The company's aluminum profile business mainly covers construction materials and industrial aluminum, actively lays out the field of new energy profiles, and develops full-line growth points: the company's aluminum profiles have continued to increase year by year in the past six years, with sales volume of 91,300 tons, 111,700 tons, and 120,200 tons, with a CAGR of 14.8% from 2021 to 2023. Currently, the company is actively developing the field of new energy vehicles and aluminum parts for photovoltaics, mainly increasing research and development efforts in aluminum profiles related to battery packs and aluminum profiles for air conditioning pipes.
The company adapts to changes in downstream demand to rent and sell, and replace the old version to reduce the production cost of aluminum formwork: in 2023, due to the decline in new real estate construction data, the aluminum formwork market showed a cliff-style decline, and the market is expected to shrink by more than 20%. The company adapts to market demand during the downward phase of the cycle, increases the leasing ratio of aluminum formwork, and increases business revenue; the company focuses on developing the replacement of old boards to achieve half-cycle, which is conducive to guaranteeing the company's production capacity and reducing production costs. In 2023, the company's sales volume was 5.310 million **** meters, of which the leasing business volume was 5.315 million **** meters, fully adapting to the changing needs of the industry for leasing.
The company fully enjoys the geographical advantages of Haixi, based in the Fujian Golden Triangle region: the Fujian Golden Triangle region, where the company is located, is the largest demand market for industrial profiles in Fujian Province. Among them, Quanzhou is one of the main distribution centers for domestic luggage, Nan'an is the “hometown of building materials” in China, Xiamen has the most complete hardware accessories industry chain, and the company is located in the center of the Golden Triangle of southern Fujian. It has unique geographical advantages and market advantages, and can provide personalized products and services to the company's customers.
China's aluminum production is growing steadily, and demand for new energy sources is driving rapid growth in the market segment: in 2023, the country's total output of processed aluminum materials was about 46.95 million tons, an increase of 3.9% over the previous year, and production was rising steadily. Among them, the production of aluminum profiles was 21.8 million tons, an increase of 9% over the previous year. In market segments, NEVs and photovoltaic cells have maintained a good development trend since 2023, with strong growth in output and exports, driving the rapid development of the aluminum processing industry. Among them, PV profile production reached 3.4 million tons in 2023, an increase of 30.8% year on year; NEV profile production reached 980,000 tons, up 30.7% year on year.
We believe that with further support from the policy side and the competitiveness formed by the rapid iteration of new energy vehicles themselves, China's NEV production will further increase 27%/25% year on year from 2024 to 2025; we believe that the current manufacturing capacity of China's entire PV industry chain has the supply capacity to meet the rapid growth in global PV demand. With the further acceleration of the carbon neutrality process, it is expected that the new installed capacity of global PV will reach 487 GW in 2024, an increase of 17% year on year.
Profit forecast and investment rating: We expect the company to achieve revenue of 29.04/30.67/3.30 billion yuan in 2024-2026, with year-on-year growth rates of 2.82%/5.61%/8.57% respectively; net profit attributable to shareholders of the parent company was 0.46/0.57/0.77 billion yuan, respectively, with year-on-year growth rates of 71.99%/22.51%/35.42%, respectively. PE corresponding to 2024-2026 is 63.59/51.91/38.33 times, respectively, higher than the average valuation of comparable companies. Considering that the company's business development is greatly affected by the Chinese real estate cycle, and due to excess production capacity in the aluminum profile market, companies have adopted price-for-volume competitive strategies, and the company is unable to balance profit growth while carrying out business expansion and revenue growth, so for the first time, coverage gave the company a “neutral” rating.
Risk warning: There is a risk that the price of processed aluminum products will fall due to downstream demand falling short of expectations; the risk that the US dollar will continue to strengthen.