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2015 Interim Results Announcement

二零一五年度中期业绩公布

August 2015


1

Disclaimer

This document does not constitute or form part of and should not be construed as an offer to sell or issue or the solicitation of an offer to buy or acquire

securities of the Company or any of its subsidiaries or affiliates in any jurisdiction or as an inducement to enter into investment activity. No part of this

document, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision

whatsoever. This document is not financial, legal, tax or other product advice.

This document has been prepared by the Company based on information available to them for use at a non-deal road show presentation by the

Company for selected recipients for information purposes only and does not constitute a recommendation regarding any securities of the Company. The

information has not been independently verified. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should

be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of the Company or any of

its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of

this document or its contents or otherwise arising in connection with the document.

This document is highly confidential and being given solely for your information and for your use and may not be retained by you nor may this document,

or any portion thereof, be shared, copied, reproduced or redistributed to any other person in any manner. In particular, neither the information contained

in this presentation nor any copy hereof may be, directly or indirectly, taken or transmitted into or distributed in the U.S., Canada, Australia, Japan or any

other jurisdiction which prohibits the same except in compliance with applicable securities laws. Any failure to comply with this restriction may constitute

a violation of the United States or other national securities laws. No money, securities or other consideration is being solicited, and, if sent in response to

this presentation or the information contained herein, will not be accepted.

The statements contained in this document speak only as at the date as of which they are made, and the Company expressly disclaims any obligation or

undertaking to supplement, amend or disseminate any updates or revisions to any statements contained herein to reflect any change in events,

conditions or circumstances on which any such statements are based. By preparing this presentation, none of the Company, its management, and their

respective advisers undertakes any obligation to provide the recipient with access to any additional information or to update this presentation or any

additional information or to correct any inaccuracies in any such information which may become apparent.

This presentation is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration

or an exemption from registration. Any offering in the United States may be made only by means of an offering circular that may be obtained from the

Company and that will contain detailed information about the Company and management, as well as financial statements. By reviewing this

presentation, the recipient is deemed to have represented and agreed that he and any customers he represents are either (a) qualified institutional

buyers (within the meaning of Regulation 144A under the Securities Act), or (b) not a U.S. person and are outside of the United States and not acting for

the account or benefit of a U.S. person (as defined in Regulation S under the Securities Act).

Any reference herein to “the Company” shall mean, collectively, China Hongqiao Group Limited and its subsidiaries and investments.


2

Summary of 1H2015

Financial Performance


3

Summary of financial performance

1 Including revenue from the sale of steam

For the six months ended 30 Jun

(RMB million) 1H2015 1H2014 Variance

Revenue1 22,453 17,368 +29.3%

Gross profit 5,236 3,810 +37.4%

Gross profit margin 23.3% 21.9% +1.4 p.p

Net profit margin 12.1% 11.7% +0.4 p.p

Net profit attributable to

shareholders of the company 2,718 2,037 +33.4%

Basic earnings per share

(RMB) 0.44 0.35 +25.7%


4

1,482

1,917

1H2014 1H2015

70

121

1H2014 1H2015

Sales volume (‘000 tons) Production volume (‘000 tons)

Production Volume

Steady increase of production and sales volumes

Sales Volume

Aggregate annual designed production capacity as at 30 Jun 2015: approximately 4,536,000 tons, making Hongqiao the largest aluminum product manufacturer in China

Aluminum Alloy Products Aluminum Alloy Products

Aluminum Alloy

Processed Products Aluminum Alloy

Processed Products

1,539 2,109

1H2014 1H2015

65

111

1H2014 1H2015


5

7,175

5,036

1H2014 1H2015

2,0372,718

1H2014 1H2015

3,810

5,236

1H2014 1H2015

Gross Profit

Stable profitability

Gross profit (RMB mn) EBITDA (RMB mn)

EBIT (RMB mn) Net profit (RMB mn)

EBITDA

Net Profit EBIT

Gross profit margin

23.3%

EBITDA margin

32.0%

EBIT margin 21.8%

Net profit margin

12.1%

21.9% 29.0%

20.5% 11.7%

4,899

3,567

1H2014 1H2015


6

Prudent financial management

(RMB million) As at 30 June 2015 As at 31 December 2014 Variance

Cash & cash

equivalents 6,713 7,676 -12.6%

Total liabilities / total

assets 63.1% 61.1% +2.0%

Trade receivables

turnover (days) 9 3 +6

Inventory turnover

(days) 118 145 -27


7

Industry Overview


8

1H2015 Aluminum Industry Overview

Aluminum price fluctuated; aluminum

products embrace strong demand and supply

In the first half of 2015, domestic demand for aluminum was

stable and production capacity recorded steady growth.

Despite both demand and supply are strong, we observe

certain volatility in aluminum price.

Although aluminum price remained volatile, China

Hongqiao strengthened its self-control capacity and

managed to maintain an excellent high growth in the

current market condition with its effective cost control,

improvement of self-supplied electricity ratio, high

management standard and effective expansion of

production capacity.

Market expectations

Domestic integration of the aluminum industry is

underway and expected to last for certain period of time.

