Incident: The company announced that 2024H1 will achieve net profit attributable to mother of 1 billion yuan to 1.1 billion yuan, an increase of 25% to 37% year over year; net profit without deduction of 0.85 billion yuan to 0.95 billion yuan, an increase of 33% to 48% year over year.

Among them, net profit due to mother is expected to be 0.638 billion yuan to 0.738 billion yuan in 2024Q2, an increase of 42% to 64% year on year; net profit without deduction of 0.583 billion yuan to 0.683 billion yuan, an increase of 60% to 88% year on year.

Production and sales continued to pick up in the first half of the year, and earnings per ton are expected to increase in 24Q2 compared to the same period last year. In terms of production and sales, 2024H1 achieved 0.7153/0.0096 million tons of aluminum sheet, foil/aluminum profile production, +18.02%/+7.87% year over year, and achieved sales volume of 0.7075/0.0081 million tons, or +18.71%/+14.08% year over year. Among them, 2024Q2 achieved an output of 0.3706/0.0048 million tons of aluminum sheets, foil/aluminum profiles, +19.24%/+4.35% year-on-year, and achieved sales of 0.3677/0.004 million tons, or +21.35%/+25.00% year-on-year. The company's 24Q2 sales increased dramatically, mainly due to 1) the steep release of production capacity in Yirui, which led to a simultaneous increase in production and sales of high-value-added products; 2) downstream demand picked up in Q2, and the company's order acquisition situation improved marginally. Looking at the profit situation, the net profit of the company's 23Q1-24Q1 single-ton aluminum processing products (based on sales volume, including aluminum sheet, strip, foil and aluminum profiles) was 1191.3/1466.4/1108.2/555.7/1052.3 yuan/ton, respectively. The 24Q2 calculation is based on the average performance forecast. The net profit for a single ton of aluminum processing products is estimated to be 1851.0 yuan/ton, up 26.2%/75.9% year over month, respectively. 24Q2 saw a sharp rise in single-ton processing profit, or mainly due to 1) the price of aluminum ingots as raw materials for 24M4-5 showed an upward trend, and domestic aluminum prices were lower than overseas aluminum prices, so there was a certain profit for export products; 2) the company's order growth was mainly in the field of high value-added products, and the increase in high-margin orders helped increase the company's profits.

Investment proposal: We expect the company to achieve operating income of 32.17/36.972/41.501 billion yuan and net profit to mother of 1.855/2.189/2.52 billion yuan in 2024-2026. The closing price on July 12 was 8.97/7.60/6.60 times PE, respectively, maintaining the “gain” rating.

Risk warning: risk of macroeconomic fluctuations; increased industry competition; risk of downstream demand fluctuations.