Key points of investment
Incident: According to the 2023 semi-annual report, the first half of 2023 achieved operating income of 2,820 million yuan, an increase of 37.61%; net profit of 128 million yuan, an increase of 40.86%; net profit after deducting net income of 107 million yuan, an increase of 47.34% over the previous year.
By business, industrial aluminum profiles achieved revenue of 978 million yuan, an increase of 17.01% over the previous year; industrial aluminum parts achieved revenue of 1,669 million yuan, an increase of 56.06%; and construction aluminum profiles achieved revenue of 153 million yuan, an increase of 14.07% over the previous year. Thanks to the release of the company's photovoltaic aluminum component production capacity, the industrial aluminum parts business grew rapidly, accounting for 59.20% in the first half of 2023.
Point 1: Sales volume has maintained a high growth rate, and the advantages of increasing production and volume are obvious
The production capacity of the 2023Q2 “100,000 tons of photovoltaic aluminum components” project was gradually completed. The company's production capacity reached the level of 300,000 tons per year, an increase of 50% over the previous year. As the fall in silicon prices led to a month-on-month increase in component-side production, the company's orders and shipments increased sharply month-on-month as downstream sentiment increased. The company's orders are saturated, capacity utilization has increased steadily, and operating conditions are good. Various operating data have increased significantly month-on-month. Revenue was 1,576 billion yuan, an increase of 26.69% over the previous month, and net profit for the return mother was 120 million yuan, an increase of 288.22% over the previous month.
The company's Southeast Asia production expansion project continues to advance, and is expected to be put into operation in the second half of 2024. After comprehensively considering factors such as the investment environment and costs of Southeast Asian countries, the company plans to build factories in Vietnam and Malaysia, lay out 120,000 tons of aluminum frames and 120,000 tons of recycled aluminum production capacity, mainly overseas factories nearby to support the company's main customers. After the construction of the project is completed, the company's production capacity in the photovoltaic field will reach 420,000 tons, and its performance will continue to be released.
Point 2: The first phase of 100,000 tons of automotive aluminum parts products was put into production, and high value-added products continue to advance? The company's first phase of the NEV aluminum parts project with an annual output of 100,000 tons has a production capacity of about 50,000 tons. It was put into operation in June 2023, and is expected to contribute to performance in the second half of the year. Construction of the second phase of the project will begin in the second half of the year, and production is expected in the fourth quarter. The company's main product direction is mainly battery trays, front and rear bumpers, door sill beams, etc., which mainly serve new energy vehicle manufacturers and power battery customers.
Up to now, the company has signed confidentiality agreements and product development plans with some automakers and power battery manufacturers, and is actively promoting related work such as sample delivery, verification, and factory review of related products. Currently, the company has confirmed a government subsidy of 25.73 million yuan, mainly equipment investment subsidies, enterprise contribution rewards, financial support, etc. provided by the Tianchang Municipal People's Government for the project, as well as major emerging industry project subsidies provided by the Anhui Provincial People's Government.
Key point 3: Technical reform continues to reduce costs, and recycled aluminum further increases the company's profit. The company's gross margin in the first half of 2023 was 12.60%, up 1.00 pct year on year, 1.09 pct over month; net margin was 4.54%, up 0.11 pct year on year, and 0.06 pct month on month.
Through technical reform and other measures, the company continuously increases the degree of automation, increases yield, and enhances profit advantages through continuous cost reduction and product structure optimization. At the same time, production capacity is gradually expanding, the scale effect is more obvious, fixed costs are being diluted, and the per-ton rate is expected to be further lowered.
As the recycled aluminum project continues to advance, it will effectively utilize the synergy of the industrial chain, further gain the advantage of low carbon premiums, and continue to improve on the cost side. Anhui Xinbo Environmental Protection Technology Co., Ltd., a wholly-owned subsidiary of the company, has implemented an annual output of 600,000 tons of recycled aluminum. The relevant approval procedures have been completed. The planned production capacity of the project is about 600,000 tons, and production will be put into operation in three phases. As the company continues to increase the amount of recycled aluminum used, the profit per ton of product is expected to continue to increase. According to the current operating situation of recycled aluminum, production costs can be effectively reduced by 300-500 yuan/ton.
Profit forecasting and valuation
Maintain a “buy” rating. The company's net profit for 2023-2025 is estimated to be 396/6.06 /943 million yuan, EPS is 2.70/4.12/6.42 yuan/share, respectively, and PE is 13.20/8.64/5.55, respectively.
Risk warning
Demand has fallen short of expectations, production expansion has fallen short of expectations, aluminum prices have risen rapidly, and market competition has intensified.