On September 21st, Jiaozuo Wanfang (00612. SZ) held an investor briefing on the termination of the issuance of shares to purchase assets and related transactions (hereinafter referred to as the "briefing").

At the briefing, company executives stated that as of now, the company has no specific plans to push forward with this transaction or other related matters. If a new plan is formed in the future and meets the information disclosure standards, the company will combine the actual situation at that time, strictly comply with relevant laws, regulations, and regulatory requirements, and fulfill the information disclosure obligations in a timely manner.

On September 14th, Jiaozuo Wanfang announced the termination of the issuance of shares to purchase assets and related transactions, and withdrew the application documents. Jiaozuo Wanfang stopped issuing shares to purchase 99.4375% equity of Cayman Aluminum (Sanmenxia) Co., Ltd. (hereinafter referred to as "Sanmenxia Aluminum" or "the target company") held by 19 counterparties including Hangzhou Jinjiang Group Co., Ltd. and Hangzhou Zhengcai Holdings Group Co., Ltd.

The reason for the termination of the transaction disclosed by Jiaozuo Wanfang is: "In view of the significant changes in the current market environment compared to the initial planning stage of this transaction, after careful consideration, the company and the main counterparty have unanimously decided to terminate the issuance of shares to purchase assets and related transactions

This transaction, worth approximately 31.9 billion yuan, officially fell through after a year and a half of promotion.

The main business of Sanmenxia Aluminum is the production and sales of products such as alumina, electrolytic aluminum, caustic soda, and gallium metal. As of the end of April 2025, Sanmenxia Aluminum's alumina equity production capacity is 10.28 million tons per year, ranking fourth in the country and sixth in the world; At the same time, it has a production capacity of over 1 million tons/year for electrolytic aluminum, 500000 tons/year for caustic soda, and 290 tons/year for gallium metal.

Jiaozuo Wanfang specializes in aluminum smelting and processing, with main products including electrolytic aluminum liquid, aluminum ingots, and aluminum alloy products. It has a total electrolytic aluminum production capacity of 420000 tons and an aluminum processing capacity of 150000 tons.

Sanmenxia Aluminum had previously planned to shell Fuda Alloy (603045. SH), but launched two transactions and failed twice within two years. This restructuring with Jiaozuo Wanfang is its third attempt to go public, but it has not yet been implemented.

It is worth noting that when planning to shell Fuda Alloy earlier, Fuda Alloy and Sanmenxia Aluminum belonged to different actual controllers, which ultimately led to the failure of the transaction. In this transaction, the actual controllers of Jiaozuo Wanfang and Sanmenxia Aluminum are both upright.

Failed to charge A three times

Before Jiaozuo Wanfang planned this acquisition, Fuda Alloy had planned to acquire Sanmenxia Aluminum Industry.

On September 27, 2021, Fuda Alloy signed a "Intentional Agreement on Asset Restructuring" with Hangzhou Jinjiang Group Co., Ltd. and Wang Dawu, intending to acquire no less than approximately 75.7% of Sanmenxia Aluminum's shares through issuing shares, and the remaining shares will be acquired separately according to the other party's wishes and negotiation situation.

According to the transaction report released by Fuda Alloy in November 2022, the assessed value of 100% equity of Sanmenxia Aluminum Industry is 15.568 billion yuan. After the completion of the transaction, Fuda Alloy will hold 100% equity of Sanmenxia Aluminum Industry. The controlling shareholder of Fuda Alloy will be changed to Jinjiang Group, and the actual controller will be changed to Zhen Zhenggang.

On December 8, 2022, the China Securities Regulatory Commission made a decision not to approve the acquisition of Fuda Alloy. The China Securities Regulatory Commission stated in its decision that, according to the application documents, the Mergers and Acquisitions Committee believes that Fuda Alloy did not fully explain and disclose that this transaction is conducive to maintaining the independence of the listed company and does not comply with the relevant provisions of Article 11 of the Measures for the Administration of Major Asset Restructuring of Listed Companies.

On December 22, 2022, the board of directors of Fuda Alloy decided to continue advancing this transaction. By November 30, 2023, the company has finally decided to terminate the transaction, marking the end of a two-year major asset restructuring.

Fuda Alloy stated at the time that due to market conditions and the actual situation of the target company, the company and the counterparty did not reach an agreement on the valuation of the target assets and other related matters. Based on the trading intentions of all parties, it is believed that continuing to advance this major asset restructuring will not meet their expectations, and there are significant risks and uncertainties if it continues.

After a year and a half, Sanmenxia Aluminum Industry has once again launched its listing plan. On March 3, 2025, Jiaozuo Wanfang began to suspend trading due to planning to issue shares to purchase assets and raise supporting funds, as well as related party transactions, and disclosed for the first time its plan to acquire Sanmenxia Aluminum Industry; On March 4th, Jiaozuo Wanfang released a trading plan proposal.

On March 2, 2025, the day before the disclosure of the transaction plan, Jiaozuo Wanfang held the 17th meeting of the 9th Board of Directors to approve the by election of Cao Liping, nominated by Zhejiang Ansheng as a non independent director and submitted to the shareholders' meeting for review. If Cao Liping is successfully elected, the listed company will change from having no actual controller to having Dou Zhenggang as the actual controller. Subsequently, Zhen Zhenggang was officially appointed as the Chairman of Jiaozuo Wanfang.

In this acquisition, Jiaozuo Wanfang's counterparties Jinjiang Group and Zhengcai Holdings are both enterprises controlled by Zhen Zhenggang.

