In 2023, the company's net profit to mother decreased 17% year on year, and 2024Q1 net profit to mother increased 44% year on year. In 2023, it achieved revenue of 28.97 billion yuan (-12.2%), net profit attributable to mother of 2.21 billion yuan (-16.8%), net profit after deducting non-return to mother of 1.88 billion yuan (-25.8%), and net operating cash flow of 3.92 billion yuan (+24%).
2024Q1 had quarterly revenue of 6.83 billion yuan (-1.7% YoY, +2.9% YoY), net profit to mother of 720 million yuan (+43.5% YoY, +26.7% YoY), net profit of 710 million yuan (+125.1% YoY, +27.4% YoY).
The company's profit decline in 2023 was mainly due to falling aluminum prices and export tariffs on high-purity aluminum. The company's gross profit in 2023 was 4.09 billion yuan, a year-on-year decrease of 960 million yuan, of which the gross profit of the self-produced aluminum ingot section fell by 790 million yuan: the sales price of self-produced aluminum ingots in 2023 was 16,545 yuan/ton, a year-on-year decrease of 890 yuan/ton or 5%; the operating cost of self-produced aluminum ingots was 13,108 yuan/ton, or 2% year-on-year. The price drop was greater than the cost reduction, causing the gross profit per ton of self-produced aluminum ingots to drop 562 yuan/ton to 3,438 yuan/ton over the same period last year. This is the main reason for the decline in profits. Second, in 2023, customs imposed a 30% export tariff on high-purity aluminum, resulting in a year-on-year decrease of 230 million yuan in gross profit from the high-purity aluminum business. At the same time, due to the influence of high-purity aluminum, the company's self-produced aluminum ingot sales decreased by 40,000 tons over the same period last year, which is also an important reason for the decline in profits. Customs abolished export tariffs on high-purity aluminum in 2024, and the company is actively expanding its high-purity aluminum business at home and abroad.
The company can be expected to reduce costs and increase efficiency in 2024. The development of local bauxite resources in Guangxi is expected to continue. At the same time, the company completed the share acquisition of a local mining company in Guinea and obtained an exclusive right to purchase its bauxite products, reducing Tiangui Aluminum's bauxite procurement costs; Tianyu Limited was awarded a high-tech enterprise at the end of 2023 and will pay corporate income tax at a 15% tax rate; the Tiantu Railway Special Line will also further reduce logistics costs.
Risk warning: There is a risk that aluminum prices will fall, competition in the battery aluminum foil market will increase the risk, and the progress of new construction projects will fall short of expected risks.
Investment advice: Maintaining a “buy” rating
Assuming that the 2023-2025 spot price of aluminum is 19,500 yuan/ton (previous value: 19,000 yuan/ton), and the price of alumina is 3,300 yuan/ton (previous value: 2,925 yuan/ton), and the price of pre-baked anode is 4,500 yuan/ton (previous value: 5,500 yuan/ton), the estimated revenue for 2024-2026 is 382/383/38.5 billion yuan, a year-on-year growth rate of 31.9/0.2/ 0.5%, and net profit to mother is 32.52/3.47/ 7.64 billion yuan, a year-on-year growth rate of 47.5/6.7/ 8.5%; diluted EPS is 0.70/0.75/0.81 yuan respectively, and the PE corresponding to the current stock price is 9.8/9.1/8.4x, respectively. This year, the company made positive changes in reducing bauxite procurement costs, logistics costs and taxes, etc., and promoted an integrated development strategy for the overseas industrial chain, opening up room for long-term growth for the company and maintaining a “buy” rating.