Aluminum prices fell, and profits declined year on year in 2023. In 2023, the company achieved operating income of 28.975 billion yuan, -12.22% year on year; net profit to mother of 2,205 billion yuan, -16.80% year over year; net profit after deduction of 1,883 billion yuan, or -25.81% year on year. Among them, Q4 achieved operating income of 6.631 billion yuan, -19.90% YoY, -12.15%; net profit to mother of 568 million yuan, +130.10% YoY and -8.10% month-on-month; net profit after deduction of 554 million yuan, or 164.91% YoY and -7.52% YoY.
Bauxite will be produced for the first time in the year, improving resource security capabilities and cost advantages. In 2023, the company completed the share acquisition of a local mining company in Guinea and obtained exclusive rights to purchase mineral products. The project plans to have an annual production capacity of 5 to 6 million tons of bauxite. After mining, the mineral products will be shipped back to the country to meet its demand for raw materials for alumina production. At the same time, the company's own bauxite exploration and mining work in Guangxi is also gradually progressing. It is expected that ore mining will be achieved within the year. At that time, the guarantee of the company's upstream resources will reach 100%. The company plans to produce 3 million tons of bauxite in 2024.
Continue to improve the industrial layout, and growth can be expected. The company has a total of 1.4 million tons of compliant electrolytic aluminum, has built 1.2 million tons, and is studying the implementation plan for 200,000 tons. The company plans to build a 2 million ton alumina production line in Indonesia. The first phase of the 1 million ton project has been included in Indonesia's national strategic project list, and is currently undergoing EIA and land acquisition. In addition, the company has obtained three bauxite mining rights in Indonesia. In the future, all of the bauxite produced will be used as raw materials for the Indonesian alumina project to ensure a stable and low-cost bauxite supply, making the alumina project more cost-effective.
The power battery foil project has entered the release period. The 300,000-ton aluminum foil blank project in Shihezi has now completed the installation of the first phase of 150,000 tons of main equipment and production and commissioning has begun, and large-scale production is about to begin. The Jiangyin 20,000 ton battery aluminum foil technical improvement project has completed equipment installation and commissioning, and has entered the trial production stage. A new battery aluminum foil production capacity project of 200,000 tons. The first phase of 150,000 tons of battery equipment is currently being installed and commissioned, and production will be gradually put into operation in 2024. The company will produce 10,000 tons of aluminum foil for batteries in 2023, and plans to produce 100,000 tons of aluminum foil and aluminum foil blanks in 2024. The aluminum foil business has entered the release period.
Investment advice: The company is a leading enterprise in the electrolytic aluminum industry. The location advantage+integrated layout creates continuous high profitability. Bauxite and power battery foil projects have entered the harvest period, alumina and electrolytic aluminum production capacity will continue to increase in the future, and the company has high growth potential. Domestic electrolytic aluminum is approaching the ceiling of production capacity, and the release of overseas incremental projects is slow. High growth in photovoltaics, new energy vehicles, etc. is boosting aluminum consumption. The focus of aluminum prices is expected to rise steadily, and the company will benefit significantly. The company's revenue for 2024-2026 is estimated to be 318.10/32.073/32.352 billion yuan, net profit to mother of 36.70/44.88/4.617 billion yuan, respectively, and EPS of 0.79/0.96/0.99 yuan, respectively. Maintain a “buy” rating.
Risk warning: The progress of new construction projects fell short of expectations, and aluminum prices fell sharply