Incident: The company disclosed its semi-annual report for 2022. In the first half of 2022, it achieved revenue of 4,099 billion yuan, +31.87% year-on-year, realized net profit of 308 million yuan, +28.52% year-on-year, and realized net profit of 303 million yuan after deducting non-attributable net profit of 303 million yuan, +31.31% year-on-year.
Actively responding to the interference of the epidemic, the company achieved a high increase in performance. 1) On a quarterly basis, Q2 earnings increased sharply month-on-month. The company achieved revenue of 1,986 million yuan in Q1, net profit of 103 million yuan in Q2, net profit of 2.113 billion yuan, and net profit of return of 210 million yuan, respectively, +6.4% and +99.0% from Q1. Despite the interference of the epidemic, the sharp increase in profit in Q2 was mainly due to two factors: ①, Q1 was affected by fluctuations in aluminum prices, and a low base of factors such as the Spring Festival holiday. Q1 The average price of non-ferrous aluminum in Shanghai was 22,200 yuan/ton, +137% year on year, +11% month on month. Large fluctuations in aluminum prices led to a partial reduction in the company's profit, and Q1 faced the traditional Spring Festival holiday, and the company's production and sales volume declined, which in turn led to a low profit base for the company Q1. ② and Q2 responded positively to the epidemic, and sales increased month-on-month.
Q2 The Shanghai region is facing interference from the epidemic. The company implemented region-wide closed management to ensure normal production and maintained a normal operating rate in April-May, when the epidemic was at its worst. Considering that Q2 aluminum prices fell 7% from Q1, the company's Q2 production and sales volume is expected to improve. 2) Aluminum prices have stabilized, the company's production has not been affected, and the annual performance is expected to increase rapidly. In terms of price, since entering the second half of the year, aluminum prices have remained in the range of 1.8 to 19,000 yuan/ton. A stable average price is more conducive to the company maintaining stable profit per ton. In terms of production and marketing, the company's positive response to the epidemic has guaranteed Q2 production. Currently, the domestic industrial chain has basically recovered to pre-epidemic levels, overseas market demand is strong, and the company expects the annual production and marketing targets to be successfully achieved. Overall, it is estimated that the company's annual performance in 2022 is expected to achieve a high increase.
Demand for new energy vehicles is strong, and the advantage of investing 150,000 tons/year in high-end aluminum plate and foil projects is expanding scale.
The sales volume of new energy vehicles from January to July 2022 reached 3.19 million units, +116% year-on-year, and the penetration rate reached 22%, entering a period of rapid growth. In order to meet strong demand, the company invested 1.98 billion yuan to build a 150,000 tons/year high-end aluminum plate and foil project for new energy vehicles in Chongqing. It has signed an agreement with the People's Government of Fuling District of Chongqing, and is expected to be put into operation in 2025. The company's production capacity will increase to 500,000 tons/year, and the share of high-end products in the field of new energy vehicles will further increase, and the company's scale advantage will expand.
Profit forecast and investment advice: Expected net profit of $721/957/1,193 million for 2022-2024. Considering the expansion of production capacity and the optimization of the product structure, the first coverage gave the company a “increase in holdings” rating.
Risk warning: downstream demand falls short of expectations, product prices fluctuate, projects under construction fall short of expectations