Events:

Company announcement results Forecast for the first three quarters of 2020: it is estimated that the net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses in the first three quarters of 2020 is about 147 million yuan to 155 million yuan, an increase of about 128.54% to 140.98% over the same period last year. In the third quarter, the net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses was about 0.5-58 million yuan, an increase of about 23.23% to 42.79% over the same period last year.

Comments:

The performance is in line with expectations, and the increase in the price of raw materials does not affect the continued enhancement of profitability. In the first three quarters, the sales of two-tablet cans of the company's main products continued the growth trend since the epidemic, the canning rate increased compared with last year, the epidemic weakened in the third quarter, offline consumption recovered somewhat, although the sales of bottled wine rebounded, but the rising trend of canning rate is irreversible. Aluminum prices have continued to rise since the second quarter, and the current price is about 30% higher than the low point in the second quarter, but it has a limited impact on the company's profitability, due to the improvement of the competition pattern over the past two years, the gradual withdrawal of production capacity, and the gradual formation of an oligopoly in the industry pattern. The company's profitability continues to strengthen, and gross profit margin is expected to increase steadily.

We will continue to improve the market layout and promote the landing of new projects. The two-piece can has a specific small transport radius, in order to meet the needs of customers, it is necessary to have production capacity around the customer factory. The company will build a new aluminum cans production line and related supporting facilities in Huaiyuan Industrial Park, Bengbu City, Anhui Province, to meet the supporting needs of customers in East China and enhance the company's competitiveness in East China. The design capacity of the first phase of the project is 1.1 billion cans per year, and the total investment in project construction is estimated to be about 440 million yuan. The company will continue to expand its advantages in East China, and it is estimated that the company will have a production capacity of more than 12 billion cans by 2022.

Profit forecast: from 2020 to 2022, EPS is expected to be 0.28,0.38,0.46 yuan, corresponding to PE 31.14X, 22.38X, 18.90X, given a "buy" rating.

Risk tips: raw material costs fluctuate, new capacity production is not as expected.