Core views:

24Q2 predicts a 6%-23% increase in net profit to mother, in line with expectations. The company released a performance forecast. In 24Q2, the company expects to achieve net profit of 1.236-1.436 billion yuan, +96%-128% year-on-year and +6%-23% month-on-month. The main reasons for the month-on-month increase in 24Q2 performance are: 1. The company accelerated the resumption of production of electrolytic aluminum production capacity, achieved a significant increase in the capacity load rate of electrolytic aluminum, and increased production and sales of aluminum products sequentially. 2. The month-on-month increase in aluminum prices led to an improvement in the profit of electrolytic aluminum. According to Wind, iFind, 24Q2, the average price of SHFE aluminum rose 8% month-on-month to 20,647 yuan/ton, while the average price of alumina in Guangxi and Southwest China rose 9% and 1%, respectively. It is estimated that the tonne cost of the electrolytic aluminum chain increased by 318 yuan/ton month-on-month, and the gross profit per ton increased 1,274 yuan/ton month-on-month.

The company further optimizes the industrial and energy consumption structure around development directions such as the acquisition of bauxite resources.

According to the investor relations activity record sheet released by the company on May 20, 2024, the company has thoroughly implemented the four special strategies of “strong scientific and technological innovation, strong mineral resources, strong high-end materials, and excellent green, low-carbon, low-cost digital intelligence”, with the development goal of building a world-class aluminum company with global competitiveness, with deepening reforms, innovation-driven, green and low carbon as the fundamental driving force, focusing on the acquisition of bauxite resources, green level improvement, and the development direction of the downstream aluminum-based new materials industry to further optimize the industry and energy use structure. At the same time, the company is increasing its efforts to obtain bauxite resources and actively promoting the acquisition of bauxite resources in Yunnan Province and Southeast Asia.

Profit forecasting and investment advice. The company's 2024-2026 EPS is expected to be 1.54/1.71/1.72 yuan/share. Referring to comparable company valuations, the company will be given 13 times PE in 2024, corresponding to a reasonable value of 19.96 yuan/share, and a “buy” rating.

Risk warning. The macroeconomy fluctuated greatly; aluminum prices fell sharply; electricity supply was scarce in Yunnan, and the company's electrolytic aluminum production fell short of expectations; and costs and prices rose beyond expectations.