The company's net profit to mother was in line with expectations in '23, and net profit to mother increased more than expected in 24Q1, which was significantly recovered from month to month. In 2023, the company achieved revenue of 26.442 billion yuan, -4.82%; net profit to mother of 1,347 million yuan, -15.71% year on year; net profit after deducting non-return to mother of 1.05 billion yuan, -16.31% year on year; gross sales margin 9.46%, -3.1% year on year; and net sales margin of 5.1%, -13.7% year over year. On a quarterly basis, net profit attributable to mother for 23Q1-Q4 was 3.54/4.49/308.187 million yuan, Q4 was -47.8% month-on-month, and -33.14% year-on-year; net profit after deducting non-return to mother was 2.77/3.63/2.91/119 million yuan, respectively, and Q4 was -59.1% month-on-month, and -33.86% year-on-year. Net profit for 24Q1 was 362 million yuan, +93.6% month-on-month, +2.35% year-on-year; net profit without return to mother was 267 million yuan, +124.4% month-on-month, -3.39%. 24Q1 performance improved rapidly from month to month.
In '23, the company's aluminum sheet and foil shipments all achieved positive month-on-month growth, and single-ton profitability declined year-on-year. In terms of sales, according to the published company announcement, the company achieved sales volume of 1,247,800 tons of aluminum sheet and foil throughout the year, +7.0% over the same period last year. On a quarterly basis, Q1-Q4 achieved sales volume of 29.30/30.3/31.98/332,000 tons, respectively, and achieved positive month-on-month growth over the four quarters. In terms of profit, the average net profit per ton of aluminum sheet with foil in 2023 was 1079.9 yuan, -21.2%; Q1-Q4 was 1207.1/1481.9/1119.6/562.4 yuan, respectively, +21.2%/+100.9%/-32.7%/-73.8%, and -49.8% month-on-month. In the future, with the rapid development of emerging industries such as the new energy industry and the low-altitude economy, demand for aluminum products will continue to grow, and the company's profitability is expected to continue to improve.
Focus on the core market of recycled aluminum to help the company move forward steadily by reducing costs and increasing efficiency. The company took the lead in entering the field of recycled aluminum downgrading applications in 2017. Currently, the production capacity of recycled aluminum upgrade applications is about 1 million tons. In order to create extreme efficiency and pursue optimal cost control, the company continues to optimize key products such as recycled aluminum 3 series and 6 series, and accelerate the construction of recycled aluminum production lines to continuously increase the market share of high-value-added products such as new energy. In the future, the company's recycled aluminum sales volume will reach 1.4 million tons, and its share will increase to about 70%, and cost reduction and efficiency will gradually become prominent.
The product structure continues to improve, promoting the rapid growth of the company's high value-added products. The company continuously optimizes the product structure and expands the product market share. New energy battery soft pack aluminum foil, battery case, battery tray, water cooling plate, electronic foil, pharmaceutical aluminum foil, pattern board, medium and thick plate, gas storage tank, fuel tank material, GIS shell, bottle cap material, container foil, etc. are constantly increasing. At present, the company has entered high-tech and high-value-added fields such as new energy, aluminum for new materials, aluminum for transportation, and aluminum for lightweight automobiles. Product optimization enhances performance space.
Investment advice: As a leading enterprise in product diversification and recycled aluminum upgrading applications in the domestic aluminum plate and strip processing industry, the company has clear advantages ahead of the industry in terms of cost control and risk management. The company's output in '23 was affected by sluggish downstream demand, so production expectations for '24 were carefully adjusted. In the future, as downstream consumption gradually recovers, we believe that the company's profitability is expected to pick up further. We expect that in 2024-2026, the company will achieve net profit of 1,535, 18.14, and 2,042 billion yuan, an increase of 13.9%/18.2%/12.6% year-on-year, corresponding PE of 10.3/8.7/7.8 times, respectively, maintaining a “buy” rating.
Risk warning: risk of fluctuating raw material prices; risk of worsening market competition; risk of falling short of expectations for high value-added products.