Net profit to mother in '23 was -15.7% year-on-year. The “buy” rating company achieved revenue of 26.44 billion yuan (yoy -4.8%) in '23 and net profit of 1.35 billion yuan (yoy-15.7%). Considering the impact of a slight reduction in processing fees and the company's equity incentive costs, we expect the company's net profit to be worth $1,423/17.39/$2,074 billion for 24-26, respectively (previous value 1,718/19.87 billion yuan). Comparatively, the average PE (2024E) value of the company was 10.5X. Considering the company's relegation of recycled aluminum, the company was given 12.0xPE in 24, corresponding to a target price of 13.68 yuan (previous value of 13.78 yuan), maintaining a “buy” rating.
Sales volume of aluminum sheet and foil in '23 was +5.98%, and the comprehensive gross margin was -0.3 pct YoY. According to the company's annual report, in '23, the company achieved sales of 1.055 million tons (yoy +5.1%) and aluminum foil sales volume of 229,400 tons (yoy +10.0%). We estimate that the gross profit per ton of aluminum strip is 1,713 yuan/ton (yoy-379 yuan/ton), the gross profit margin per ton of aluminum foil is 2,543 yuan/ton (yoy-451 yuan/ton), and the gross profit margin of comprehensive sales is 9.46% (yoy-0.3pct). Affected by the industry's supply and demand pattern, etc., the gross margin still declined slightly. The cost rate for the 23-year period of the company was 5.13% (yoy+0.88pct), with sales expenses +22.4% year-on-year, mainly due to the company's increased market development, an increase in salary, and an increase in insured property insurance. Net profit margin of 5.10% (yoy-0.81pct). In addition, in '23, the company plans to pay a cash dividend of 0.13 yuan per share, with a cash dividend rate of 12%.
24Q1 aluminum sheet foil sales volume +16% year over year. According to the company's operating announcement, 24Q1 achieved sales volume of 343,900 tons of aluminum sheet and foil (yoy +15.8%, qoq +2.4%), gross profit per unit of about 2306 yuan/ton (yoy-251 yuan/ton), and a comprehensive sales gross margin of 11.04% (yoy-1.42pct). With the commissioning of the Yirui New Materials Project, the company's production capacity was released one after another, and production and sales continued to grow well. The 24Q1 company's cost ratio was 6.52% (yoy-0.33pct), of which the R&D cost rate increased. Looking ahead to 2023, domestic demand is expected to continue to recover. According to SMM, the average operating rate of leading aluminum plate companies in the week ending April 26 was about 77%. The domestic “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-in” is expected to further boost demand for aluminum in the home appliance, automobile and other industries.
A leader in the reclassification of recycled aluminum, Yirui New Materials put into operation to help the NEV Product Structure Optimization Company lay out the renewable resources industry chain earlier. It now has an annual production capacity of 1 million tons of scrap aluminum, 120,000 tons of comprehensive utilization of aluminum slag, and advanced machinery, equipment and leading process technology. The EU carbon border adjustment mechanism began trial operation in October 2023, and the company's low carbon advantage is expected to gradually become prominent in the future.
In addition, in the Jianyirui New Materials Project, the company added 700,000 tons of new green aluminum alloy material production capacity, and plans to produce 250,000 tons of new energy battery materials per year. The commissioning of the new production line will help optimize the company's product structure, upgrade to high value-added fields such as new energy and automobile weight reduction, and achieve the target of 1 million tons of aluminum sheet and foil production and 1.4 million tons of recycled aluminum as soon as possible.
Risk warning: raw material prices fluctuate, capacity expansion progress falls short of expectations, downstream demand falls short of expectations.