The company has remarkable advantages in scale and raw materials, and actively distributes the business of recycled aluminum and green aluminum.
According to the company announcement, by the end of 2021, the company has a total production capacity of more than 3.5 million tons. In 2020, the company has the first market share of aluminum alloy bar products, the first market share of aluminum alloy round casting ingots, and the second market share of aluminum rod and cable in the country. According to the product type, the company has a bar production capacity of 1.1332 million tons, profile production capacity of 47500 tons, plate, strip and foil production capacity of 225200 tons, aluminum rod and cable production capacity of 197500 tons, and structural production capacity of 2089.36 million pieces.
The company has a variety of raw material sources, and the proportion of recycled aluminum is expected to increase in the future. In 2021, liquid aluminum, aluminum ingots and recycled aluminum accounted for 74.5%, 10.5% and 15% respectively, and from January to April 2022 accounted for 70.34%, 10.29% and 19.37% respectively, and the proportion of recycled aluminum used by the company gradually expanded. Seven recycled aluminum projects are planned in Shandong base, with a total amount of 2.05 million tons.
China Hongqiao, the largest supplier, plans to transfer part of the electrolytic aluminum production capacity from Shandong to Yunnan in stages, and the company actively distributes the production capacity in Yunnan, raising investment projects in Yunnan Province with a production capacity of 1.2 million tons and an increase in the proportion of green aluminum; with the increase in the output of green aluminum alloy and the expansion of recycled aluminum business, the company has sufficient raw materials, and the sales volume of aluminum processing products is expected to grow in the future.
High-end transformation of customer structure, fund-raising projects contribute to profit growth in the future
Bar positioning high-end market, mainly used in the aerospace field of super-hard high-strength aluminum alloy, 3C electronics, automotive lightweight, new energy, rail transit industry, construction industry.
In terms of consumer electronics aluminum profiles, the products include notebook shell materials, tablet computer shell materials, smartphone shell materials and medium frame materials. The company is an alloy supplier of Apple Inc industrial chain, undertaking dozens of projects, driving the continuous improvement of the high-end business scale.
In terms of rail transit and automobile lightweight aluminum profiles, aluminum alloy has the characteristics of "light weight and high quality", and the density is 30% of steel. Using aluminum alloy instead of steel can effectively reduce the weight of cars, and various indicators such as strength can meet the needs of alternative steel. Based on the green and lightweight development trend of the automobile industry, the company continues to increase the business layout.
The "annual output of 800000 tons of high-strength and high-toughness aluminum alloy material project (phase II)" and the "annual output of 1.2 million tons of light and high-strength aluminum alloy material project (phase II)" are both expected to be put into production in July 2023, and the production capacity will reach the standard in the fifth year. After putting into production, the company's market share is expected to further increase, to increase profit growth points. According to the report of the company's major assets selling and issuing shares to purchase assets and raise supporting funds and related transactions, it is estimated that the annual gross profit margin of the 800000-ton project is 3.53%, the after-tax IRR is 16.48%, the 1.2 million-ton project annual gross profit margin is 3.61%, and the after-tax IRR is 19.96%.
Profit Forecast: we estimate that the company's operating income will be 62.22 billion yuan, 65.641 billion yuan and 67.9 billion yuan respectively, and its net profit will be 1.094 billion yuan, 1.269 billion yuan and 1.426 billion yuan respectively, and the corresponding EPS will be 0.27,0.32,0.36 yuan per share respectively. The current stock price is 23.2,20.0,17.8 times corresponding to PE. For the first time, it will be covered and given the "overweight-A" rating. The 6-month target price is 6.97 yuan per share.
Risk tips: project progress is not as expected, raw material supply structure has been adjusted, downstream demand is lower than expected, production safety and environmental risks.