occurrences
On April 22, the company announced its quarterly report for the year 24. 1Q24 achieved revenue of 8.223 billion yuan, -8.58% month-on-month, -13.57%; net profit to mother of 1,091 billion yuan, -39.51% month-on-month, and -29.47% year-on-year; net profit after deduction of 1,013 billion yuan, -42.84% month-on-month and -34.24% year-on-year.
reviews
The coal accident in Henan Province affected Q1 coal production. (1) The electrolytic aluminum sector of Q1 Company operated smoothly. The average price of colored aluminum in the Yangtze River was 1.9 million yuan/ton, +0.42% month-on-month, the average price of alumina was 3,347 yuan/ton, +11.39% month-on-month, and the average price of pre-baked anodes was 3,841 yuan/ton, -6.06% month-on-month. In January-January, the market-based electricity price of Yunnan Electric Power was 0.291 yuan/degree, up 22.78% compared to 0.237 yuan/degree in 4Q23. (2) An outstanding coal and gas accident occurred at Pingdingshan Tian'an Coal Industry Co., Ltd. on January 12, 2024. Coal mines in Henan province concentrated on carrying out special safety risk identification and hazard investigation and rectification work. The company's coal mines were concentrated in Henan Province. Affected by this, Q1 coal production and sales declined sharply. Combined with the Q1 Yongcheng anthracite average price -10.65% month-on-month to 23.93 yuan/ton, the profitability of coal declined.
Expense management is optimized, and the capital structure continues to improve. 1Q24 The company's operating tax and additional/operating income was -0.15 percentage points to 1.48%, the sales expense ratio was +0.91 percentage points month-on-month to 1.32%, the management expense ratio was -1.16 percentage points month-on-month to 2.42%, and the financial expenses ratio increased to 0.27% month-on-month, of which the interest rate was -1.13 percentage points month-on-month to 1.06%. As of the end of March '24, the company's balance ratio was 57.69%, down 0.26 percentage points from the end of '23, and the capital structure continued to improve.
Yunnan Shenhuo is gradually resuming production, and the aluminum sector is expected to see a sharp rise in volume during the peak season. Yunnan Shenhuo resumed production in March '24, and has resumed production of 160,000 tons as of April 18. April entered the peak consumption season for electrolytic aluminum, and rising aluminum prices encouraged the industry to continue to expand its profits per ton of aluminum. It is expected that with the release of Yunnan Shenhuo Electrolytic Aluminum production capacity, the company's aluminum sector will experience a sharp rise in volume profit during the peak season.
Shenhuo New Materials Phase II is about to be put into operation, and the deep processing layout is gradually being improved. The first 60,000-ton rolling mill for new energy power battery materials in Shenhuo New Materials Phase II was commissioned in February '24, and all 8 mills are expected to be put into operation in August '24; the 110,000-ton aluminum foil project in Yunnan is expected to complete the blank production line installation by the end of '24; the company's aluminum processing sector is expected to form 250,000 tons of aluminum foil production capacity within the next 2 years, making full use of the cost advantages of the integrated industrial chain.
Profit forecasting & investment ratings
The company's revenue for 24-26 is estimated to be 402/44.1 billion yuan, net profit to mother is 51.84 billion yuan, 64.41/7.125 billion yuan, EPS is 2.30/2.86/3.17 yuan, respectively, and the corresponding PE is 9.93/7.99/7.22 times, respectively. Maintain a “buy” rating.
Risk warning
Product prices fluctuate greatly; risk of limited production of electrolytic aluminum; sharp rise in production costs.