Incident: The company released its 2024 semi-annual report, and 2024H1 achieved operating income of 38.733 billion, yoy +9.94%; realized net profit of 0.578 billion yuan, yoy +13.87%.
Comment: Steady growth in performance, with profiles and aluminum cables driving steady growth in the company's performance. 2024H1 achieved operating income of 38.733 billion, yoy +9.94%; realized net profit of 0.578 billion yuan, yoy +13.87%. Corresponding to the Q2 quarter, the company achieved revenue of 21 billion yuan, yoy +11.85%, qoq +17.86%, realized net profit of 0.297 billion, yoy +22.5%, qoq +5.29%, realized net profit without deduction of 0.284 billion yuan, yoy +18.5%, and qoq +3.8%. By product, 2024H1 achieved revenue of 234/78/53/1.6/0.06/0.6 billion yuan, yoy -1%/+60%/+8%/+22%/-24%/+40%; gross profit of 7.29/2.63/2.45/2.35/ (0.33) /0.015 billion yuan, respectively; 24H1 production reached 2.4408 million tons, yoy +5.40%, profile /Aluminum rod cable/rod/strip foil production was 6.24/0.4541/1.6305/0.2938 million tons, respectively.
Continue to be optimistic about aluminum alloy faucets to optimize the business structure and increase the proportion of high-value-added products: 1) Consumer electronics profiles: cooperating with Foxconn, Lixun, BYD Electronics, Lansi, and Jepp, as Apple's core aluminum alloy supplier, which is expected to benefit from the increased penetration rate of aluminum structural parts driven by end-side AI; 2) Lightweight automotive profiles: the company's products are mainly used in anti-collision beams, threshold beams, battery packs, heat exchange system parts and body suspension system parts, etc. The company has now entered several domestic and foreign automobile and power battery brand supplier sequences; 3) Aluminum rod and cable: 2024H1 electricity The grid project completed an investment of 254 billion yuan, yoy +23.7%. The power infrastructure renewal led to an increase in demand for aluminum pole cables. In 2023, the company's domestic market share for aluminum wire was 14.72% (top three). The aluminum pole cable business is expected to fully benefit from the rapid growth in power grid construction.
The company is Apple's supplier of aluminum alloy materials and is expected to fully benefit from the new consumer electronics hardware innovation cycle led by Apple AI. Aluminum alloy materials are widely used in consumer electronic structural components. Aluminum alloy has excellent heat dissipation performance, and is also less difficult to process and material cost compared to titanium alloys. In the consumer electronics hardware innovation cycle led by Apple AI, end-side AI will continue to enhance the cooling performance requirements of mobile phones. The use of aluminum alloy structural parts is expected to increase, and the company is expected to fully benefit Apple's core aluminum alloy suppliers.
The weight reduction of automobiles has led to an increase in the use of aluminum alloy bicycles, and the company actively lays out the lightweight automobile profile business, which is expected to accelerate growth. The weight reduction of automobiles and the increase in the penetration rate of new energy vehicles are expected to increase the amount of aluminum alloy used in bicycles. The “Energy-saving and New Energy Vehicle Vehicle Technical Route Map 2.0” predicts that the amount of aluminum used in bicycles will reach 250 kg/vehicle and 350 kg/vehicle by 2025 and 2030, respectively. The company has successfully become a partner of many well-known automobile brands and leading Tier 1 suppliers at home and abroad in the field of automobile lightweighting, including BYD, Ningde Era, Xiaomi, Ideal, Mercedes-Benz, BMW, Audi, etc., which is expected to benefit from the trend of automobile weight reduction.
It is deeply involved in Apple's closed loop recycling technology for recycled aluminum, and the continuous improvement of recycled aluminum processing capacity is expected to further increase profits. Apple continues to promote the application of recycled aluminum and continues to use 100% recycled aluminum in the fuselage of various Apple products. The company has had in-depth cooperation with Apple in recycled aluminum for 17 years. With the comprehensive solution of “alloy formulation suggestion+first-class alloy process+closed circuit recycling of aluminum”, it has become the backbone of Apple's establishment of an aluminum closed-loop supply chain. In 2023, the company comprehensively recycled 1.0139 million tons of recycled aluminum, which is the leading level in the industry. It is expected that the construction of 14 intelligent imported recycled aluminum recycling production lines will be completed within 2024, and will have an annual production capacity of 2.05 million tons of recycled aluminum. Increased use of recycled aluminum is expected to further increase profits. The company signed a strategic cooperation agreement with Fulian Industrial, the core supplier of Apple's mid-frame, to carry out strategic in-depth and comprehensive cooperation in 3C consumer electronics profiles, waste aluminum recycling, etc., and deep ties with downstream structural component manufacturers are expected to enhance competitiveness in the recycling process.
Investment advice: The company's revenue for 24/25/26 is expected to be 87/97.35/107.5 billion yuan, and the company's net profit for 24/25/26 is expected to be 1.4/2/2.6 billion. Maintaining a “buy” rating Risk warning: downstream demand falls short of expectations, production expansion falls short of expectations, consumer electronics ID innovation uncertainty, and vehicle weight reduction falls short of expectations