Shandong Hontron Aluminum Industry Holding (002379.SZ) will have a net profit of nearly 2 billion yuan after the restructuring! The potential dividend per share is over 1 yuan, making it a "cash cow".

Since the introduction of the "Six Regulatory Measures on Mergers and Acquisitions" in September last year, mergers and acquisitions by listed companies have become the direction strongly encouraged by regulators, the reason behind this being that capital operations in line with industrial logic help improve the quality of listed companies. GMTEight noted that Shandong Hontron Aluminum Industry Holding (002379.SZ) plans to acquire the core assets of the aluminum industry chain leader CHINAHONGQIAO (01378) Shandong Hongtuo Industrial Co., Ltd. (hereinafter referred to as the "target company" or "Hongtuo Industrial") for approximately 63.5 billion yuan and has seen a series of new developments. On the evening of September 3, Shandong Hontron Aluminum Industry Holding provided comprehensive answers to the core issues of its issuance of shares to purchase 100% equity of the target company and related transactions to the Shenzhen Stock Exchange and the market. At the same time, Shandong Hontron Aluminum Industry Holding also disclosed the revised draft of the transaction report. The acquisition is progressing in an orderly manner, and considering that the scale of Hongtuo Industrial is much larger than that of Shandong Hontron Aluminum Industry Holding, Shandong Hontron Aluminum Industry Holding will benefit from high-quality assets after the completion of the reorganization. By then, Shandong Hontron Aluminum Industry Holding's total assets and revenue scale will exceed one trillion yuan, making it a global leader in the aluminum industry and becoming a "chain-leading flagship enterprise" integrating the production and sales of alumina, aluminum electrolysis, and aluminum deep processing products. For secondary market investors, after the reorganization, Shandong Hontron Aluminum Industry Holding's earnings per share will increase significantly from -0.06 yuan to 1.39 yuan. Shandong Hontron Aluminum Industry Holding's long-term investment logic will be significantly upgraded, and small and medium-sized shareholders will also share the dividends brought by the continuous growth of the A-share aluminum industry. Nearly 20 billion in annual profits after reorganization In recent years, aluminum processing enterprises have faced severe challenges in their operations due to high raw material prices and a continuous decline in consumer goods prices. In the current period of industry adjustment, Shandong Hontron Aluminum Industry Holding is also under considerable profit pressure. For Shandong Hontron Aluminum Industry Holding, which is eagerly awaiting a turning point in performance, the opportunity to fully acquire Hongtuo Industrial can be regarded as a valuable opportunity to rebuild its fundamentals through capital operations. It is reported that Hongtuo Industrial has an annual production capacity of 6.459 million tons of aluminum electrolysis and 19 million tons of alumina. In the first half of 2025, Hongtuo Industrial achieved revenue of 76.995 billion yuan and a net profit of 9.071 billion yuan, an increase of 8.64% and 14.63% respectively compared to the same period last year. After the transaction is completed, based on the situation in 2024, Shandong Hontron Aluminum Industry Holding's total assets will increase from 3.127 billion yuan to 108.026 billion yuan, revenue will increase from 3.486 billion yuan to 150.336 billion yuan, net profit attributable to shareholders will increase from a loss to a profit of 18.082 billion yuan, net asset return will increase by 39 percentage points to 35.57%, earnings per share will increase from -0.06 yuan to 1.39 yuan, which can be described as a comprehensive "upgrade". From the perspective of the capital market, as CHINAHONGQIAO is listed in Hong Kong, there is currently only one aluminum company with a market value of over one trillion yuan in A shares, which is Aluminum Corporation Of China. Once the acquisition of Hongtuo Industrial by Shandong Hontron Aluminum Industry Holding is completed, the listed company will transform from a single aluminum deep processing enterprise into a global leader covering the entire aluminum industry chain. After the stunning transformation, a comprehensive revaluation and repositioning of Shandong Hontron Aluminum Industry Holding will need to be put on the agenda as soon as possible. The future aluminum industry king may become a "cash cow" In the secondary market, investors who value both quality fundamentals and long-term growth potential of listed companies will undoubtedly be the most popular targets among investors. After all, who would be indifferent to growth value stocks? In my opinion, Shandong Hontron Aluminum Industry Holding, who will transform into a "chain-leading flagship enterprise" in the future, will undoubtedly become a "potential stock" with both stable and growth attributes. First of all, from the perspective of the industry, due to production capacity constraints, the aluminum electrolysis industry is expected to maintain high profitability for a long time in the future, and aluminum companies will continue to benefit deeply from this. Since the beginning of this year, the supply and demand situation in the aluminum electrolysis industry has been better than market expectations. Data