League of Nations People's Livelihood: First Innovative Industry (02788) “recommends” a growing electrolytic aluminum enterprise with scarce ratings
The Zhitong Finance App learned that the Guolian People's Livelihood released a research report saying that the first coverage gave Innovation Industry (02788) a “recommended” rating. The company has an integrated energy-alumina-electrolytic aluminum layout, and the production capacity of electrolytic aluminum is distributed in the Inner Mongolia region, where energy costs are advantageous. In the future, as green electricity is connected to the grid to generate electricity, the cost of electrolytic aluminum is expected to drop further. The company is expanding its electrolytic aluminum production capacity overseas in Saudi Arabia. The bank believes that the company will become a rare target for the industry's rare increase in electrolytic aluminum. The tight balance between supply and demand in the aluminum industry continues, and the aluminum price center is rising.
The main views of the League of Nations on people's livelihood are as follows:
Integrated layout of electrolytic aluminum, Saudi Arabia expands aluminum production capacity
The company is mainly engaged in the integrated smelting of alumina and electrolytic aluminum. By mid-December 2025, it had formed a domestic production capacity of 788,000 tons of electrolytic aluminum and 3.2 million tons of alumina, with an alumina self-sufficiency rate of over 100%. In 2025, the company expanded overseas, and plans to invest in a 500,000 ton aluminum industry chain comprehensive project in Saudi Arabia to create a new performance growth point. The capital raised by the IPO is mainly used for Saudi projects and domestic green power construction. The bank believes that the company will become the target of an increase in the amount of rare electrolytic aluminum in the industry.
Domestic electrolytic aluminum production capacity is located in Huolingol, Inner Mongolia, and energy costs are advantageous
The company's electrolytic aluminum production capacity is located in Huolingol City, Inner Mongolia, and alumina production capacity is mainly located in Binzhou, Shandong. The company supports the construction of its own coal-fired power plants. Inner Mongolia is rich in coal resources and has advantages in electricity costs. To achieve a green transformation, the wind power plants built by the company in Inner Mongolia are gradually being put into operation and connected to the grid. At the same time, green power (the cost of electricity is 0.1-0.18 yuan) is lower than that of coal power, which is expected to further consolidate the energy cost advantage of electrolytic aluminum.
Overall increase in performance
The company relies on overseas purchases of bauxite, and in the 2021-2025 M1-M5 alumina production volume is 71/155/154/660,000 tons, mainly for internal use. The M1-M5 electrolytic aluminum production line is basically operating at full capacity, with an output of 74.4/75.8/75.5/311,000 tons. The products are mainly sold directly in liquid aluminum to innovative new materials to the largest customers. The supply-side reforms of electrolytic aluminum have achieved remarkable results. Aluminum prices are strong, and the company's overall performance has maintained an upward trend. In 2024, revenue was +9.8% year-on-year, and net profit to mother was +104.8%; 25M1-M5 aluminum prices rose slightly, with revenue +22.6% year-on-year.
Saudi Arabia plans aluminum production capacity to open up room for growth
In March 2025, the company planned and Innovation Group and Innovative New Materials jointly invested in the Saudi Red Sea Aluminum Industrial Chain Comprehensive Project. The company held 33.6% of the shares in the project. The first phase of the Saudi Red Sea project plans 500,000 tons of electrolytic aluminum+aluminum alloy production capacity. The final products target the Saudi and European markets. The construction period of the project is 18-24 months, and the bank is expected to be put into operation in 2027. Saudi Arabia is rich in natural gas resources and electricity costs are low. After the project is put into operation, the company's performance will be significantly enhanced. Project shares held by Innovation Group are expected to be injected into listed companies in the future, and an increase in the equity ratio will further increase the contribution to Saudi project performance.
Risk Alerts
Demand for aluminum fell short of expectations, alumina prices fell beyond expectations, and project progress fell short of expectations.