occurrences
Tianshan Aluminum released its 2023 annual report: the company's revenue in 2023 was 28.975 billion yuan, -12.22%; net profit to mother was 2,205 billion yuan, -16.80% year over year; net profit to mother after deducting non-recurring profit and loss was 1,883 billion yuan, -25.81% year over year.
Key points of investment
The company's production of various products has increased steadily, and the production cost of electrolytic aluminum has decreased: the company's output of all products has increased. The company's aluminum ingot output in 2023 was 1,165,500 tons, +0.64%; high-purity aluminum production was 42,800 tons, +3.38%; battery aluminum foil output was 0.1 million tons, +233.33%, the main reason for the large increase in output was that the company's Jiangyin battery aluminum foil project had already put some products on the market; alumina output was 2,119 million tons, +37.57% year over year. The reason for the sharp increase in production was that all of the company's alumina projects were put into operation in 2023; pre-baked anode output was 598,900 tons, +16.86%.
Price: 1) In terms of electrolytic aluminum, the average sales price of the company's self-produced electrolytic aluminum was about 18,700 yuan/ton (tax included), down 5.1% year on year, and production costs fell 2.44% year on year, mainly due to a decrease in pre-baked anodes and coal power generation costs; 2) In terms of alumina, the average sales price of the company's alumina in 2023 was about 2,840 yuan/ton (tax included), up 3% year on year. Due to rising domestic and foreign bauxite supply prices, the company's alumina production cost increased 1.6% year on year.
Key projects are successfully put into operation, and the raw material self-sufficiency rate will increase
Some products of the battery foil project have been successfully shipped. In 2023, the company's Shihezi aluminum foil blank production base and Jiangyin aluminum foil production base are all undergoing equipment installation and commissioning. Some products have already been shipped, test orders from more than 40 customers and certification from more than 10 customers have been completed, and production capacity will climb in 2024.
Overseas bauxite resources have been expanded and implemented, and the degree of self-sufficiency in alumina raw materials has increased. In 2023, the company completed the share acquisition of a local mining company in Guinea and obtained exclusive priority purchasing rights for mineral products, directly targeting the supply and procurement costs of bauxite resources. The 2024 project has already entered large-scale mining and is about to be shipped back to the country to meet the demand for raw materials for domestic alumina production. The project plans to have an annual production capacity of 5 to 6 million tons of bauxite. After full delivery, it will basically solve the company's raw material requirements for alumina production.
Profit forecasting
The company's revenue for 2024-2026 is estimated to be 315.45, 334.92, and 36.587 billion yuan, respectively, and net profit to mother is 30.72, 37.82, and 4.520 billion yuan, respectively. The PE corresponding to the current stock price is 10.6, 8.6, and 7.2 times, respectively.
Considering that the company's battery foil and alumina incremental logic has been implemented, the company's industrial chain integration advantage is high, and the price center of superimposed electrolytic aluminum and alumina is expected to continue to move upward, maintaining the company's “buy” investment rating.
Risk warning
1) Downstream demand for electrolytic aluminum falls short of expectations; 2) the progress of the company's new construction projects falls short of expectations; 3) the risk of major product prices falling sharply; 4) the risk of fluctuations in raw materials and energy prices, etc.