By Sherry Qin


China Hongqiao Group's shares rose sharply after it posted strong 2023 results thanks to improved margins for its aluminum alloy products.

Shares of the aluminum maker gained 13% to 8.38 Hong Kong dollars (US$1.07) early Monday, on track for its largest daily percentage gain since June.

The Shandong, China-based company reported 2023 net profit of 11.46 billion yuan ($1.59 billion), 32% higher from the previous year, according an exchange filing after the market closed Friday. Its revenue edged up 1.5% to CNY133.62 billion.

The company attributed the rise in profits to an increase its overall gross profit margin for aluminum alloy products, lower administrative expenses and a higher share of profits from associates.

Hongqiao's aluminum alloy products, which represented 71% of its 2023 revenue, saw its gross profit margin improving to 17.4% from 13.5% in 2022. Although sales prices for Hongqiao's aluminum alloy products dropped in 2023, the lower cost of its main raw materials more than offset that impact, it said.

Hongqiao's net income beat market expectations, mainly due to lower production costs and a higher-than-expected aluminum sales volume in the fourth quarter, Citi analyst Jack Shang said in a research note.

Shang expects the strong aluminum smelting margin to be sustained in 2024 thanks to lower coal and electricity costs.


Write to Sherry Qin at sherry.qin@wsj.com


(END) Dow Jones Newswires

03-24-24 2357ET