Main points of investment
The company's performance has declined. In the first half of the year, the company achieved revenue of 5.8 billion yuan, down 18.7% from the same period last year; realized net profit of 64.62 million yuan, down 55.5% from the same period last year; and realized non-net profit of 24.43 million yuan, down 128.0% from the same period last year. The company's revenue in the second quarter was 2.97 billion yuan, an increase of 4.8% over the previous quarter; the net profit returned to the mother was 61.01 million yuan, an increase of 15.9 times over the previous quarter; and the loss of non-net profit was 18.43 million yuan, which was nearly 11 million yuan higher than that of non-net profit-6.99 million in the previous quarter.
Costs have risen and performance has declined. In the first half of the year, the average price of aluminum reached 13827 yuan / ton, an increase of 18.9% over the same period last year; but the prices of pre-baked anodes and alumina rose all the way up because of environmental protection, increasing by 34.9% and 53.4% respectively in the first half compared with the same period last year, and the overall profitability of the electrolytic aluminum process declined. The sharp increase in net profit in the second quarter was mainly due to a substantial increase in non-operating income, which was due to the fact that the unit received 93.6 million yuan in compensation from the CSRC, affecting the net profit of 70.2 million yuan. An important reason for the decline in non-net profit in the second quarter is the substantial increase in management expenses, an increase of nearly 60 million yuan compared with the previous quarter.
The company has benefited from the supply-side reform of electrolytic aluminum. At present, the company's operating capacity of 750000 tons is fully compliant and will not be affected by the closure of illegal projects. The company also has a target of 28000 tons for sale at 74.9 million yuan. We expect aluminum prices to rise and stocks to decline in the fourth quarter of this year, and there will be a great rise in the price center of electrolytic aluminum next year. The company's performance is expected to improve.
The company has a lot of benefits and is optimistic about the development of the company. First, financial costs are expected to fall sharply. The company's current loan interest rate has basically been adjusted to the base rate, and the company's fixed increase of 1.25 billion yuan will reduce the company's financial burden in the future. Second, the company's major shareholders and senior executives hold shares. In the first half of this year, the company announced that the increase of major shareholders' holdings reached 45.48 million yuan, and senior executives increased their holdings by more than 5 million yuan. Reflect the strong confidence in the future development of the company.
Profit forecast and rating: from 2017 to 2019, the company is expected to achieve a net profit of 410 million yuan, 760 million yuan and 980 million yuan belonging to the parent company of the listed company, and the PE of the previous share price is 30x, 16x, 12x, giving an overweight rating.
Risk hint: supply-side reform is not as expected, and project progress is not as expected.