China Hongqiao Group Ltd., the world’s biggest aluminum producer, rose for a second day after agreeing to buy a 28 percent stake in a Chinese foil maker, enabling it to expand beyond primary metal production.
The shares ended 0.9 percent higher at HK$5.68 in Hong Kong on Wednesday, the highest close this month, after gaining 5.8 percent on Tuesday. In a filing late Tuesday, Hongqiao confirmed an earlier statement from its target that it had agreed to buy 261.1 million shares in Loften Environmental Technology Co. for up to 900 million yuan ($138 million).
“It’s a small deal in terms of value, but it has a more longer-term impact as the company moves into downstream business, ” Kevin Guo, an analyst with Guotai Junan Securities Co. Ltd., said by phone from Shenzhen. “It’s positive to the company’s shares.”
Loften makes aluminum foil used everywhere from kitchens to medicine packaging, according to its website, and has a market value of 3.55 billion yuan. The company was founded and is based in China’s eastern Shandong province, where Hongqiao has its main operations. Its stock remains suspended after it rose 3.2 percent on Monday.
— With assistance by Winnie Zhu