The company performed well in 2024H1, and net profit to mother increased 66.7% year-on-year. In the first half of 2024, the company achieved revenue of 15.667 billion yuan, +8.05% year over year; realized net profit of 2.189 billion yuan, +66.68% year over year; realized net profit after deducting non-return to mother of 2.157 billion yuan, +68.61% year over year. Among them, the second quarter achieved revenue of 8.443 billion yuan in a single quarter, +10.14% year over month; realized net profit of 1.338 billion yuan, +68.45% year over year, and +57.20% month on month; realized net profit without return to mother of 1.326 billion yuan, +72.39% year on year and +59.65% month on month.

The company's volume and price rose sharply in 2024H1. The sharp increase in the company's performance was mainly due to the increase in commodity prices and the year-on-year increase in the production of alumina, one of the main products. The average price of A00 aluminum in the 2024H1 Yangtze River Nonferrous Market was 0.0198 million/ton, up 7.1% year on year; the average price of aluminum oxide FOB in Australia was 393 US dollars/ton, up 12% year on year; the company's alumina in Indonesia was the first full year of production. The output in 2023 was 1.9 million tons Around, production is expected to be around 2.1 million tons this year.

The expense ratio remained stable during the period, and the balance ratio declined steadily. In the first half of 2024, the company's gross margin was 25.23%, up 6.01pp year on year; net margin was 16.76%, up 6.51pp year on year. Sales/management/R&D/finance expense ratios were 0.80%/2.67%/4.61%/-0.37%, respectively, which remained stable compared to 2023. Meanwhile, the company's balance ratio continued to be optimized. As of the end of the second quarter of 2024, it was 19.62%, down 1.87% from the end of 2023.

To strengthen the upstream layout, Indonesia plans 4 million tons of alumina and 1 million tons of electrolytic aluminum. Domestically, the company has eliminated 336,000 tons of high-energy electrolytic aluminum production capacity in Shandong Province starting in 2023, and is expected to obtain asset disposal revenue of about 1.4 billion yuan. Domestic thermal power aluminum will drop from 816,000 tons to 480,000 tons after the target transfer is completed; in addition, the company has 1.4 million tons of alumina production capacity in Shandong, but in previous years, the annual output has basically reached about 1.7 million tons. Overseas, the company began planning the alumina project in Indonesia's Bintan Industrial Park in 2017. The cost advantage is remarkable. Currently, production has reached 2 million tons, and the same production capacity is being prepared; it is also expanding downstream in the same industrial park to build 250,000 tons of electrolytic aluminum production capacity, and plans for 1 million tons of electrolytic aluminum in Indonesia in the long term.

Risk warning: Demand for electrolytic aluminum falls short of expectations, raw material prices rise, and the company's project progress falls short of expectations.

Investment advice: Raise profit forecasts and maintain the “better than the market” rating. The company's 2024-2026 revenue is expected to be 28.308/32.258/36.293 billion yuan, a year-on-year growth rate of -1.86%/13.95%/12.51%; net profit to mother of 4.331/4.421/5.076 billion yuan, a year-on-year growth rate of 24.66%/2.09%/14.81%; diluted EPS is 0.37/0.38/0.43 yuan, and the PE corresponding to the current stock price is 10.0/9.8/8.5x. Considering that the company's expansion of electrolytic aluminum, alumina, and automotive panels is still ongoing, and that the profitability of alumina in Indonesia is clearly superior to that of the domestic market, it maintains a “superior to the market” rating.