With the help of its own advantages, the company can increase its market share and open up long-term growth space through overseas projects, which belongs to periodic growth stocks. Affected by the decline in raw materials, the company's impairment led to a loss. With the rebound of raw material prices, the company's products are expected to raise prices and profits are expected to be repaired, which is a reversal of the predicament.
The company is the global prebaked anode leader.
The company's main business is aluminum pre-baked anode, with anode sales of 2.695 million tons in 2022, a five-year compound growth rate of 24%, anode product revenue of 16.91 billion yuan, a five-year compound growth rate of 40%, and a net profit of 905 million yuan and a five-year compound growth rate of 11%. In 2022, the company made a net profit of 436 yuan per ton of anode, the highest level in the past five years. The company has announced that the total domestic contracted production capacity is 4.06 million tons and the equity production capacity is 2.72 million tons.
The increase of global demand for primary aluminum leads to the increase of anode demand.
The downstream of prebaked anodes is mainly the electrolytic aluminum industry. China's electrolytic aluminum output in 2022 is 40.43 million tons, which is still far from the ceiling of domestic electrolytic aluminum production capacity, which will lead to an increase in domestic demand for prebaked anodes.
According to the forecasts of Hydro and CRU, global primary aluminum demand grew by 2.8 per cent and global primary aluminum production grew by 1.4 per cent from 2022 to 2030, leading to an increase in global demand for prebaked anodes.
Both volume and price rise, profit repair
With the commissioning of projects under construction, we expect the company's sales of prebaked anodes to increase by 180000 tons to 2.88 million tons in 2023 and 860000 tons to 3.74 million tons in 2024. The pre-baked anode is priced by the cost-plus method, and the company's profit is expected to be repaired with the stable price of raw materials.
Earnings forecast, valuation and rating
We estimate that the company's operating income from 2023 to 2025 will be 147.68 million yuan 184.98 percent, year-on-year changes-23.88 percent 25.26 percent, 18.07 percent, and three-year compound growth rate 4%; net profit from home will be 0.22 percent 12.97 billion yuan, respectively; year-on-year changes-97.56 percent, 5766 percent, 11.77 percent; and three-year compound growth rates, 17 percent, will be 0.04 yuan / 2.4 yuan / 2.68 yuan, respectively. The average PE of comparable companies in 2024 was 9.8 times. In view of the fact that the company's pre-baked anode production is expected to continue to grow in the next three years, 2024 will be a year of rapid growth. Using the relative valuation method, we give the company 9.8 times PE in 2024, with a target price of 23.52 yuan, covering the "buy" rating for the first time.
Risk tips: electrolytic aluminum enterprises reduce production; domestic projects do not advance as expected; raw material prices fall sharply; product prices fall; restricted shares are lifted.