Event: Xinjiang Zhonghe released the 2021 Annual report. During the reporting period, the company achieved operating income of 8.226 billion, a year-on-year increase of 43.88%, a year-on-year increase of 853 million, a year-on-year increase of 142.97%, and a non-return net profit of 931 million, an increase of 192.72%. Among them, Q4 realized operating income of 2.052 billion in 21 years, an increase of 12.47% over the same period last year, a decrease of 5.93%, and a net profit of 263 million, an increase of 137.43% and a decrease of 2.04%.
During the reporting period, the volume and price of the company's main products rose, promoting the high growth of the company's performance.
In terms of volume, the downstream market demand for aluminum electronic materials in 2021 is strong, and the company's production and sales volume has increased as a whole. During the reporting period, the company produced 69600 tons (yoy+2.89%) of high purity aluminum, 36700 tons of sales (yoy+2.92%), 29300 tons of electronic aluminum foil (yoy+21.63%), 21100 tons of electronic aluminum foil (yoy+16.15%), 24.7656 million square meters of formed foil (yoy+32.03%), 25.5794 million square meters of sales (yoy+48.76%) and 858 thousand tons of aluminum alloy products (yoy+31.03%). Sales volume is 79400 tons (yoy+46.76%), aluminum production is 70800 tons (yoy-7.28%) and sales volume is 59200 tons (yoy-6.41%).
In terms of price, under the influence of the red line of production and the double control policy of energy consumption in 2021, the overall supply and demand is tight, the prosperity of the industry continues to rise, and the aluminum price remains high. During the reporting period, the average price of aluminum A00 in the Yangtze River non-ferrous market was 18898.11 yuan / ton (yoy+33.18%).
The ability of cost control has been improved. The 21-year company period expense rate was 6.44%, which decreased 3.96pcts compared with the same period last year. Specifically: 1) the sales expense rate decreased from 2.22% → 0.83%, decreased 1.39pcts, mainly due to the change of accounting standards, and the related transportation costs were reclassified from "sales expenses" to "operating costs". After restatement, the sales expense rate decreased from 0.90% → 0.83% to 0.08pcts. 2) due to the increase in employee compensation and equity incentive expenses in the current period, the management expenses increased by 16.0% to 232 million yuan compared with the same period last year, and the management expense rate was reduced from 3.50% → 2.82% to 0.68pcts (3) in terms of financial expenses, due to the 13.57% decrease in interest expenditure in the current period compared with the same period last year, the financial expense rate was reduced by 4.02% → 2.38%, reducing 1.64pcts. 4) the rate of R & D expenditure decreased from 0.66% → to 0.41%, which decreased by 0.25pcts.
The high boom of aluminum electronic materials raises the overall profit center. During the reporting period, driven by the development of the new energy industry, the company's aluminum electrolytic capacitor business continued to rise, photovoltaic, new energy vehicles and other areas of rapid development, superimposed overseas supply chain shortage and other factors, aluminum electrolytic capacitor demand is strong, after October 2021, there is a 10% increase of 20%. Under the guidance of prosperity, the company's electrolytic foil sales unit price rose 5.4% to 64.58 yuan / square meter in the past 21 years. It is expected that under the development trend of new energy, the price of aluminum electrolytic capacitors may remain high, and the prosperity of the company's electrode foil products will be maintained.
The rights issue project is expected to become a new performance growth point of the company. In April 2021, the company raised investment in the existing pilot line expansion project with an annual production capacity of 15000 tons of high-purity aluminum, 3000 tons of high-strength and high-toughness aluminum alloy and 3000 tons of ultra-high purity aluminum-based sputtering target blanks. Continue to increase the company's efforts in the downstream market of high purity aluminum, and may expand the company's incremental space in the future.
Profit forecast and investment advice: benefiting from the tight supply and demand situation in the electrolytic aluminum industry and the development trend of new energy business, the company's main business is expected to remain high. We estimate that the company's output of electrode foil in 22-24 is 2600 pounds / 27 million square meters, and under the assumption that the aluminum price in 22-24 is 2.0x2.1 million yuan / ton, and the sales unit price of electrode foil is 65-65-65 yuan / square meter. It is estimated that the return net profit of the company in 22-24 is 1.291 billion yuan (1.355 billion yuan) respectively (compared with the previous estimate of 951 million yuan in 22-23), and the PE in 22-24 is 10 PE 8X respectively. Maintain the company's "buy"
Rating.
Risk reminder events: macroeconomic fluctuations, product prices fluctuate sharply; the company's profit level caused by a sharp rise in costs such as raw materials is lower than expected risk; electrode foil industry boom downside risk; projects under construction are less than expected risk.