Investment Rating - The report initiates coverage with a "Buy" rating for the company [8]. Core Views - The company has established itself as a global leader in the aluminum industry chain, effectively hedging against price fluctuations and ensuring long-term operational stability [2][4]. - The company benefits from a flexible management mechanism and leverages the advantages of hydropower resources in Yunnan to transfer part of its electrolytic aluminum capacity, further achieving cost leadership [5][32]. - The company has completed its peak capital expenditure phase, with an average dividend payout ratio of approximately 49.2% from 2019 to H1 2024, and an average dividend yield of 9.2% from 2019 to 2023, which is high within the metal cycle sector [7][32]. - Future aluminum prices are expected to rise, coupled with a tight supply-demand balance, leading to reduced price volatility and enhanced cash profit margins for the company, highlighting its long-term investment value [2][7]. Summary by Sections Company Overview - Founded in July 1994, the company has become a global leader in the aluminum industry chain, with a total alumina production capacity of 19.5 million tons, including 17.5 million tons domestically and 2 million tons in Indonesia [4][17]. - The electrolytic aluminum production capacity is approximately 6.46 million tons, with major production bases in Shandong and Yunnan [4][26]. Operational Strengths - The company has a comprehensive layout of the aluminum industry chain, including bauxite mining, alumina, electrolytic aluminum, and aluminum processing, which effectively mitigates price volatility risks [5][22]. - The company’s return on equity (ROE) is as high as 18.35% (annualized for H1 2024), placing it among the top in the aluminum industry [32]. Profitability and Market Dynamics - The company anticipates a net profit growth of approximately 95% year-on-year in 2024, reaching a historical high, driven by the overall price increase in the aluminum industry chain [4][18]. - The report highlights that the profit share of alumina is expected to dominate in 2024 due to supply constraints, while the profitability of electrolytic aluminum is projected to expand in 2025 as supply dynamics shift [6][53]. Dividend and Valuation - The company’s high dividend payout and the potential acquisition of core aluminum assets are expected to enhance its valuation, with a focus on long-term stable returns for investors [7][56]. - The report notes that the company is likely to benefit from the correction of the A/H share valuation gap following the acquisition of Hongtu Industrial, which has significant alumina and electrolytic aluminum production capacities [7][56].
中国宏桥：宏图远航，桥通八方-20250217