The company achieved a net profit of 358 million yuan in the third quarter of 2023, in line with expectations. In the first three quarters of 2023, the company achieved revenue of 19.456 billion yuan, year-on-year-11.64%, net profit of 1.161 billion yuan, year-on-year-12.02%, non-return net profit of 931 million yuan, year-on-year-13.37%, sales gross profit of 11.45%, compared with the semi-annual report of-0.33%. The net profit rate of sales is 5.97%, compared with the semi-annual report of-0.38%. From a quarterly point of view, the net profit of 2023Q1-Q3 from home to home is RMB 449,358 million, Q3 is-20.27%, + 56.54% compared with the same period last year, and the net profit from non-return to home is RMB 291 million after deducting non-return from Q3, which is 19.83% lower than the same period last year and + 106.25% compared with the same period last year.

In the third quarter, the company's sales volume of aluminum plate, strip and foil was 320000 tons, a small increase compared with the previous quarter, and the profitability per ton decreased compared with the previous month. In terms of sales volume, according to the monthly operating KuaiBao statistics announced by the company, the company realized aluminum strip sales of 320000 tons in the third quarter, an increase of 17000 tons compared with the previous quarter, and sales of 114,108,000 tons in July-September respectively. Affected by the prosperity of the industry, monthly sales showed a downward trend; in the first three quarters of 2023, the company achieved sales of 916000 tons, an increase of 25000 tons over the same period last year. In terms of profit, the company's net profit per ton in the third quarter was about 1119 yuan / ton, a decrease of 362yuan / ton compared with the previous quarter (2023Q2 is 1482 yuan / ton); the average net profit per ton in the first three quarters was 1268 yuan / ton, a decrease of 213yuan / ton compared with the same period last year (2022Q1-Q3 is 1481 yuan / ton).

The decline in the company's profitability in the third quarter was mainly affected by the strengthening of aluminum prices in the inner market. According to the 2023 semi-annual report, about 16% of the company's gross profit comes from overseas markets, and its business model is to purchase raw materials based on SHFE aluminum price and sell products based on LME aluminum price, so the company's profit is affected by the difference between internal and external aluminum prices.

Affected by the downward LME accumulation of overseas demand, the average price of SHFE aluminum rose 1.5% to 18700 yuan / ton in the third quarter, but the average price of LME aluminum fell 2.4% to $2211 / ton. The strong Shanghai-Lun ratio led to the low price of the company's export products, thus hurting the profitability of the company.

The company has plenty of cash assets, waiting for the industry demand boom to reverse. The decline in corporate profitability compared with the same period last year was mainly affected by the decline in the growth rate of industry demand and the intensification of supply competition. The company's production and sales volume maintained positive growth in the first three quarters, reflecting the counter-cyclical operational stability of the leading companies. In addition, the company pays attention to risk control and cash flow management. at present, the monetary funds on the account are as high as 3.162 billion yuan, the quarter-on-quarter increase, and the decrease in the proportion of transactional financial assets, reflecting the company's strong sense of risk management and ensuring the company's long-term development.

Investment suggestion: as the leading enterprise of product diversification and recycled aluminum grading application in the domestic aluminum plate and strip processing industry, the company has obvious advantages over the industry in cost control and risk management. counter-cycle still maintain stable profitability and cash flow control ability. With the industry processing fees bottoming out and downstream consumption recovery, the company's profitability is expected to pick up. We expect the company to achieve a net profit of 16.45,19.66 and 2.24 billion yuan from 2023 to 2025, an increase of 2.9%, 19.5% and 14.0% over the same period last year, corresponding to a PE of 8.9,7.4,6.5 times respectively, maintaining a "buy" rating.

Risk tips: raw material price fluctuation risk, market competition deterioration risk and so on.