With the deepening of Chinalco’s integration of Yunnan’s non-ferrous resources industry, its listed companies are starting to solve the problem of horizontal competition.
On July 25, Aluminum Corporation of China (SH601600, stock price of 4.53 yuan, market value of 77.46 billion yuan) issued an announcement saying that the company plans to acquire 19% of Yunnan Aluminum (SZ000807, stock price of 9.58 yuan, market value of 33.24 billion yuan) for 6.662 billion yuan in cash. .
After the completion of this transaction, Chinalco’s shareholding in Yunnan Aluminum will increase from 10.1% to about 29.1%, making it its largest shareholder, and will include Yunnan Aluminum into the scope of consolidated statements.
At the same time as Chinalco’s acquisition, the shareholding ratio of Yunnan Metallurgical Group Co., Ltd. (hereinafter referred to as “Yunnan Metallurgy”), the original controlling shareholder of Yunnan Aluminum Co., Ltd., a local state-owned enterprise in Yunnan Province, dropped from 32% to 13%.
The reporter of “Daily Economic News” noticed that the Yunnan Provincial People’s Government and China Aluminum Group signed the “Cooperation Agreement” on May 27, 2018. The two parties intend to cooperate on the platform of China Copper, a wholly-owned subsidiary of China Aluminum Group. Cooperation methods include but are not limited to capital increase, transfer, etc.
At that time, the assets included in the scope of cooperation of the Yunnan Provincial People’s Government were mainly equity interests in Yunnan Metallurgy. The assets included in the cooperation scope of Chinalco are mainly equity interests in China Copper Industry.
However, while the Yunnan provincial government is cooperating with Chinalco, there has always been a problem of horizontal competition between Chinalco, the listed platform of Chinalco, and Yunnan Aluminum.
Previously, Yunnan Aluminum Co., Ltd. stated on the interactive platform that Chinalco Group had issued the “Commitment Letter on Avoiding Horizontal Competition with Yunnan Aluminum Co., Ltd.” in December 2018, promising to start planning for horizontal competition business integration in 2019. And promised to solve the problem of competition in the industry within five years.
Now, with Aluminum Corporation of China about to become the controlling shareholder, the above problems will be further alleviated. Aluminum Corporation of China said that this transaction is conducive to further solving the problem of horizontal competition between the company and Yunnan Aluminum Co., Ltd., and effectively reducing the company’s daily related transactions; in recent years, Yunnan Aluminum Co., Ltd. has performed well, and the company’s acquisition of Yunnan Aluminum’s equity is also conducive to optimizing the company. Financial indicators, enhance the company’s core competitiveness and value, in line with the overall interests of the company and shareholders.
It is worth mentioning that both Chinalco and Yunnan Aluminum Co., Ltd. have achieved steady growth in performance in recent years.
Financial data shows that from 2019 to 2021, the performance of Yunlu Aluminum Co., Ltd. has grown steadily, achieving operating income of about 24.28 billion yuan, 29.57 billion yuan and 41.67 billion yuan respectively; corresponding to the net profit attributable to shareholders of listed companies of about 495 million yuan, 903 million yuan and 3.319 billion yuan, of which, the company’s net profit attributable to shareholders of listed companies in 2021 increased by 267.74% year-on-year.
Entering 2022, the performance of Yunlu Aluminum Co., Ltd. will continue to grow. In the first quarter of this year, the operating income and attributable net profit were about 10.9 billion yuan and 1.124 billion yuan, respectively, a year-on-year increase of 7.78% and 64.86%.
In contrast, the profitability of Aluminum Corporation of China is higher than that of Yunnan Aluminum. The company’s performance has also grown steadily in recent years. In the first quarter of this year, its operating income and attributable net profit were about 75.62 billion yuan and 1.575 billion yuan, respectively, a year-on-year increase. 43.62%, 60.52%.
Aluminum Corporation of China said that after the incorporation of Yunnan Aluminum into the company, it will help to further enhance the company’s industry status and profitability. Relying on the advantages of Yunnan Aluminum in clean energy, it will further increase the proportion of the company’s green aluminum production capacity, which is conducive to promoting the company’s Green, low-carbon and high-quality development.
