Event: the company released its 2022 semi-annual report: 2022H1, the company achieved revenue of 5.61 billion yuan, an increase of 33.5% over the same period last year; net profit of 212 million yuan, up 36.4% over the same period last year; and 149 million yuan of non-return net profit, an increase of 8.4% over the same period last year. 2022Q2, the company achieved revenue of 2.807 billion yuan, an increase of 10.6% over the same period last year, an increase of 0.2% over the same period last year; a net profit of 85 million yuan, an increase of 11% over the same period last year, a decrease of 32.5%; and a net profit of 52 million yuan, down 17.8% from the same period last year and 46.1% from the previous year. The performance is in line with the performance KuaiBao.

2022H1's net profit increased by 56.5703 million yuan compared with the same period last year, mainly due to an increase of 81.987 million yuan in other income (mainly tax rebates and government subsidies), as well as a decrease in the balance of accounts and bills receivable and a reduction in bad debts, resulting in a 31.86 million yuan reduction in credit impairment loss compared with the same period last year. 2022H1, although the volume and price of the company's products increased, but the cost increment was greater, and the gross profit decreased by 39.0836 million yuan compared with the same period last year. ① price: the average sales price of 2022H1 aluminum alloy ingots is 16419.5 yuan / ton, an increase of 1387.37 yuan / ton over the same period last year. ② volume: 2022H1, the company's aluminum alloy ingot sales of 304400 tons, an increase of 10.25% over the same period last year. ③ cost: 2022H1, the average cost of aluminum alloy ingots is 15700.2 yuan / ton, an increase of 1649.1 yuan / ton over the same period last year.

In a single quarter, the net profit of returning home increased by 85.492 million yuan compared with the previous quarter. The main profit increase points are gross profit (+ 87.85 million yuan), other / investment income (+ 46.6 million yuan), fair value change (+ 12.23 million yuan) and impairment loss (+ 8.8 million yuan). ① price: the average market price of ADC12 aluminum alloy ingot Q2 is 21041 yuan / ton, up 13.1% from the same period last year, and down 2.56% from the previous month. ② volume: by the end of the first half of the year, the company's sales volume reached 42.28% of the annual target and failed to complete the plan, mainly due to the periodic decline in Q2 aluminum prices and the delay of procurement by some customers; second, poor logistics in eastern China and temporary suspension of production in Guangdong base in April-May; third, the new deformed aluminum alloy production capacity of Hubei production base during the construction period, Chongqing Aobo technical transformation is still under way, has not been put into production. The interest reduction points mainly include fees and taxes (- 65.64 million yuan), due to social security relief, adjustment of payment policy and salary, increase in loan interest expenses and discounted interest, and minority shareholders' profits and losses (- 3.83 million yuan).

Capacity expansion continues. ① casting aluminum alloy ingot: speed up the construction of the 400000-ton production base of Anhui Maanshan Phase I, and ensure that the plant with a capacity of about 100000 tons of 2022Q4 will be put into production one after another. ② deformed aluminum alloy ingot: based on the existing business, the company will accelerate the equipment construction and installation progress of Hubei Shunbo 150000 ton deformed aluminum bar project, and strive to achieve partial mass production in 2022Q4; actively promote the land and environmental assessment and other preliminary work of Anhui Maanshan Phase II 500000 ton project, and strive to start the project as soon as possible and put part of the production capacity equipment into trial operation in 2023. ③ aluminum ash hazardous utilization project: Chongqing Dazu District project has been approved, Hubei Xiangyang and Anhui Maanshan projects are also actively carrying out environmental impact assessment, safety assessment and other preliminary procedures.

It is expected that with the gradual implementation of these projects, it will open up new business growth space for the future development of the company.

Investment suggestion: the company has initially formed a management network that radiates the main consumer markets of recycled aluminum, such as Southwest, South China, East China and Central China, and the new production base is gradually put into production, with steady growth in sales and strong certainty of profit. We expect the company's 2022-2024 return net profit to be 4.41,5.87 and 667 million yuan, corresponding to the August 30 closing price of 16 times, 12 times and 11 times, respectively, maintaining the "recommended" rating.

Risk tips: aluminum prices continue to decline, environmental protection policies become stricter, downstream demand and project production are not as expected.