Incident: The company recently released its three-quarter report for 2022. In the first three quarters, it achieved operating income of 6.32 billion yuan, +36.2% year-on-year; realized net profit of 5.2 billion yuan, or +41.9% year-on-year. Looking at the third quarter alone, the company achieved operating income of 2.23 billion yuan (+45.0%) and net profit of 210 million yuan (+67.8%). On a month-on-month basis, revenue for the single third quarter was +5.3% compared to the previous quarter, and net profit for the second quarter was +1.4%.
Production and sales have increased, and profitability has remained stable. The average spot price of Changjiang Aluminum in Q2 in '22 was 206,000 yuan/ton, while in Q3 it was 18,400 tons, a decrease of 10.8%. However, the company's Q3 revenue still achieved a positive 5.3% month-on-month increase. The company's product sales volume is expected to increase, and the company's gross sales margin and net profit margin remain stable. Q3 was 15.4% and 9.4%, respectively, and the month-on-month decline was only 0.2 PCT and 0.4 PCT.
R&D expenses increased significantly, up 41% over the previous month. 22Q3 The company's R&D expenses reached 100 million yuan, +41% over the previous year, and +59%. The R&D cost rate was as high as 4.5%. The R&D intensity increased significantly to meet the higher requirements for aluminum sheets and strips in the field of new energy vehicles, and to prepare technology and products for the 150,000-ton project.
Closely focusing on the “three highs” strategy, we continue to expand our leading cost base. Thanks to the company's three-pronged strategy of “high-end market, high-end customers, and high added value”, it maintained stable profitability in the aluminum heat transfer niche market, and handed over impressive answers even when the macro situation in the third quarter was not optimistic. Focusing on the “three highs” strategy, the company's plant in Chongqing will accelerate the increase in production capacity. The fund-raising project will focus on new energy aluminum sheets and foils such as battery cases and battery aluminum foil, and also utilize the cost advantages of the base to create new profit growth points for the company.
The company's EPS for 2022-2024 is expected to be 0.74, 0.84, and 0.99 yuan. Based on the valuation of 22XPE by comparable companies in 2022, the purchase rating is maintained, and the target price is 16.28 yuan.
Risk Reminder
The release of production capacity at the Chongqing plant falls short of expectations, the risk that processing costs for aluminum sheets and strips fall short of expectations, the risk of industry production capacity being released too quickly, a slowdown in macroeconomic growth, and the risk of repeated global epidemics.
