The first-half results were lower than expected.
Lufeng shares achieved income of 1.15 billion yuan in the first half of the year, up 16% from the same period last year; the net profit attributed to the parent company was 6.02 million yuan, turning losses into profits over the same period last year, equivalent to 0.04 yuan per share, which was lower than we and the market expected.
The income realized in the second quarter was 630 million yuan, up 12% and 21% respectively from the same period last year; the net profit attributable to the parent company lost 53000 yuan.
Comments: 1) Gross profit margin declined in the second quarter compared with the previous quarter. Although the new aluminum foil production capacity is gradually released, and the increase in aluminum foil production and sales helps to push up the main business steadily, due to the slow growth of downstream demand, the slow progress of capacity release, and the rise in unit production costs, the gross profit margin for the current period fell 6.8 percentage points month-on-month to 8.8%. 2) sales expenses increased month-on-month. Sales expenses increased by 43% month-on-month in the second quarter, causing the sales expense rate to rise to 2.5%. 3) performance of thickening of non-operating income. In the second quarter, the company recorded non-operating income of 2.98 million yuan, an increase of 0.01 yuan per share, mainly due to income from asset disposal.
Trend of development
The structure of aluminum foil products is gradually adjusted. At present, the demand for household and medicinal aluminum foil at home and abroad is growing relatively slowly. on the one hand, due to the relatively slow recovery of fundamentals at home and abroad, the demand for aluminum foil at home and abroad has been affected to varying degrees. On the other hand, it is because it still takes a long time for consumers to improve their awareness of environmental protection and living standards. Therefore, the company is committed to adjusting the aluminum foil product structure and building a double zero aluminum foil project in Qingdao Runfeng, which is expected to gradually improve the business structure and enhance the company's profitability in the future.
Dingzeng has successfully alleviated the pressure on financial expenses, and the profit contribution of projects under construction still needs to be observed. The company successfully issued a non-public offering project to raise funds for the first phase of the 450000-ton aluminum strip project, which is expected to reduce debt leverage and reduce the burden of financial expenses to a certain extent. However, the first phase of the cold rolling project of 450000 tons of aluminum strip project and the Qinghai Xinheng aluminum strip project are still under construction, which is expected to improve the company's aluminum plate, strip and foil product line and control the quality of upstream raw materials, but the progress of project construction and production and its contribution to the company's performance still need to be observed.
Profit forecast adjustment
Maintain a profit forecast of 0.03 won for 2013 and 2014. Assuming that the processing fee is the same this year and next year, the unit cost is + 3%, and the output of aluminum foil is increased by 10%, 15%, which is lower than the consensus of 0.21% 0.50 yuan.
Valuation and suggestion
It will take a long time for earnings to improve, and the stock price will rebound by a limited margin, maintaining a volatile pattern. The company's share price has rebounded with the non-ferrous sector in the early days, up 28% since the end of July, and the corresponding Pamp E in 2013 and 2014 is 230amp 179 times. The demand growth downstream of the company is relatively slow, and it still takes time to improve the capacity utilization of new projects put into production, while the contribution of aluminum foil product structure adjustment to profitability needs to be observed. Stock prices are expected to rebound in the near future is relatively limited, the future may maintain a volatile situation, maintain a "neutral" rating.