In April of this year, Jiaozuo Wanfang disclosed the "Draft Report on Issuance of Shares Purchase and Related Party Transactions (Revised Draft)" (hereinafter referred to as the "Revised Draft"), indicating that the restructuring is still in progress. The revised draft shows that the transaction price for 99.4375% equity of Sanmenxia Aluminum Industry is 31.91679 billion yuan, with a valuation of 38.65 million yuan lower than before; The company plans to issue approximately 59.2 billion shares, accounting for 83.24% of the total share capital of the listed company after the issuance. The document details the payment methods for this restructuring.

The revised draft is based on December 31, 2025 as the evaluation reference date. After the restructuring is completed, the total assets of Jiaozuo Wanfang will increase by 440% to approximately 47.178 billion yuan, and the total liabilities will increase by 1073.99% to approximately 18.013 billion yuan; The asset liability ratio increased by 20.6%, reaching 38.18%; The operating revenue increased by 50.303% to approximately 39.166 billion yuan, and the net profit attributable to the parent company increased by 533.56% to 6.786 billion yuan.

Aluminum oxide 'changes the sky'

At this briefing, the company's management further explained what "significant changes in the market environment compared to the initial planning stage" means.

Liu Mengxi, Deputy General Manager, Secretary of the Board of Directors, and Chief Financial Officer of Jiaozuo Wanfang, stated at the briefing that since the planning of this transaction, there have been certain changes in the domestic and international macroeconomic situation, aluminum industry market environment, and capital market, which have had a certain impact on the transaction.

Previously, on the online collective reception day for investors of listed companies in Henan Province in 2025, Jiaozuo Wanfang stated that this restructuring (Jiaozuo Wanfang's acquisition of Sanmenxia Aluminum Industry) is in response to national policy calls and promotes the integration of high-quality assets in the aluminum industry. After the restructuring is completed, Jiaozuo Wanfang will form a complete aluminum based material industry chain of "alumina electrolytic aluminum aluminum processing", with more prominent industrial and regional synergies, which will help resist the impact of fluctuations in alumina and aluminum prices on performance, improve the asset quality of listed companies, enhance their ability to sustain operations and resist risks.

Liu Mengxi stated at the briefing that alumina is the core raw material for the company's electrolytic aluminum production, and the company attaches great importance to the stable supply of upstream raw materials. At present, the company has signed annual long-term agreements with multiple alumina enterprises and regularly purchases raw materials, which can meet the needs of existing production and operation as well as cost control.

A senior aluminum industry insider told reporters that the changing market environment in the aluminum industry mainly refers to the continuous decline in profits of alumina.

According to him, the profitability of alumina enterprises in 2024 is very good. The lucrative profits have attracted a group of cross-border capital to enter the market, and many electrolytic aluminum enterprises have also extended their alumina production capacity upstream to ensure the supply of raw materials.

The direct result is that there will be a serious overcapacity of alumina production capacity from 2025 onwards. According to the production capacity limit of 45 million tons of electrolytic aluminum in China, the domestic demand for alumina is approximately 90 million tons.

The senior aluminum industry personnel mentioned above stated that different institutions have different statistical standards. Currently, the total domestic alumina production capacity is about 120 million tons, corresponding to an overcapacity scale of about 30 million tons.

After reaching a historical high in 2024, alumina began to decline. By the end of 2024, alumina will reach a high level of 5540-5700 yuan/ton, falling below 3000 yuan/ton in the first half of 2025 and further dropping to 2700 yuan/ton by the end of the year.

According to statistics from CITIC Securities, when the price of alumina is above 3000 yuan/ton, the industry's profit is positive. From September 2024 to January 2025, the theoretical profit of alumina can reach over 1500 yuan/ton. Starting from 2025, the theoretical profit of alumina will approach zero, and there may even be months with negative values.

The revised draft mentions that during the reporting period, the average selling prices of the core product alumina of the target company were 2610.65 yuan/ton, 3512.44 yuan/ton, and 2897.12 yuan/ton, respectively, due to market price fluctuations. If the market prices of the target company's alumina, electrolytic aluminum, caustic soda, gallium metal and other products experience severe fluctuations or continue to decline in the future, it will have a certain impact on the performance of the target company.

According to Lu Junjie, an analyst in the aluminum industry at Shanghai Steel Union, based on the current price level, the price of alumina has approached the industry's marginal cash flow cost. As of September 21, 2026, the closing price of alumina main chain was 2718 yuan/ton.

Lu Junjie predicts that domestic alumina prices will remain low in the short term, and the situation of overcapacity in China will continue, with the export window not yet open. If there are adjustments in ore policies or large-scale production cuts by alumina enterprises in the future, it may drive a rebound in alumina prices.

Lu Junjie stated that the alumina industry belongs to the sales based production model, and as the electrolytic aluminum production capacity ceiling gradually approaches, the alumina industry will face the situation of capacity clearing in the future.

Against the backdrop of the continuous mismatch between production capacity and demand, which is squeezing the profits of the alumina industry, the industry is concerned that the Guinea bauxite policy, which has not yet been implemented, will further compress the profitability of the alumina industry.

The revised draft mentions that during the reporting period, imported bauxite accounted for 41.52%, 55.65%, and 65.42% of the bauxite purchased by the target company's domestic alumina factory, and the proportion of imported bauxite usage continued to increase. Such imported bauxite mainly comes from Australia, Guinea, Türkiye, Laos and other countries. If the major importing country of bauxite in China is restricted from exporting by its host country in the future, or if domestic policies on bauxite mining safety, environmental protection, etc. are further tightened, the target company's bauxite supply will face unfavorable factors, thereby affecting the stability of its production and operation and profit level.

Lu Junjie stated that the import dependence of domestic alumina plants exceeds 80%, and Guinea's export control measures have been in the stage of market rumors. Currently, there is sufficient supply of imported minerals in China. The actual impact of this policy on domestic alumina plants still needs to be judged based on the policy's strength.

(Author Pan Juntian)