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2026-09-18 16:52:14 Morgan Stanley issued a report summarizing key takeaways from a meeting with CHUANGXIN IND (02788.HK). The bank cited management as saying that since July, Chinese regulators have tightened approvals for outbound direct investment, focusing on geopolitical risks, technology transfer and foreign exchange controls. However, restrictions on Belt and Road projects are relatively limited, although approval timelines have been extended. The first-phase Saudi Arabia project obtained outbound direct investment approval in June 2025. The report noted that deleveraging remains a company priority. Financing for the coal mine acquisition increased interest-bearing debt by around RMB2.5 billion, while existing debt will decline by RMB700 million to RMB800 million in 1H26. Management targets debt reduction to around RMB12 billion by year-end, with borrowing costs falling from about 5% last year to around 3% in 2H26. Coal mine integration should further lower electricity costs. The acquired coal mine has reserves of 660 million tonnes and planned annual output of 5 million tonnes, potentially covering 80% to 90% of the approximately 6 million tonnes of annual coal demand for captive power generation. Management expects electricity costs to decline by RMB0.05 to RMB0.06 per kilowatt-hour from the current RMB0.33 per kilowatt-hour including value-added tax. The bank also said the Saudi project's all-in production cost is USD1,900 to USD2,000 per tonne, compared with around USD3,300 per tonne on the London Metal Exchange, with downstream products adding another USD200 to USD400 per tonne. Domestic all-in costs in 1H26 are estimated at around RMB14,500 per tonne, also demonstrating strong cost competitiveness. The bank maintained its "Equalweight" rating on CHUANGXIN IND (02788.HK) with a TP of HKD22. (da/ad)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |