Tianshan Aluminum released its 2024 semi-annual report: the company's revenue for the first half of 2024 was 13.785 billion yuan, -6.83%; net profit to mother was 2.074 billion yuan, +103.45% year over year; net profit to mother after deducting non-recurring profit and loss was 1.961 billion yuan, +168.42% year over year.

Key points of investment

The company's 2024H1 profit increased sharply, mainly due to the rise in the price of electrolytic aluminum and the increase in alumina production, sales, and price

The main reasons for the sharp increase in the company's net profit to mother in the first half of 2024 are: during the reporting period, the average sales price of the company's main product, electrolytic aluminum increased by about 6.7% year on year, and the full cost of electrolytic aluminum was basically the same as the same period last year; the company's alumina sector's operating performance increased by 108073.6% year on year, mainly due to a combination of factors such as a 6.8% year-on-year increase in alumina production, a 4% increase in sales volume, and a 26.1% year-on-year increase in the average sales price of alumina.

On a quarterly basis, the company's profit for the second quarter of 2024 increased significantly compared to the first quarter.

The company's revenue for the second quarter of 2024 was 6.96 billion yuan, -11.36% YoY, +1.97%; net profit to mother was 1.354 billion yuan, +161.47% YoY, +88.06% month-on-month; net profit to mother after deducting non-recurring profit and loss was 1.255 billion yuan, +200.95% YoY and +77.88% YoY.

Production is progressing steadily, and the price of 2024H1 electrolytic aluminum oxide all increased year on year

In terms of production, in the first half of 2024, the company produced 0.5854 million tons of electrolytic aluminum, +1.28%; produced 1.093 million tons of alumina, +6.81%, and produced 0.269 million tons of pre-baked anodes, or -2.57% year-on-year. Continuing the situation in 2023, the production of alumina and pre-baked anodes remains self-sufficient.

In terms of price, the average price of A00 aluminum in the H1 Yangtze River Nonferrous Market in 2024 was 19781 yuan/ton, compared with H1 +6.99% in 2023, and H2 +4.58% in 2024; the average price of H1 alumina in 2024 was 3505 yuan/ton, compared with H1 +12.76% in 2023, and H2 +11.98% in 2023; the average price of pre-baked anodes in July 2024 was 4,488 yuan/ton, compared with H 1-25.12% in 2023.

Actively deploy overseas production capacity and further enhance the advantages of industrial integration. Currently, the company's main overseas investment projects are: Guinea bauxite, Indonesian bauxite, and Indonesian alumina projects. In terms of bauxite, the company completed the share acquisition of a local mining company in Guinea and obtained the exclusive right to purchase its bauxite. The project has a production and transportation capacity of about 6 million tons/year of bauxite. Currently, the project has entered the production and mining stage and is about to be shipped domestically; at the same time, the company has acquired three bauxite mining rights in Indonesia and is currently undergoing detailed exploration. In terms of alumina, the company plans to build a 2 million ton alumina production line in Indonesia. Currently, the project is undergoing EIA and land acquisition.

Profit forecasting

The company's revenue for 2024-2026 is estimated to be 33.07, 35.267, and 38.501 billion yuan, respectively, and net profit to mother is 4.211, 4.774, and 5.257 billion yuan, respectively. The PE corresponding to the current stock price is 7.6, 6.7, and 6.1 times, respectively.

Considering that the prices of electrolytic aluminum and alumina are expected to remain strong, the company's industrial chain integration advantage is high, maintaining the company's “buy” investment rating.

Risk warning

1) Downstream demand for electrolytic aluminum falls short of expectations; 2) the progress of the company's new construction projects falls short of expectations; 3) the risk of major product prices falling sharply; 4) the risk of fluctuations in raw materials and energy prices, etc.