The company released its quarterly report for 2021, which is in the median of the performance forecast: in the first three quarters of 2021, the company achieved a net profit of 590 million yuan, an increase of 350 million yuan, or 145.5%, compared with the same period last year. From a quarterly point of view, the net profit of 2021Q3 was 270 million yuan, an increase of 152.4% over the same period last year, a sharp increase of 51.0% from a month earlier, and a non-return net profit of 254 million yuan, an increase of 98.3% over the same period last year and a sharp increase of 58.4% over the same period last year.

Q3 performance benefited from the rise in electrode foil and aluminum prices, but the release of Q4 performance may be accelerated again: Q3 company's performance rose sharply compared with the previous month for two reasons: (1) quantity: in order to meet the strong demand downstream, the company has enhanced the production capacity of the existing production line through technical transformation, and the production and sales of electrode foil products have increased significantly in 2019 with the continuous construction of non-public offering projects. (2) Price: the price of electrode foil has been raised many times this year, especially the price of Q3 has been further raised due to the influence of cost and supply and demand, while the average price of Q3 aluminum in Shanghai is 20582 yuan / ton, up 10.7% from the previous month. We believe that the impact of price adjustment on performance has a lag, and the prices of Q4 electrode foil and electrolytic aluminum are expected to remain high, or will accelerate the release of Q4 performance.

Rely on the special electrician, add the related party transaction quota, and take a stake in Tianchi Energy to increase the investment income. The controlling shareholder of the company is special electrician, and the company purchases thermal coal, industrial silicon, chemical raw materials and other products from major shareholders to ensure the supply of raw materials; at the same time, special electricians purchase aluminum alloy, aluminum products and other products from the company. The original related party transaction quota is 680 million yuan, the special electrician will add an additional quota of 120 million yuan, the company will add an additional transaction quota of 30 million yuan, relying on the special electrician will be beneficial to support the development of the company. At the same time, the company's stake in Tianchi Energy, a subsidiary of Special Electric, benefited from the sharp rise in coal prices this year. The company's investment income in the first three quarters was 240 million yuan, a sharp increase of 112.4% over the same period last year, which will significantly increase the company's performance.

Aluminum electrolytic capacitors ushered in price adjustment, electrode foil price space opened. Downstream capacitor manufacturers have started a new round of price adjustment in October. For example, the prices of all products of Aihua Group have increased by 15-20%, Jianghai shares have increased by 10%, and the average price increase in the capacitor industry is 10-20%. The price adjustment of aluminum electrolytic capacitor will be beneficial to the price transmission of electrode foil, and the price increase space may be opened in the future. At the same time, electrode foil, as the raw material with the highest cost of aluminum electrolytic capacitors, benefits from the substantial increase in demand in emerging areas, the future will continue to be in short supply, the current round of price increases will be different from the past, or will be more sustainable.

Investment advice: aluminum prices are expected to remain high, electrode foil prices are expected to rise, and the company's performance will accelerate its release. We maintain the company's 2021-2023 home net profit forecast of 9.39,12.24 and 1.454 billion yuan, with EPS of 0.71,0.92 and 1.10 yuan, corresponding to the October 14 closing price PE of 13.0X, 9.9x and 8.4x, maintaining 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.