Main points of investment
The company issued a forecast for the third quarterly report of 2021, showing a big increase in performance compared with the previous quarter: in the first three quarters of 2021, the company realized a net profit of 580 million yuan to 600 million yuan, an increase of 340 million yuan to 360 million yuan over the same period last year, an increase of 141.4% to 149.7% over the same period last year. From a quarterly point of view, the net profit of 2021Q3 is 260 million yuan to 280 million yuan, an increase of 143.0% to 161.8% over the same period last year, and a sharp increase of 45.4% to 56.7% compared with the previous month, which is higher than our previous forecast.
The reason for the sharp increase in the month-on-month increase: under the tight supply and demand, the price of electrode foil continues to rise, and the price of electrolytic aluminum continues to reach a new high:
(1) the price of the electrode foil industry has been raised for many times. The price of the industry increased by about 5-7% in the first half of the year, and continued to increase by about 4% in July, and in August, the industry leader Dongguang again announced a price increase of about 12%, confirming the high magnificence of the industry. due to the lagging impact of the price adjustment on performance, Q3 began to reflect the sharp increase in prices since the beginning of this year. We believe that the company's performance is expected to accelerate the release of Q4 as demand continues to expand in emerging areas. (2) the aluminum price continues to hit a new high compared with the previous month, and the company owns coal mining-self-provided power plant will continue to benefit: the average price of Q3 Shanghai aluminum is 20582 yuan / ton, up 10.7% from the previous month, and the aluminum price continues to reach a new high of 24165 yuan / ton in October, which is expected to remain high. The impact of the company's limited electricity production restrictions is small and the cost is relatively stable, and the aluminum price of high-purity aluminum / aluminum alloy / aluminum products has significantly increased the company's profits.
Electrode foil industry ushered in the inflection point of supply and demand, this round of price increase is different from the past, or is expected to continue. The core of the current round of price increases in the electrode foil industry is driven by demand growth in downstream emerging applications rather than supply-side disturbances. at the same time, other factors of this round of price rise include the rise in electricity prices (the 50% increase in electricity prices in Inner Mongolia leads to higher costs of leading enterprises, resulting in higher prices), and the sharp rise in aluminum prices (which has little impact on the overall cost). It is expected to be only about 4%), the price of sulfuric acid as auxiliary materials has increased significantly (with little impact on the overall cost), and we expect the price of electrode foil to continue to rise in 2021-2022.
The rights issue and expansion project will benefit from the development opportunities of semiconductors and aerospace, and open up the space for future growth. The company's 2021 rights issue project will expand 15000 tons of high purity aluminum production capacity, 500 tons of ultra-high purity aluminum base sputtering target billet (used in semiconductors), and 3000 tons of strong and high toughness aluminum alloy large section billet (used in aerospace). It is expected to usher in more room for development in the future.
Investment advice: based on the fact that aluminum prices are expected to remain high in the future, electrode foil prices are expected to continue and volume prices are expected to rise, we believe that the company will usher in a period of accelerated performance release, we raise the company's 2021-2023 return net profit forecast of 9.39,12.24 and 1.454 billion yuan, EPS of 0.71,0.92 and 1.10 yuan, corresponding to the October 14 closing price PE of 11.3X, 8.7x and 7.3x, to maintain the "prudent overweight" rating.
Risk tips: aluminum prices fell sharply, the company's fundraising project progress is not as expected; electrode foil downstream demand growth is not as expected.