Performance summary: in the first three quarters of 2023, the company achieved operating income of 4.713 billion yuan, an increase of 52.85% over the same period last year; a net profit of 211 million yuan, an increase of 62.48% over the same period last year; and a net profit of 189 million yuan, an increase of 79.37% over the same period last year. The company's performance is in line with previous performance forecasts.
23Q3 shipments continued to rise from the previous month, with a slight decline in gross profit margin. The company's 23Q3 shipments continued to increase from the previous quarter, with an operating income of 1.893 billion yuan in a single quarter, an increase of 83.03% over the same period last year and 20.14% over the same period last year. 23Q3's comprehensive gross profit margin was 12.81%, a slight decline in 0.40pp compared with the previous month. The decline in gross profit margin is mainly due to the trial production of 50,000 tons of aluminum components in the first phase of the new energy vehicle project in mid-June. 23Q3 actively promotes sample verification, factory review and other related work, with high fixed costs in the early stage. During the period of 23Q3, the expense rate is 7.40%, which is 0.87pp lower than that of 23Q2. In addition, 23Q3 calculated a credit impairment loss of 15.24 million yuan, added back the asset impairment loss, and 23Q3 deducted 96.99 million yuan in non-parent net profit, an increase of 18.86% over the previous month, which basically matched the income growth rate.
The layout of production capacity in Southeast Asia is expected to make excess profits. In order to open up overseas markets and meet the needs of the company's international development strategy, the company plans to build 120000 tons of aluminum frame production capacity and 120000 tons of recycled aluminum capacity in Vietnam and Malaysia, and overseas plants are expected to be put into production in the second half of 2024. Longji Green Energy, JinkoSolar Holding Co Ltd, Jing O Technology, Trina Solar Energy, Oriental Sunrise and other head component manufacturers all have component production capacity in Southeast Asia. At present, the production capacity of Vietnamese components is about 50GW, and the market space is huge. The company is building a production base in Southeast Asia, and the production capacity of the nearest component factory is available. As the sales of overseas components have a high premium, matching auxiliary materials are also expected to make excess profits compared with those in China.
The fixed point of the new energy vehicle project will be obtained, and the second growth curve is expected to expand. Xinplatin New Energy, a subsidiary of the company, recently received fixed-point notification from some domestic customers to provide customized development and delivery of battery shell, threshold beam, extended range transfer aluminum bracket and front cabin frame beam. The 50,000-ton project of the first phase of the new energy vehicle aluminum parts project has climbed steadily, and the equipment order for the second phase of the 50,000-ton project has been issued. It is expected that Q3 will be installed and debugged in the plant, and Q4 will be put into production. The profit of the battery tray is higher than that of the photovoltaic aluminum frame, and all 100000 tons of production capacity will be put into production next year, which will become the company's second growth curve and help the performance take off.
Profit forecast and investment advice. The company's shipments continued to improve month-on-month, and its performance maintained rapid growth compared with the same period last year. The company has achieved the fixed point of the new energy vehicle aluminum parts project, battery trays and other aluminum parts products will gradually become the company's new growth curve. The upstream layout of recycled aluminum projects will further reduce costs and increase efficiency and improve profitability.
It is estimated that the return net profit of the company in 2023 to 2025 is 336 million yuan, 596 million yuan and 919 million yuan respectively, and the corresponding PE is 14.6,8.2,5.3 times respectively. Maintain a "buy" rating combined with industry average valuations.
Risk tips: aluminum ingot prices rise rapidly, aluminum frame is replaced by other products, new capacity construction, production schedule is not as expected and other risks.