宏达股份，即将迎来华丽转身

Investment Rating - The report assigns a "Buy" rating to Hongda Co Ltd (600331 SH) with a first-time coverage [4] Core Views - Hongda Co Ltd once dominated the resource sector with Asia's largest lead-zinc mine during China's rapid industrialization phase However, the company faced significant challenges after 2016, including the invalidation of its core asset Jinding Zinc's equity and the bankruptcy restructuring of its associate company Sichuan Trust, leading to operational difficulties In 2024, the company was restructured and taken over by Sichuan Province's state-owned Shudao Group, which holds assets exceeding RMB 1 trillion The report explores whether Hongda can achieve a turnaround with Shudao's resource support and business synergies, especially given its 30% stake in the Duolong Copper Mine, which has over 7 million tons of copper resources [1][4] Company Overview - Hongda Co Ltd primarily engaged in zinc mining, smelting, and processing, as well as phosphate chemical production Its subsidiary Jinding Zinc had 5 07 million tons of recoverable zinc reserves and produced over 100,000 tons of zinc annually, making it a key player in China's zinc industry However, in 2018, the Supreme Court ruled that Hongda's 60% equity in Jinding Zinc was invalid, leading to a loss of its core profit-generating business In 2020, the company fully impaired its RMB 1 904 billion investment in Sichuan Trust, further deteriorating its financial condition By 2023, its controlling shareholder Hongda Industrial was forced into bankruptcy restructuring, and the company relied on its phosphate and zinc smelting businesses to barely sustain operations [4][14] Shudao Group's Restructuring - Shudao Group, a state-owned enterprise with assets exceeding RMB 1 34 trillion, took over Hongda Co Ltd in 2024 by acquiring 26 39% of its shares through the bankruptcy restructuring of Hongda Industrial Shudao facilitated the spin-off of Sichuan Trust's equity from Hongda and planned to subscribe to a private placement, increasing its stake to 43 38% and raising RMB 2 853 billion to repay debts and improve liquidity This restructuring significantly improved Hongda's financial health and set the stage for its recovery [5][32][34] Business Synergies and Duolong Copper Mine Development - Shudao Group's entry brought two key opportunities for Hongda: 1) Resource and industrial synergies: Shudao's extensive mining rights and exploration permits in phosphate and non-ferrous metals could stabilize Hongda's phosphate chemical business and enhance its product portfolio, potentially improving profitability [5][41] 2) Accelerated development of the Duolong Copper Mine: With Shudao holding 40% and Hongda holding 30% of the mine, Shudao's state-owned status and financial strength are expected to expedite the mine's development The mine, with over 7 million tons of copper resources, could achieve an annual production capacity of 240,000-270,000 tons, with an estimated total investment exceeding RMB 30 billion and annual net profits of RMB 6 5-7 3 billion under equilibrium price assumptions [6][39][59] Financial Performance and Outlook - Hongda's financial performance has been volatile, with its phosphate business contributing the majority of profits while its zinc smelting business incurred losses In 2023, phosphate products accounted for RMB 122 million of the company's RMB 189 million gross profit, while zinc smelting recorded a loss The company's lack of upstream resources has made it vulnerable to price fluctuations in raw materials [27][30] - The report forecasts that Hongda's revenue will grow modestly from RMB 3 041 billion in 2024 to RMB 3 176 billion in 2026, with net profits improving from RMB 19 million to RMB 125 million over the same period, driven by Shudao's support and the potential development of the Duolong Copper Mine [65][67]