Event: The company released its 2023 annual report and 2024 quarterly report. The company achieved revenue of 26.4 billion yuan for the full year of 2023, -4.82% year-on-year, achieved net profit of 1.35 billion yuan, -15.71% year-on-year, achieved net profit deducted from mother of 1.05 billion yuan, -16.31% year-on-year, gross sales margin of 9.46%, and net profit margin of 5.10%, all slightly lower than in 2022.
The company achieved revenue of 7.19 billion yuan in a single quarter in 2024Q1, +2.85% month-on-month, +17.92% year-on-year, and achieved net profit of 360 million yuan, +93.86% month-on-month and +2.35% year-on-year, all of which improved from month to month. The company plans to distribute a cash dividend of RMB 162 million (tax included), with a dividend payment rate of 12%.
Prices have declined, and profits for aluminum sheet and foil have declined in 2023. In terms of output, in 2023, the company produced 1.015,700 tons of aluminum sheets and strips, an increase of 6.70% over the previous year, and produced 228,700 tons of aluminum foil, an increase of 8.65% over the previous year. The new green aluminum alloy material project with an annual output of 700,000 tons of new green aluminum alloy materials completed the construction of 1+4 hot rolling finishing mills and 1850 cold rolling mills. In terms of price, in 2023, the company achieved revenue of 19.07 billion yuan, operating costs of 18.25 billion yuan, and gross profit of 1.72 billion yuan, a year-on-year decrease of 14.0%. We calculated that the average sales price of aluminum sheet and foil was 19858 yuan/ton, down 11.2% from 22,333 yuan/ton in 2022; the unit gross profit was 1,713 yuan/ton, down 18.1% from 2,092 yuan/ton in 2022. In 2023, the company's aluminum foil achieved revenue of 4.89 billion yuan, operating costs of 4.30 billion yuan, and gross profit of 580 million yuan, a year-on-year decrease of 6.6%. We calculate the average sales price of aluminum foil at 21,297 yuan/ton, down 8.2% from 23,211 yuan/ton in 2022; the unit gross profit is 2,543 yuan/ton, down 15.1% from 2,995 yuan/ton in 2022.
2024Q1 production and sales have grown, processing fees are at the bottom, and profits are or entering improvement channels. According to the company's business report, from January to January 2023, it achieved cumulative sales of 339,900 tons of aluminum sheet and foil, an increase of 16.0% over the previous year, and achieved sales of 0.41 million tons of aluminum profiles, an increase of 5.1% over the previous year. The average processing fee for the 2024Q1 quarterly 1060 embossing board (Henan) was 650 yuan/ton, a sharp decrease of 43.5% from the previous year, which was the same; the average processing fee for the 2024Q1 8011 food foil blank (Henan) for the quarter was 700 yuan/ton, a sharp drop of 48.1% year on year, and remained flat from month to month. The company's product sales adopt the pricing principle of “aluminum ingot price+processing fee”. Profits mainly come from processing fees. 2024Q1 compensates with volume, and performance improved year-on-month.
Profit forecast. Based on processing costs and the company's long-term production and sales targets, we expect the company's revenue for 2024-2026 to be 339/383/38.5 billion yuan, respectively, with net profit of 14.7/16.5/1.67 billion yuan, corresponding EPS of 1.18//1.32/1.34 yuan, and the PE corresponding to the closing price on April 26, 2024 being 10.80x/9.63x/9.52x, respectively, to maintain a “buy” rating.
Risk warning: Projects under construction have fallen short of expectations; downstream demand has fallen short of expectations; aluminum processing costs have dropped dramatically.