2024H1's net profit to mother increased 103% year over year. 2024H1 achieved revenue of 13.78 billion yuan (-6.8%), net profit to mother of 2.07 billion yuan (+103.4%), net profit of 1.96 billion yuan (+168.4%) after deducting non-attributable net profit of 1.96 billion yuan (+168.4%), and net operating cash flow of 2.23 billion yuan (+195%). The company's profit growth was mainly due to rising aluminum prices. The price of 2024H1 aluminum was 1,800 yuan/ton, up 1,300 yuan/ton from the same period last year; the price of 2024H1 alumina was 3,500 yuan/ton, up 600 yuan/ton from the same period last year. The company was 100% self-sufficient in aluminum, and the smelting profit was not squeezed out by the price increase of aluminum oxide; the price of 2024H1 pre-baked anodes was 4,500 yuan/ton, down 1,500 yuan/ton from the same period last year, which could reduce the cost of a ton of aluminum by more than 600 yuan. If we look at alumina and electrolytic aluminum separately, Tiangui Aluminum, the operating entity of alumina, had a net profit of 0.55 billion yuan in the first half of this year, compared to only 0.5 million yuan in the same period last year. In addition, at the end of 2023, Tianlu Co., Ltd., a wholly-owned subsidiary of the company, was awarded the “National High-tech Enterprise” and paid corporate income tax at a 15% tax rate. In addition, it can also enjoy the value-added tax credit policy for advanced manufacturing enterprises, which contributed positively to the company's performance during the reporting period.

Main product output: 2024H1 produces 0.5854 million tons of electrolytic aluminum, produces 1.093 million tons of alumina, produces 6.6 billion degrees of electricity, produces 0.269 million tons of pre-baked anode, produces 0.016 million tons of high-purity aluminum, and produces 6,000 tons of aluminum foil. Production and sales of major products were stable, with little change compared to the same period last year.

The company will continue to consolidate the upstream resource side, including developing Indonesian bauxite projects and Guinea bauxite projects, to target high-quality and low-cost overseas bauxite resources to withstand the risk of future long-term increases in bauxite prices. At the same time, supporting local bauxite resources in Guangxi are also being explored for mining. After the layout is completed, the company's annual bauxite output can reach 7 million tons, which fully meets the raw material requirements of the company's 2.5 million tons of alumina production capacity.

Risk warning: Risk of falling aluminum prices, risk of overseas project progress falling short of expectations.

Investment advice: Raise the profit forecast and maintain the “better than the market” rating. Assuming 2024-2026 the spot price of aluminum is 19,500 yuan/ton, the price of alumina is 3,700 yuan/ton (previous value: 3,300 yuan/ton), the price of pre-baked anode is 4,000 yuan/ton (previous value: 4,500 yuan/ton). The estimated revenue for 2024-2026 is 39.2/39.4 billion yuan, with a year-on-year growth rate of 35.0/0.2/ 0.5%, net profit to mother 4.067/4.211/4.438 billion yuan (previous value 3.252/3.47/3.764 billion yuan), year-on-year growth rate of 84.4/3.6/ 5.4%; diluted EPS was 0.87/0.91/0.95 yuan, respectively, and PE corresponding to the current stock price was 7.8/7.5/7.1x, respectively. The company has made positive changes in reducing bauxite procurement costs, logistics costs and taxes this year. The entire industry chain layout will fully enjoy the benefits of rising aluminum prices. Furthermore, it will promote the integrated development strategy of overseas industrial chains, open up room for long-term growth for the company, and maintain a “superior to the market” rating.