The upstream aluminum industry leader, Innovation Industrial, received overwhelming response for its Hong Kong IPO, with margin subscriptions oversubscribed by 126 times, drawing market attention.
$CHUANGXIN IND(02788.HK) officially launched its public offering on November 14, with the subscription period ending on November 19, and is scheduled to list on the main board of the Hong Kong Stock Exchange on November 24.
As a leading enterprise focused on the upstream of the aluminum industry chain, with its integrated business model and outstanding cost control, it has successfully attracted a lineup of 17 cornerstone investors, including Hillhouse, China Hongqiao, and Glencore, with a total subscription amount of up to $336 million (approximately HK$2.612 billion), accounting for nearly 50% of the shares offered, providing a solid foundation for the stock price.
Market subscription is enthusiastic. As of November 18, the company's margin subscription has exceeded 126 times, making it a highly anticipated new stock in the recent Hong Kong stock market.
I. Business Model: Building an Integrated "Energy-Alumina-Electrolytic Aluminum" Moat
Innovation Industrial is one of the few leading enterprises in China focused on the upstream of the aluminum industry chain, primarily concentrating on the two highest value-added segments: alumina refining and electrolytic aluminum smelting.
High Value-Added Segments: According to CRU reports, in terms of value-added per ton of aluminum, refining and smelting are the highest value-added segments in the aluminum industry chain.
Integrated Ecosystem: The company has successfully built an integrated "energy-alumina refining-electrolytic aluminum smelting" ecosystem, covering the key chain from energy to core products.
Ultra-High Self-Sufficiency: In 2024, the company achieved an 84% self-sufficiency rate for alumina and an 88% self-sufficiency rate for electricity, far exceeding the industry average of about 57% as indicated in CRU reports, with its cost control capability ranking in the top 5% domestically.
Industry Position: Based on 2024 production, the company is the 12th largest electrolytic aluminum producer in China, and its Inner Mongolia plant is the fourth largest production base in North China.
II. Financial Performance: Strong Profit Growth and Cost Advantages
Innovation Industrial has demonstrated strong performance growth and profitability over the past three years.
Steady Revenue Growth: The company's revenue increased from RMB 13.49 billion in 2022 to RMB 15.163 billion in 2024.
Significant Profit Surge: Profit growth was even more pronounced during the same period, rising from RMB 913 million to RMB 2.63 billion, with a compound annual growth rate exceeding 60%.
Gross Margin Improvement: The company's gross margin increased from 15.1% in 2022 to 28.2% in 2024, demonstrating excellent profitability and cost control capabilities.
Ultimate Cost Advantage: In 2024, the company's cash cost per ton of aluminum was approximately RMB 15,112, significantly lower than the average cash cost per ton of aluminum in China.
III. Industry Outlook: Green Transformation Drives Long-Term Aluminum Demand Growth
As a key lightweight material, aluminum plays an indispensable role in the new energy revolution.
Demand Surge: In areas such as new energy vehicles, photovoltaic brackets, and energy storage systems, aluminum demand continues to surge. Particularly, the development of the new energy vehicle industry has led to rapid growth in demand for aluminum materials.
Supply Constraints: However, global electrolytic aluminum supply is expanding slowly due to environmental policy restrictions, energy costs, and stricter capacity approvals.
Significant Gap: By 2034, the annual demand gap is expected to exceed one million tons. This supply-demand dynamic presents long-term strategic opportunities for leading enterprises with cost advantages and integrated layouts.
IV. Strategic Plan: Globalization and Green Energy Dual Drivers
The funds raised from this listing will primarily be used for two strategic directions.
Approximately 50% of the net proceeds will be used to expand overseas capacity, including the construction of an electrolytic aluminum smelter in Saudi Arabia.
The company has already planned to invest in a 500,000-ton electrolytic aluminum integrated project in Saudi Arabia through a joint venture, with a total investment of approximately HK$2.18 billion, expected to commence before the end of 2026, with a construction period of 24 months.
Approximately 40% of the net proceeds will be invested in green energy projects, including the construction of green energy power stations and the purchase and installation of related equipment.
As early as July 2023, the company initiated the construction of a green energy power project in Inner Mongolia, building a wind power station with a capacity of 400.0 MW and a solar power station with a capacity of 110.0 MW.
As global green transformation deepens, demand for aluminum in lightweight and energy sectors continues to grow,for more details and company prospects, click to view $CHUANGXIN IND(02788.HK) >>
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