the products was approximately 22.5%, which increased by approximately 2.9 percentage points as compared with approximately 19.6% for the corresponding period of last year. Gross profit margin of aluminum alloy products increased, which was mainly due to the increase in average sales price of aluminium alloy products and the decrease in the Group’s average purchase price of raw materials such as alumina, bauxite and carbon anode blocks during the Year, which led to the decrease in the cost of aluminum alloy products of the Group. Affected by the drop in the alumina market prices, the Group’s gross profit margin for alumina products decreased compared to the same period last year. The gross profit margin for aluminum fabrication products increased slightly compared with the same period of last year. The Group will continue to strengthen the cost control and upgrade the production technology to enhance its market competitiveness.

During the Year, in accordance with its business models of “Integration of Aluminum and Electricity”, “Integration of Upstream and Downstream Businesses”, “Global Integration”, and “Green Smart Integration”, the Group continued to accelerate deployment of technological innovation, increase investment in scientific research, and make efforts towards green development and high quality development. Domestically, the Group focused on the material strategy of “Three New (new infrastructure, new material and new applications) and One High (high value-added)”, accelerated the construction of aluminum lightweight material bases, and built a world-class full-process automotive lightweight R&D and manufacturing base and a world-class R&D center for lightweight aluminum materials in Shandong province. The Group also accelerated construction of the Yunnan green aluminum innovation industrial park. The project initiated partial production in September 2020, which will help the Group to further reduce production costs, enhance its core competitiveness, as well as effectively reduce its carbon emission and create a more eco-friendly production environment through more use of hydropower clean energy. Additionally, the Group further extended its international cooperation and improved the development of a circular economy by joining hands with Germany’s Scholz China GmbH to build the Sino-German Hongqiao Scholz Circular Economy Science & Technology Project, which focuses on secondary aluminum, scrapped vehicle and research and development of recycling technology, and practically contributes to the circular economy. As to overseas business, the bauxite mines projects in Guinea and the construction of phase 2 alumina project in Indonesia have been progressing smoothly.

In the prospect of 2021, the Group believes that the construction industry as well as high-end manufacturing industries such as automobile and aviation will maintain a stable growth due to the development of the economy in China. With energy savings, reduced emissions and low carbon footprints being strongly advocated by the society, aluminum for rail transit and lightweight aluminum for motor vehicles are expected to become key consumption growth for the aluminum processing industry. It is expected that as demand for aluminum in these important fields will continue to maintain growth, the total demand for aluminum will also grow steadily at the same time. The Group has sufficient confidence in the industry’s future development. However, as the Pandemic is not yet completely over, there are uncertainties in the world economic development and there will still be certain challenges and opportunities ahead for the aluminum industry.

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About China Hongqiao Group Limited

China Hongqiao Group Limited (“China Hongqiao” or “the Group”; Stock code: 1378) is a leading aluminum product manufacturer in China. Located in Shandong Province of China, the Group is mainly engaged in the production and sales of molten aluminum alloy, aluminum alloy ingots, aluminum alloy casting-rolling products, aluminum busbars and alumina. With large scale operations, advanced technology, competitive cost structure, visionary strategy of industrial chain expansion and experienced management team, the Group has successfully strengthened its leading market position, sustaining its business growth and unique competitive edges. China Hongqiao is dedicated to accelerating the industrial cluster development, enhancing the cost advantages and the economies of scale, and maintain its leading position in the global aluminum industry through the industrial model of “Integration of Aluminum and Electricity”, “Integration of Upstream and Downstream Businesses” and “Global Integration”.

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