Core views
1. The company's performance improved month-on-month. In the first three quarters of 2023, the company achieved operating income of 21,690 billion yuan, a year-on-year decrease of 18.24%, and realized net profit of 2.142 billion yuan, a year-on-year decrease of 24.81%. 2023Q3 achieved net profit of 829 million yuan, a year-on-year decrease of 18.96% and an increase of 4.37% over the previous year.
2. In recent years, the company has focused on developing high value-added products such as automobile boards, aviation boards, and power battery foils, etc., and the share of high-end products has steadily increased.
3. The company adheres to green and low-carbon development and actively lays out the recycled aluminum industry; at the same time, the company's overseas industrial chain continues to expand, and Indonesian entities plan to spin-off and go public.
occurrences
The company released its report for the third quarter of 2023
In the first three quarters of 2023, the company achieved operating income of 21,690 billion yuan, a year-on-year decrease of 18.24%; realized net profit of 2.142 billion yuan, a year-on-year decrease of 24.81%; and achieved net profit of 2,076 billion yuan, a year-on-year decrease of 25.89%. 2023Q3 achieved revenue of 7.188 billion yuan, a year-on-year decrease of 16.58%, a decrease of 6.23% over the previous year; realized net profit of 829 million yuan, a year-on-year decrease of 18.96%, an increase of 4.37% over the previous year; and realized net profit of 797 million yuan, a decrease of 20.49% over the previous year and an increase of 3.54% over the previous year.
Brief review
The company's performance continued to improve month-on-month. The company's net profit showed a quarterly upward trend. Since Q2 net profit increased significantly month-on-month, Q3 net profit continued to improve, +4.37% month-on-month, net profit after deducting +3.54% month-on-month after non-return net profit. The main driver of the company's continuous increase in performance was the decline in costs. The cost of all major raw materials was reduced to varying degrees in the third quarter. The company's overall operating costs fell by 10.59%, and gross margin increased by 3.76 pct.
Continued efforts are being made in the field of high added value, and the share of high-end products has steadily increased. In recent years, the company has focused on developing high value-added products such as automobile boards, aviation boards, and power battery foils. With the release of production capacity for high-end products, the company's share of high-end product profits has further increased. The company currently has a production capacity of 200,000 tons of automobile panels and 21,000 tons of power battery foil. Currently, construction of the high-end lightweight aluminum strip project (the third phase of the automobile board project) is being stepped up. After the completion of the project, the total production capacity of Nanshan Aluminum's automobile panels will reach 400,000 tons. The company is the only domestic private enterprise that simultaneously supplies OEMs such as Boeing, Airbus, and COMAC. After a long period of technical research and development and process improvements, the company solved the “skeleton” and “outer coat” problems of domestic aircraft for the domestic C919 aircraft and promoted the domestic replacement process for aviation boards.
Adhere to green and low-carbon development and actively lay out the recycled aluminum industry. The company responded positively to the country's “carbon peak, carbon neutrality” and promoted energy saving and emission reduction and environmental protection. In the past half of the year, the company shut down some electrolyzers and transferred the 336,000 tons of electrolytic aluminum production capacity target to the outside world, while making every effort to promote the implementation of recycled aluminum projects. At present, the company has reached business cooperation for recycling and recycling of scrap aluminum with some core customers.
The overseas industrial chain continues to expand. The company is building a 2 million ton alumina project in Indonesia. The project was put into operation in 2022 and is expected to be fully produced in 2024. At the same time, the company plans to invest 6.063 billion yuan to build a 250,000 ton of electrolytic aluminum and 260,000 tons of carbon project in Indonesia to further improve the industrial chain and take advantage of cost advantages. The company plans to list the Indonesian main company Nanshan Aluminum International on the Hong Kong Stock Exchange, which is expected to further enhance the international influence of the company's brand and capital raising efficiency. In the future, the company will accelerate its deep cultivation in Indonesia and surrounding markets, and continue to expand the overseas aluminum industry chain layout using Indonesia's resources and location advantages.
Investment suggestions: The company's net profit from 2023 to 2025 is estimated to be 3.159 billion yuan, 3,567 billion yuan and 4.185 billion yuan respectively. The PE corresponding to the current stock price is 11.49, 10.17 and 8.67 times, respectively. Considering the company's position in the aluminum processing industry and its low cost advantages, the company is given a “buy” rating.