HONTRON(SZ:002379) Minsheng Securities·2025-09-02 13:42Investment Rating - The report gives a "Recommended" rating for the company after the acquisition of Hongtuo Industrial, positioning it as a leader in the electrolytic aluminum and alumina industry [3][6]. Core Viewpoints - The acquisition of Hongtuo Industrial for 63.52 billion yuan will transform the company into a fully integrated player in the aluminum industry, enhancing its production capabilities and market position [1][3]. - Hongtuo Industrial is a leading integrated aluminum producer in China, with significant production capacities in alumina (19 million tons) and electrolytic aluminum (6.459 million tons) [2][40]. - The company is expected to maintain high dividend yields post-acquisition, with projected net profits of 23.44 billion yuan in 2026, leading to a potential dividend yield of 6.3% to 6.9% depending on the payout ratio [3][43]. Summary by Sections Company Overview - The company, originally established in 2000 and listed in 2010, plans to acquire 100% of Hongtuo Industrial by May 2025 for 63.52 billion yuan, marking a significant shift from aluminum processing to a fully integrated aluminum production model [1][10]. Financial Performance - Hongtuo Industrial's revenue for 2024 is projected at 149.29 billion yuan, a 15.8% increase year-on-year, with a net profit of 18.15 billion yuan, reflecting a 168.7% growth [2][42]. - The company's revenue from aluminum processing is expected to grow, but it has faced pressure from intense competition, leading to a projected net loss of 1.9 billion yuan in 2025 without the acquisition [3][5]. Production Capacity and Strategy - The report highlights a strategic shift in production capacity from Shandong to Yunnan, where electricity costs are lower due to abundant hydropower resources, which will help reduce production costs [2][54]. - The planned capacity transfer includes 44.8 thousand tons in 2025, 24.1 thousand tons in 2026, and 83.1 thousand tons in 2027, ultimately increasing Yunnan's capacity to 3.008 million tons by 2027 [55]. Market Position and Competitive Advantage - The company is set to become the second-largest electrolytic aluminum and alumina producer in China, following China Aluminum, with a clear competitive advantage due to its integrated production model [1][3]. - The report emphasizes the strong demand-supply dynamics in the aluminum industry, which are expected to support stable pricing and profitability [3][43]. Dividend Potential - The company is projected to become a high-dividend stock post-acquisition, with a historical dividend payout ratio increasing from 48% in 2021 to an expected 63.4% in 2024 [3][43].