Everbright Securities has released a research report indicating that by 2026, steel and electrolytic aluminum companies with high retained earnings, ample monetary funds, and lower asset-liability ratios possess significant dividend potential. This outlook is supported by three key factors: the inclusion of market capitalization management in performance evaluations, the continued focus on high-dividend strategies by insurance capital, and the gradual decline in industry capital expenditures. The firm specifically recommends Hunan Valin Steel Co.,Ltd. (000932.SZ), Baoshan Iron & Steel Co., Ltd. (600019.SH), and Jiuli Special Steel Wire Rope Co.,Ltd (002318.SZ), and suggests monitoring Aluminum Corporation of China Limited (601600.SH).

The report draws a parallel with China Shenhua Energy Company Limited, whose dividend payout ratio averaged 39% from 2008 to 2016, surged to 151% in 2017, and has since maintained an average of 74% from 2018 to 2024. The primary reasons identified for Shenhua's increased dividends include a low asset-liability ratio relative to its industry, a reduction in capital expenditure compared to previous years, profit recovery coupled with high retained earnings and monetary funds, a high shareholding ratio by major shareholders with potential M&A expectations, and supportive dividend policies.

Currently, within the steel and electrolytic aluminum sectors, only eight companies have a dividend yield above 3%, based on the assumption that their 2025 payout ratio remains consistent with 2024 and using Wind's consensus net profit forecasts for 2025. As of February 6, 2026, seven steel companies meet this criterion: Youfa Group (6.90%), Inner Mongolia Eerdosi Resources Co.,Ltd. (4.62%), Baoshan Iron & Steel (4.18%), Nanjing Iron & Steel Co., Ltd. (4.15%), CITIC Pacific Special Steel Group Co., Ltd. (3.69%), Xinyu Iron & Steel Co., Ltd. (3.59%), and Jiuli Special Steel Wire Rope (3.23%). Only one electrolytic aluminum company, Henan Shenhuo Coal & Power Co., Ltd. (3.03%), has a dividend yield above 3%.

The three key drivers for potential dividend increases in these sectors are: 1) The inclusion of market capitalization management in performance assessments for central state-owned enterprises, as announced by the State-owned Assets Supervision and Administration Commission on January 24, 2024. This policy encourages company executives to enhance market performance through measures like share buybacks and increased cash dividends, making dividend payouts a crucial tool for value return and investor confidence. 2) The significant inflow of insurance capital into the market, which is promoting a revaluation of dividend-paying assets. Against a backdrop of "asset shortage" and new financial instrument standards, high-dividend strategies are a core allocation choice for insurers. As more non-listed insurers adopt these standards, increasing allocations to equity assets classified as Other Comprehensive Income (OCI) to mitigate profit volatility, the配置 value of high-dividend stocks in steel and aluminum is expected to become more prominent. 3) The anticipated gradual decline in capital expenditures for the steel and aluminum industries. With the completion of ultra-low emission upgrades in steel and electrolytic aluminum capacity nearing its ceiling, industry capital spending is expected to decrease, potentially leading to further improvements in cash dividend payout ratios.

The analysis assesses the potential dividend capability of steel and electrolytic aluminum companies based on three metrics: Retained Earnings/Total Market Cap, Monetary Funds/Total Market Cap, and Asset-Liability Ratio. A company is considered to have strong dividend potential if it meets all of the following criteria: a high Retained Earnings/Total Market Cap ratio, sufficient Monetary Funds/Total Market Cap, an Asset-Liability Ratio below 60%, a positive 2024 P/E ratio below 25x, and an average dividend payout ratio between 2022 and 2024 below 60%.

As of February 6, 2026, only 14 companies in these sectors meet the last three criteria. Using a scoring system that assigns weights of 0.6 to Retained Earnings/Total Market Cap, 0.3 to Monetary Funds/Total Market Cap, and -0.1 to Asset-Liability Ratio, the steel companies are ranked by dividend potential from highest to lowest as follows: Hunan Valin Steel, Baoshan Iron & Steel, Zhejiang Jiuli Hi-Tech Metals Co.,Ltd, Jinzhou Pipeline Co., Ltd., Changbao Special Steel Tubes Co.,Ltd, and Jiuli Special Steel Wire Rope. The electrolytic aluminum companies are ranked as follows: Mingtai Aluminum Industry Co., Ltd., Xinjiang Joinworld Company Limited, Nanshan Aluminum Co., Ltd, Henan Shenhuo Coal & Power, Yunnan Aluminium Co., Ltd., Xinjiang Tianshan Aluminum Co., Ltd, Aluminum Corporation of China, and Zhejiang Huafeng Aluminum Co.,Ltd.

The report concludes with risk analysis, highlighting potential policy changes in the steel and electrolytic aluminum industries, significant price fluctuations for steel and aluminum, and the possibility that dividends from relevant companies may fall short of expectations.