Performance summary: The company achieved operating income of 6.821 billion yuan in 2023, an increase of 61.59% over the previous year; realized net profit of 302 million yuan to mother, an increase of 60.80% over the previous year. 2024Q1 achieved operating income of 1,768 billion yuan, a year-on-year increase of 42.10%; net profit to mother was 41 million yuan, an increase of 56.72% over the previous year.
Photovoltaic aluminum frame shipments have maintained high growth, and profitability has improved. Benefiting from the rapid development of the new energy photovoltaic industry and the release of production capacity in the company's fund-raising projects, the production and sales of new energy photovoltaic aluminum profiles and aluminum components continued to grow, and revenue increased. In 2023, the new energy photovoltaic industry achieved revenue of 5.856 billion yuan, an increase of 74.03%; the automotive lightweight business achieved revenue of 90 million yuan, an increase of 64.73% year on year; and other aluminum products achieved revenue of 875 million yuan, an increase of 9.14% year on year. The total sales volume of the company's aluminum products was 306 million tons, an increase of 70.54% over the previous year. Production of photovoltaic aluminum frames remained at full capacity throughout the year, with a gross profit margin of 12.44%, an increase of 1.57pp over the previous year. The first phase of the 50,000-ton automobile lightweight business project was put into operation in 2023. The cost is still high during the climbing period, and the gross margin is only 2.18%. Profitability is expected to increase as the automotive lightweight business completes the climb and full production. Other aluminum products are mainly construction and industrial aluminum products, which are mainly dragged down by real estate. The gross profit margin was 19.34%, a year-on-year decrease of 2.01 pp.
2024Q1's gross margin is expected to decline due to rising aluminum ingot prices and fluctuations in capacity utilization. In 2024Q1, the company achieved revenue of 1,768 billion yuan, a year-on-year increase of 42.10% and a year-on-month decrease of 16.14%. The company's consolidated gross profit margin for the 2024Q1 quarter was 9.26%, down 2.56pp year on year. Downstream component factories are on holiday during the Spring Festival, and the company's capacity utilization rate is affected to a certain extent. In addition, the automobile lightweight business is still climbing, which has had a great impact on gross margin. Furthermore, since this year, the price of aluminum ingots has risen. The company mainly uses a cost plus pricing method for aluminum products, which is expected to have a certain impact on gross margin.
Upstream layout of recycled aluminum projects helps the company reduce costs and increase efficiency. The 100,000 ton recycled aluminum project built by the company with its own funds was successfully put into operation in 2023. Non-public fund-raising project — the 600,000 tons/year recycled aluminum project will be implemented in three phases. The first phase of 200,000 tons of production capacity will be put into operation this year. The company's recycled aluminum is expected to contribute 200,000 to 250,000 tons of production in 2024. The company uses self-produced and outsourced scrap aluminum for industrial production of recycled aluminum. While extending the upstream industry chain and recycling its own scrap aluminum, the company fully guarantees the supply quality and efficiency of the company's raw materials, and pushes the company to achieve autonomous control of raw materials. The estimated cost can be reduced by 400 to 500 yuan/ton, helping the company reduce costs and increase efficiency and enhance profitability.
Profit forecasting and investment advice. Since the company went public, the production capacity of photovoltaic aluminum frames has continued to increase, benefiting from increased shipments and maintained high performance growth. In 2024, the NEV aluminum parts project will be released after customer certification and introduction, and will become the company's second growth curve. The upstream layout of recycled aluminum projects will further reduce costs and increase efficiency and increase profitability. The layout of aluminum frame production capacity in Southeast Asia is expected to contribute to excessive profits. The company's net profit from 2024 to 2026 is estimated to be 4.53, 6.74, and 854 million yuan, respectively, and the corresponding PE is 11.0, 7.4, and 5.8 times, respectively.
Referring to comparable companies in the same industry, the valuation was 15 times over 24 years, and the target price was 38.10 yuan, maintaining the “buy” rating.
Risk warning: Risks such as the rapid rise in the price of aluminum ingots, the replacement of aluminum frames by other products, and the progress of new production capacity being lower than expected.