Event
Suotong Development released a half-year report on 2023: 2023H1 achieved operating income of 8.13 billion yuan, an increase of 2.09% over the same period last year, and its net profit was-410 million yuan, a decrease of 171.97% over the same period last year. The net profit of non-parent was-410 million yuan, a decrease of 172.43%.
Comment
The price is declining rapidly, and the company has a large impairment loss. 2023Q2 achieved revenue of 3.91 billion yuan, a decrease of 7.4% from the previous month and 18.2% from the same period last year; the net profit returned to its mother was-140 million yuan, an improvement of 140 million yuan from the previous month and a decrease of 133.1% from the same period last year.
The prices of petroleum coke and pre-baked anodes continued to decline rapidly in the first half of the year. In June 2023, the average monthly price index of petroleum coke was 2287.17 yuan per ton, down 34.98 percent from 3517.84 yuan per ton in January. The monthly average price index of pre-baked anode was 4678.57 yuan / ton, down 32.26% from 6906.97 yuan / ton in January. At the same time, due to the decline in the prices of raw materials and finished products, the company lost 366 million yuan in asset impairment, which had a greater impact on profits.
At present, the prices of pre-baked anode products and petroleum coke have remained stable from June to September. The company's performance is expected to get back on track in the second half of the year.
The capacity is running at full capacity, and the output and sales volume have reached an all-time high. In the first half of 2023, the company produced 1.4559 million tons of prebaked anodes, an increase of 10.02 percent over the same period last year; sales of prebaked anodes were 1.4209 million tons, up 12.28 percent over the same period last year, including export sales of 294800 tons, a decrease of 11.76 percent, and domestic sales of 1.1261 million tons, an increase of 20.90 percent over the same period last year; the company produced 12900 tons of lithium anode products and sold 0.9 million tons of lithium anode products.
The project is progressing steadily, with 5 million tons of pre-baked anodes planned for 2025. The company's pre-baked anode production capacity of 2.82 million tons in 2023, Shandong Innovation Phase II project, Longxi Suotong 300000 tons of aluminum carbon materials project has been officially launched. Qijiang District of Chongqing has an annual output of 250000 tons of high conductive and energy-saving aluminum carbon materials and 50,000 tons of lithium battery high-end anode materials production box plate project is in steady progress. After the completion of the project, the total production capacity of the company's pre-baked anode will reach 3.71 million tons, while forming a production capacity of 50, 000 tons of containers and plates. It is estimated that the company's pre-baked anode production capacity will reach 5 million tons in 2025.
Actively open up overseas markets and build a global petroleum coke supply system, the cost is expected to be reduced.
2023H1 has signed a Memorandum of understanding on Investment with EGA, United Arab Emirates, laying a solid foundation for joint ventures and cooperation with global high-quality primary aluminum producers. At the same time, the company has reached a North American logistics terminal and petroleum coke storage business cooperation with International Marine Terminal (IMT), which is expected to further reduce raw material procurement and logistics costs.
Profit forecast
With the price of petroleum coke and pre-baked anode stabilizing, the company's performance is back on track. We estimate that the company's net profit from 2023 to 2025 will be 2.441 billion yuan, corresponding to EPS 0.45, 1.90, 2.67 yuan, and PE, 38.9, 9.3, 6.6 times, maintaining the "buy rating".
Risk Tips:
The price of raw materials continued to fall, the price of pre-baked anode fluctuated sharply, and the project was lower than expected.