shows that in the first half of the year, the average price of aluminum on the Shanghai Futures Exchange for March delivery was about 20,226 yuan/ton (including VAT), an increase of about 1.9% year-on-year. During the same period, domestic aluminum production and consumption were 21.84 million tons and 22.97 million tons, an increase of 2.4% and 4.3% respectively year-on-year, showing a significant trend of rising prices and quantities. At present, considering that the domestic aluminum electrolysis operating capacity has nearly reached the 45 million-ton capacity ceiling, the domestic aluminum supply has lost elasticity; while the demand side continues to benefit from the rapid development of new energy and other sectors, the long-term mismatch between supply and demand determines that the aluminum price is difficult to fall and easy to rise. With the "ceiling" of supply pressurizing, aluminum companies must focus on cost control in order to obtain excess profits, and cost control is precisely the traditional advantage of "Weiqiao series" companies. Breaking down the cost structure of aluminum electrolysis, electricity costs are one of the major components, with electricity costs accounting for about 32% of total production costs, according to SMM data. Through technological breakthroughs, Hongtuo Industrial has long mastered the technology of 600kA super-large prebake anode electrolytic cell, which can reduce energy consumption by 10% compared to the industry average, giving it a cost advantage of 15%-20% per ton of aluminum. Since 2020, high-cost electrolytic aluminum production capacity in China has gradually shifted to low-cost provinces represented by Yunnan, and Hongtuo Industrial is a representative enterprise in this round of the aluminum industry's large-scale migration. It is reported that Hongtuo Industrial is promoting the transfer of production capacity to Yunnan's clean energy base and building a "green power aluminum integrated" production system relying on local hydropower resources. Considering that hydropower prices are lower than thermal power prices, with the increase in the proportion of electrolytic aluminum production capacity in Yunnan, there is further room for the comprehensive electricity costs of Hongtuo Industrial to decrease. Furthermore, with the growing stricter requirements for low-carbon industries in the global industrial chain, the introduction of carbon trading and carbon tariffs, the "gold content" of green aluminum from Hongtuo Industrial will continue to rise in the near future. According to Zheshang's research report, based on a carbon emission permit price of 99 euros per ton for calculating the carbon tax cost per ton of aluminum, it is estimated that the cost of green aluminum can save about 650 yuan per ton. With high visibility of future growth and large growth potential, Shandong Hontron Aluminum Industry Holding will undoubtedly be welcomed by a large number of secondary market investors. After the completion of the reorganization, it is expected that Shandong Hontron Aluminum Industry Holding will continue to attract institutional investors and fundamental investors who prefer value styles due to its high-quality fundamentals and good growth prospects. Enthusiastic buying interest is expected to push up the stock price center. In fact, savvy investors have already taken the initiative to actively position themselves, and Shandong Hontron Aluminum Industry Holding's stock price has entered a "main uptrend" since June, with a cumulative increase of over 60% to date. However, as Shandong Hontron Aluminum Industry Holding, which is about to become the new electrolytic aluminum leader following CHINAHONGQIAO with an annual increase in stock price of more than 1.2 times, has significant room for further price increase. In addition, considering that industry supply is rigid, upstream investment has entered the final stage, and the pattern of high profits and low capital expenditure will undoubtedly enhance the willingness and ability of aluminum companies to distribute dividends. Not to mention, CHINAHONGQIAO, also a member of the "Weiqiao series," has implemented dividends every year since its listing in 2011. From 2011 to 2024, the company has accumulated a net profit of 124.93 billion yuan and cash dividends of 52.24 billion yuan. In the past five years, CHINAHONGQIAO's average dividend payout ratio was as high as 51.3%. With such a successful example in front of them, if Shandong Hontron Aluminum Industry Holding can follow suit and initiate dividends in the future, it has the potential to become a "cash cow" in the A-share market. After all, based on the earnings per share of Shandong Hontron Aluminum Industry Holding after the reorganization, if the company's dividend payout ratio can approach the current level of CHINAHONGQIAO, theoretically, the potential per share dividend of Shandong Hontron Aluminum Industry Holding could exceed 1 yuan, and the dividend yield calculated at the current price would be no less than 7%. In conclusion, the acquisition of Hongtuo Industrial is undoubtedly a milestone event in the history of Shandong Hontron Aluminum Industry Holding. If the transaction can be successfully completed, Shandong Hontron Aluminum Industry Holding's long-term investment logic will be significantly strengthened. With expectations of rising stock prices and high dividends, investors will naturally benefit from it.