occurrences

On August 26, the company released its 24-year report. 1H24 achieved revenue of 24.648 billion yuan, +39.49% year over year; net profit to mother of 2.519 billion yuan, +66.26% year over year; net profit without return to mother of 2.388 billion yuan, +60.19% year over year. 2Q24 achieved net profit of 1.355 billion yuan, +16.46% month-on-month and +115.01% year-on-year.

reviews

Q2 Volume and price have risen sharply, and the company's performance has increased. The average price of aluminum ingots in the 2Q24 market was 0.0205 million yuan/ton, +7.82% month-on-month, while the average price of alumina during the same period was 3,720 yuan/ton, +9.48% month-on-month. In the second quarter, the company produced 0.7138 million tons of raw aluminum, +12% month-on-month, 0.3092 million tons of aluminum alloy and aluminum processed products, +11% month-on-month, and alumina and carbon production remained flat. Since March, the company's electrolytic aluminum operating capacity has gradually recovered. Production completely resumed in mid-late July, and Q2 raw aluminum production achieved a slight month-on-month increase in production. Against the backdrop of sharp increases in volume and price in the second quarter, the company's performance achieved a slight increase from month to month.

The gross profit of 1H24 processing has improved significantly, and the competitive advantage of the entire green aluminum integrated industry chain has been highlighted. 1H24 achieved a gross profit margin of 15.43% for electrolytic aluminum products, a year-on-year decrease of 2.94 percentage points, and a gross profit margin of 15.61% for aluminum processing products, up 2.1 percentage points from the previous year. The gross margin of aluminum processed products was slightly higher than that of the electrolytic aluminum process. In other words, the situation where the company's aluminum ingot deep processing process dragged down the company's performance in 23 years improved significantly in the first half of this year.

The company is the largest supplier of green low-carbon aluminum in China. It is vigorously promoting the “alloying” strategy, expanding the application of aluminum and upgrading to high-end products, developing and industrializing new products with competitive advantages such as aluminum welding materials, high-precision aluminum, high-end aluminum alloys for IT, new forged aluminum alloys, aviation aluminum alloys, and 3N aluminum ingots, etc., to achieve high-end products.

Supply reforms have boosted the long-term performance stability of the industry, and the valuation system is gradually skewed towards the resource side. The company is focusing on increasing bauxite development efforts in Yunnan Province. Relying on the advantages of its own bauxite resources, Yunlu Wenshan has formed an annual alumina production scale of 1.4 million tons, providing a strong guarantee of bauxite-alumina resources for the development of the company's green aluminum industry. As the production capacity of the electrolytic aluminum industry gradually reaches the red line, the growth rate of domestic production is expected to decline significantly after 25 years, while the demand side benefits from applications in new energy vehicles and photovoltaics, etc., and the supply and demand gap in the electrolytic aluminum sector is gradually widening. It is expected that the profit stability of the industry will be further enhanced, and the valuation system may gradually shift from smelting and processing to upstream resource pricing.

Profit forecasting & investment ratings

The company's revenue for 24-26 is estimated to be 49.2/49.7/50.9 billion yuan, the realized net profit to mother was 4.684/5.015/5.994 billion yuan, and EPS was 1.35/1.45/1.73 yuan, respectively, and the corresponding PE was 8.66/8.08/6.76 times, respectively. Maintain a “buy” rating.

Risk warning

Aluminum prices fluctuated greatly; electricity restrictions limited production; raw material prices rose.