With its self-adjustment, the market shall drive backward

production capacity out of the market and further relieve

the pressure from excessive production capacity.

Monthly Average Price of Yangtze River Spot Market

12500

12600

12700

12800

12900

13000

13100

13200

1月 2月 3月 4月 5月 6月

RMB/ ton

Jan Feb Mar Apr May Jun

Average Yangtze River 6 Months Spot Market Price: RMB12,905/ton

1600

1700

1800

1900

Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14

USD/ ton

Source: LME, Antaike, Yangtze River Spot Market

London Metal Exchange (LME)

Average LME 3 Months Aluminum Futures Price: USD1,802/ton

Jan Feb Mar Apr May Jun


9

China aluminum industry overview

1H2015 PRC aluminum supply & demand overview Economic growth expected to continue to drive PRC aluminum demand

(ktpa) (ktpa)

According to Antaike, China Hongqiao is the largest aluminium

manufacturer in China, as at 30 June 2015.

Through continuous strategic repositioning efforts, strive to

develop an integrated industrial value chain

Vertically integrated business model enhances cost

competitiveness

Competitive advantage through expanding into upstream

business

1H2015 PRC aluminum consumption breakdown Well positioned to benefit from growing demand

As the industry integrates, China Hongqiao believes it stands

prime to benefit from China’s growing demand for aluminum

Source: Antaike

Supply Demand

2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2

54,850 58,100

61,480 64,190 66,950 69,570

49% 47%

46% 45% 43% 42%

51% 53% 54% 55%

57% 58%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Others China

2014 2015E 2016E 2017E 2018E 2019E

Construction

35.5%

Transport

12.1% Packaging

5.6%

Electronics

13.9%

Durables

11.3%

Machinery

6.2%

Others

3.8%

11.6%

Export


10

Industry outlook

Ridding excess production capacity, helping to foster sustainable healthy development of the aluminum industry

Opportunities

Price of bulk commodity suffered from

economic downturn. Domestic aluminum price

dropped slightly yet remained stable in general

Chinese government has been actively

promoting the use of aluminum in

transportation, construction, power supply

and durable goods sectors

China’s “One belt one road” aspiration has its

major emphasis on infrastructural projects


11

Boost production scale and optimize production structure Well positioned to benefit from industry recovery

Major downstream processing provinces

Major alumina production provinces

Major primary aluminum production provinces

Railway & highway transportation

Shipping transportation

Source: Antaike

1H2015 China aluminum industry landscape

Provinces planning for massive increase in aluminum capacity

expansion


12

Operation Review


13

Comprehensive strategy to ensure sufficient upstream supply

Achieved breakthrough in overseas raw material business

The bauxite mining project in The Republic of Guinea achieved

massive breakthrough, standing in effective support of China’s

strategic “Maritime Silk Route” initiative.

Starting from 12 January 2014, the Republic of Indonesia has

prohibited the export of 65 kinds of raw ore materials including

bauxite. Facing bauxite supply challenge, the Group expanded its

procurement channels for bauxite in countries including Australia,

India and Malaysia.

Continued to increase proportion of self-supplied alumina

The Group’s joint venture alumina production plant in Indonesia ,

which has a designed phase-one capacity of 1,000,000 tons of

alumina a year, is expected to complete construction at the end of

2015.


14

Total installed capacity reaching

7,950 MW, raising the ratio of self-

supplied power

Competitive electricity cost –

average cost of self-supplied

electricity further decreased

Stable and highly efficient power supply

All production facilities of CHQ

connected to self-built power grid

Integrated electricity cost

is RMB0.087/kWh lower

than the alumina industry

average in China

Captive power plant – further

increase self-sufficiency

Captive power grid capable of

continuous stable operation

1

2


15

Continuous enhancement of technology, striving to lead electrolysis technology in the world

Boosting investment in R&D of energy efficiency, achieving

breakthrough in low energy consuming electrolysis technology

The world’s first 600 KA electrolyzer commenced operation last

year

The new electrolysis technology is expected to reduce electricity

consumption of aluminum production

It not only agrees with China’s energy conservation aim, but to

also helps the Group enhance its clean production and recycling

economy model


16

Shandong

Production base for aluminum products

Weiqiao production base

Capacity1: 636,000 tons

Binzhou production base


Zouping production base

Capacity1: 2,040,000 tons

Expand production capacity Set up new production bases

1 As of 31 Dec 2014

Huimin production base


Yangxin production base Capacity

1: 300,000 tons

Binzhou Beihai production base



17

Future Plans & Strategies


18

Alumina production plant JV in Indonesia slated for future development

The Group’s joint venture in

Indonesia is expected to

complete construction at the

end of 2015. It has a captive

power plant, a port and a living

zone

The Group will ensure the

project adopts the most

advanced and environmental-

friendly techniques aiming for

optimized construction and

operation management, such

investment will help secure

stable supply of raw materials

for the Group


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Long-term goal

Integration of aluminum,

electricity and grid

Integration of upstream

and downstream business

To become a vertically-integrated, large-

scale aluminum enterprise leading in

cost competitiveness

Develop clean production

and recycling economy Strengthen R&D Efforts


20

Q&A

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