Introduction to this report:
The company continues to expand production capacity and actively explore the field of automotive lightweighting. Benefiting from reduced costs of recycled aluminum, expansion of production in Southeast Asia, and growth in the NEV business, the company ushered in a period of rapid growth.
Key points of investment:
First coverage, giving the company an “increase in holdings” rating. The company has benefited from both increased demand for photovoltaics and lightweight automobiles. We expect the company's EPS for 2023-2025 to be 2.20, 3.86, and 7.54 yuan, respectively.
Referring to the average valuation of the industry in 2024, the target price of 46.48 yuan was given, and the rating of “increased holdings” was given.
By reducing the cost of recycled aluminum and expanding production in Southeast Asia, the company is expected to increase market share and profit per ton.
The company's main business includes three segments: industrial aluminum parts, industrial aluminum profiles, and construction aluminum profiles.
Following the launch of two aluminum components for photovoltaics after listing, H1 industrial aluminum component revenue in 2023 accounted for 59.21% of total revenue and 60.39% of gross profit, making it the company's most important business. Future aluminum frame performance growth logic: 1) As the only listed company in the aluminum frame industry, production capacity expansion is accelerating, and market share is expected to increase in the future. 2) Actively deploy recycled aluminum and continue to reduce costs and increase profits through integration. 3) Follow component manufacturers overseas and lay out the highly profitable Southeast Asian market.
Vehicle lightweighting is expected to become the company's second growth curve. Under the double carbon policy, China's new energy vehicle market is developing rapidly, and the lightweight automobile is driving an increase in demand for lightweight aluminum components. In May 2022, the company issued an announcement to invest in the construction of a new energy vehicle aluminum component project with an annual output of 100,000 tons. The first phase of production capacity of 50,000 tons is expected to be mass-produced in the second half of 2023. Currently, lightweight aluminum automotive components are in the blue ocean, and the company is expected to seize the market through its original technical reserves.
Catalysts: Automobile customer orders exceed expectations; recycled aluminum business reduces costs and increases efficiency.
Risk warning: demand falls short of expectations; production expansion falls short of expectations; raw material prices rise.