Incident: The company recently released its 2023 annual report and 2024 quarterly report. It achieved annual revenue of 26.44 billion yuan, -4.82% year over year; net profit to mother of 1.35 billion yuan, -15.7% year over year. 24Q1 achieved revenue of 7.19 billion yuan, +17.92% year-on-year; realized net profit of 360 million yuan, +2.4% year-on-year. Revenue +2.8% month-on-month, net profit to mother +93.9%.
Sales of aluminum sheet and foil increased by 6% in '23, and maintained a market share of 9.8%. In '23, the company's sales volume of aluminum sheet and foil reached 1,235,000 tons, +6.0% year-on-year, and the market share of the industry was 9.8%. The sales volume of aluminum sheet and foil reached 340,000 tons in 24Q1, and the monthly sales volume in March was about 127,000 tons. Downstream demand may have picked up.
Net profit per ton returned to mother in 24Q1 was 1,052 yuan/ton, a significant increase over the previous month. Net profit per ton in Q1, Q2, Q3, and Q4 in '23 was 1191, 1466, 1108, and 578 yuan/ton, respectively. Net profit per ton in Q1 in '24 was 1,052 yuan/ton, -12% year-on-year and +82% month-on-month. Profitability improved markedly.
The target ratio of recycled aluminum was raised to 70%, and it won the “ESG Pioneer of the Year Award”. In the context of dual carbon, recycled aluminum has become a global encouragement for development. Currently, the company has an annual production capacity of over 1 million tons of recycled aluminum, the future target is 1.4 million tons, and the proportion of recycled aluminum used has increased to 70%. As the self-sufficiency rate continues to rise, it is expected that raw material costs will be further reduced, and at the same time, it is expected that overseas and in the new energy sector will enjoy premiums in the future.
Accelerate new YiRui projects and promote product innovation. The new Yirui New Materials project continues to advance. At the same time, the company has completed the certification of products such as water-cooled plates, automobile panels, energy storage materials, and new energy materials, expanded sales of products such as power battery cases and water-cooled panels, and continuously improved market competitiveness through product innovation.
Considering that macroeconomic demand falls short of expectations, we lowered the company's aluminum sheet and foil sales volume and gross margin assumptions, and raised the sales expense ratio assumption. The company's 2024-2026 EPS is expected to be 1.21, 1.36, and 1.44 yuan/share (previously 2.02 and 2.51 yuan/share in 24-25). According to the comparable company's 2024 14X PE valuation, the purchase rating is maintained, and the target price is 16.94 yuan.
Risk warning
There is a risk that the progress of fund-raising projects falls short of expectations, risk of product upgrades falling short of expectations, macroeconomic growth is slowing down, and the risk of repeated global pandemics.