HK IPO Subscription: Analysis and Application Plan for Innovation Industrial IPO
Innovation Industries is a global top 5% low-cost aluminum producer focusing on the aluminum industry chain's upstream, headquartered in China, and listed on the Hong Kong Stock Exchange (02788). Leveraging Inner Mongolia's low electricity costs and Shandong's port advantages, it has built an integrated "energy - alumina - electrolytic aluminum" ecosystem. In 2024, it ranked as China's 12th largest electrolytic aluminum producer. It is investing in 500,000 tons of overseas capacity in Saudi Arabia and allocating 40% of its raised funds to green energy development, aiming for green energy to account for over 50% by 2026. Despite risks from aluminum price fluctuations, capacity limits, and customer concentration, it continues to expand due to its resource advantages, technical efficiency, and first-mover green energy strategy.
Use of Proceeds:
The company's net proceeds from the global offering amount to approximately HKD 5.11 billion, with 50% allocated to Saudi electrolytic aluminum capacity construction, 40% to green energy projects, and the remaining 10% for working capital.
IPO Details and Lottery Rate:
The company is offering 500 million shares globally, with 500 shares per lot. As of writing, the oversubscription rate is 21.16x. The offering follows Mechanism B, with 50,000 lots each for Group A and B. An estimated 190,000-220,000 investors are expected to participate, with a lottery rate of around 10% for one lot and 200 lots required to secure one.
Cornerstone Investors:
The company has secured 18 cornerstone investors, with a maximum subscription of USD 351 million (approx. HKD 2.728 billion). At the upper price range, cornerstone investors account for 49.66%; at the mid-point, 49.38%; and at the lower range, 49.79%.The lock-up period is 6 months.
Sponsors:
Innovation Industries is jointly sponsored by CICC and Huatai Financial. CICC serves as the stabilizing agent. CICC, previously in a "blackened" state, has improved significantly, while Huatai Financial—well, let's not go there. In any case, it's not the lead sponsor, and given that this is a Mechanism B IPO (not a "second marriage" stock), the impact is limited.
Financial Performance:
Revenue:2022 revenue: RMB 13.489 billion; 2023 revenue: RMB 13.814 billion;2024 revenue: RMB 15.163 billion; LTM revenue as of May 31, 2025: RMB 16.493 billion.
Gross Profit:2022 gross profit: RMB 2.041 billion; 2023 gross profit: RMB 2.336 billion; 2024 gross profit: RMB 4.276 billion; LTM gross profit as of May 31, 2025: RMB 4.069 billion.
Net Profit:2022 net profit: RMB 913 million; 2023 net profit: RMB 1.081 billion; 2024 net profit: RMB 2.630 billion; LTM net profit as of May 31, 2025: RMB 2.486 billion.
Comprehensive Review:
Innovation Industries' main revenue comes from electrolytic aluminum (RMB 12.884 billion, 85%), alumina (RMB 1.85 billion, 12.2%), and others (RMB 430 million, 2.8%). Listed peers in Hong Kong include Chalco, China Hongqiao, and Rusal. Currently, Chalco's H-share market cap is HKD 196.604 billion (TTM P/E 12.59x), China Hongqiao's is HKD 319.248 billion (TTM P/E 11.38x), and Rusal's is HKD 66.545 billion (TTM P/E 56.15x). Innovation Industries' IPO valuation at the upper price range is HKD 21.980 billion (TTM P/E 8.07x).
Currently, the sector is in an uptrend, with related A-share and H-share stocks in a strong upward momentum. Although the charts show signs of a pullback, the upward trend for resource assets is unlikely to end so quickly. Moreover, subscriptions are ultra-short-term plays—if market sentiment is favorable and the sector is rising, many other risks can be ruled out.
Innovation Industries' revenue growth is actually quite modest, butnet profit has doubled due to rising aluminum prices and cost reductions driving gross margin expansion. Current per-ton gross margins are at high levels, but if aluminum prices decline or coal and anode prices rebound, net profit faces "downside elasticity" risks.
On the funding side, this offering raises HKD 5.090-5.495 billion, with HKD 2.611 billion locked up by cornerstone investors, leaving a free float of HKD 2.479-2.884 billion. Since Mechanism B was implemented, market sensitivity to free float size has decreased, with attention shifting to retail interest and liquidity changes. However, given that even giants like Zijin Mining International surged 50%+ (and even doubled), Innovation Industries' size is not a major concern. Its cornerstone lineup is also noteworthy, including several investors from Zijin Mining International.
Currently, resource assets in Hong Kong are no worse than some companies relying on "dream valuations" and storytelling. Although Innovation Industries is slightly late to the party, it's still catching the trend. Mechanism B + IPO debut + valuation upside + sector uptrend—roughly estimating 20% upside. For this kind of stock, just go for it without overthinking.
Subscription Plan:
I will subscribe. The specific strategy will be posted on the community platform on the 18th and may adjust based on market conditions. Recently, some accounts (e.g., NiuNiu, HuHu) have faced restrictions. The best workaround is to keep some funds in a Hong Kong bank account and set up a small fixed investment in money market funds to maintain account activity.
$CHUANGXIN IND(02788.HK)
The copyright of this article belongs to the original author/organization.
The views expressed herein are solely those of the author and do not reflect the stance of the platform. The content is intended for investment reference purposes only and shall not be considered as investment advice. Please contact us if you have any questions or suggestions regarding the content services provided by the platform.
