The company disclosed its 2023 annual report: In 2023, it achieved revenue of 225.071 billion yuan (-22.65%), net profit attributable to mother of 6.717 billion yuan (+60.23%), and net profit of non-return to mother of 6.614 billion yuan (+111.27%). Among them, the fourth quarter achieved revenue of 36.666 billion yuan (-32.53% month-on-month), net profit to mother of 1,364 billion yuan (-29.51% month-on-month), and net profit of non-return to mother of 1,685 billion yuan (-17.65% month-on-month). Reasons for the sharp increase in net profit due to the sharp increase in net profit in 2023:1) The price of electrolytic aluminum raw materials such as petroleum coke and coal decreased, leading to an increase in the unit profit level. The company's net profit per unit of electrolytic aluminum was 1,240 yuan/ton in '22, or 1,379 yuan/ton, +11.2% year-on-year; 2) Asset depreciation for 23 years was 760 million yuan, down 4.13 billion yuan year-on-year from 4.884 billion yuan in '22. The reasons for the month-on-month decline in net profit due to 2023Q4:1) It reduced some low-gross margin businesses such as trade, and the profit margin of the aluminum sector increased by 5 pct to 21% in the fourth quarter, and the net interest rate also increased significantly; 2) the loss of assets of 610 million in the fourth quarter and the accrued amount of $70 million in the third quarter; 3) the ratio of management expenses and the financial expense ratio increased month-on-month.
Profitability has increased dramatically, and the balance ratio has declined steadily. In 2023, the company's gross margin was 12.90%, up 1.43 pct year on year; net profit margin was 5.59%, up 1.86 pct year on year; the period expense ratio was 5.10%, up 0.70 pct year on year. Among them, the fastest growth rate was the management expense ratio, which increased 0.52 pct to 1.93% from 1.41% in 2022. Looking at the fourth quarter of a single quarter, the company's gross margin was 20.96%, up 5.19 pcts month-on-month; net margin was 9.23%, up 2.58 pcts month-on-month. As of the end of 2023, the company's balance ratio was 53.30%, down 5.37pct from the end of 2022. The balance ratio has declined steadily over the years.
In '23, the company's production of raw aluminum and alumina was basically the same. In 2023, the company achieved alumina production of 21.66 million tons (-1%), export sales of 6.52 million tons; production of raw aluminum and alloys of 6.79 million tons (-1%), export sales of 6.8 million tons; output of 13.5 million tons of coal (+22%); and power generation capacity of outsourced power plants of 16.2 billion kwh (-3%).
In 23Q4, the company achieved 6.37 million tons of alumina output, 1.51 million tons of self-produced alumina sales; 1.86 million tons of electrolytic aluminum; and 3.36 million tons of coal. As a leading state-owned enterprise in China's aluminum industry, the company has a complete bauxite-aluminum-electrolytic aluminum-aluminum alloy industrial chain. It has an alumina production capacity of 22.26 million tons and an electrolytic aluminum production capacity of 7.45 million tons. The complete industrial chain and large production capacity enable the company to fully benefit from the performance flexibility brought about by the rise in alumina and electrolytic aluminum prices.
Risk warning: Demand for electrolytic aluminum falls short of expectations; rising raw material prices have led to a decline in the profitability of electrolytic aluminum.
Investment advice: Raise profit forecasts and maintain the “gain” rating. The company's 2024-2026 revenue is expected to be 2,229.65/2,265.90/231,599 billion yuan, a year-on-year growth rate of -0.94%/1.63%/2.17%; net profit to mother of 85.00/102.21/11.626 billion yuan, a year-on-year growth rate of 26.54%/20.25%/13.75%; diluted EPS is 0.50/0.60/0.68 yuan, and the PE corresponding to the current stock price is 14.9/12.4/10.9x. Considering that the company is a leading large non-ferrous central enterprise, has a complete aluminum industry chain, and still has the capacity to expand production capacity even when there is a ceiling in the electrolytic aluminum industry, it maintains an “increase in weight” rating.