Event: The company released its 2023 annual report and 2024 quarterly report. The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 23.365 billion yuan, a year-on-year increase of 9.33%, net profit to mother of 606 million yuan, an increase of 22.98% over the previous year, and net profit after deducting non-return to mother of 518 million yuan, an increase of 30.79% over the previous year. Looking at a single quarter, Q4 achieved revenue of 6.238 billion yuan, up 15.7% year on year, down 0.05% month on month; net profit to mother was 191 million yuan, up 105.53% year on year, up 15.67% month on month, and performance increased steadily.
With 2024Q1, the company achieved revenue of 5.967 billion yuan, up 16.49% year on year, down 4.34% from 23Q4, achieved net profit due to mother of 274 million yuan, up 132.47% year on year and 43.39% month on month; realized net profit deducted from non-return mother of 263 million yuan, up 220.78% year on year and 76.13% month on month.
Strong margins drove growth in performance, and cast aluminum alloy and aluminum alloy wheels contributed increased. The sales volume and profitability of the company's three major business segments increased steadily. Volume: In 2023, the sales volume of the company's three major business segments, aluminum alloy castings, aluminum alloy wheels, and intermediate alloys was 903,500 tons/21.2 million units/76,000 tons respectively, up 10.2%/21.3%/2.3% year-on-year respectively. Benefits:
From a gross profit perspective, in 2023, the gross profit per unit of cast aluminum alloy was 768 yuan/ton, an increase of 8.4%; the gross profit per unit of aluminum alloy wheels was 67 yuan/unit, up 3.8% year on year, and the gross profit per unit of intermediate alloy was 3,186 yuan/ton, down 1.5% year on year.
From a net profit perspective, according to estimates, net profit per unit of cast aluminum alloy was 170 yuan/ton, up 44.61% year on year; net profit per unit of aluminum alloy wheels was 15 yuan/unit, up 2.80% year on year; net profit from intermediate alloy unit was 167 yuan/ton, down 0.86% year on year.
Expenses have increased, and cash flow has improved markedly. In 2023, the company's sales, management and financial expenses were $325/59,212 million, up 36.06%, 16.03%, and 32.38% year-on-year respectively. The management expenses ratio and sales expense ratio are also on the rise. Among them, sales expenses were mainly due to increased sales volume and increased commissions and storage expenses. Management expenses were mainly due to an increase in the number of personnel and an increase in employee remuneration. The 24Q1 company's sales and management expenses were 0.79/ 131 million yuan respectively, up +16.20%/+1.31% year on year; they changed -17.9%/-16.2% respectively from 23Q4, which has decreased significantly from month to month, and the overall cost ratio is on a downward trend. At the same time, the company's cash flow improved significantly. Due to the increase in sales volume and the increase in operating payables, the company's cash flow improved year by year. The net operating cash flow in 2023 was 961 million yuan, and the company's monetary capital increased to 2,887 million yuan.
Future highlights: Production capacity continues to expand, high-end products continue to break through, and future growth can be expected. The company's business in all three segments is in the production capacity expansion stage. Intermediate alloys promote high-end products such as aerospace-grade special intermediate alloys and high-entropy alloy materials, and are expected to restart the growth stage; leading casting aluminum alloy technology, heat-free alloys and other materials are expected to enter the release stage; the resonance of aluminum alloy wheels at home and abroad will fully benefit the development of the NEV industry. In 2023, the company sold 404 million new energy aluminum alloy wheels, an increase of 331.15% over the previous year. A number of designated projects have been announced, and it is expected that the Mexican factory will further consolidate its international competitiveness after production is put into operation.
Investment advice: As a leading enterprise in aluminum alloy materials, the company's production capacity is in a continuous expansion stage. The business in the three major sectors continues to grow, and the scale of production and sales is expected to continue to grow. We expect that in 2024-2026, the company will achieve net profit of 881/1,075/1,329 million yuan. PE corresponding to the closing price on April 29, 2024 will be 15/12/9 times, respectively, covered for the first time, and given a “recommended” rating.
Risk warning: Risk of production capacity release falling short of expectations, increased risk of competition, risk of fluctuations in raw material prices, risk of exchange rate fluctuations, etc.