Incident: The company released a performance forecast. In the first three quarters of 2024, it achieved net profit of 3.8-3.85 billion yuan, a year-on-year increase of 51.70%-53.69%; after deduction, it was 3.65-3.7 billion yuan, an increase of 47.51%-49.53% year-on-year.

Increased capacity utilization and increased marketing efforts, and 2024Q3 performance continued to grow at a high rate. According to the company's announcement, Q3 2024 achieved net profit of 1.28-1.33 billion yuan, a year-on-year increase of 29.29%-34.34%; after deduction, it was 1.26-1.31 billion yuan, up 28.08%-33.17% year on year. The main sources of growth were: 1) The company accelerated the resumption of production of electrolytic aluminum production capacity, greatly increased the utilization rate of electrolytic aluminum production capacity, and achieved full production in the third quarter; 2) The company carried out all aspects of benchmarking and cost reduction and efficiency, and continued to increase marketing efforts. Production and sales increased significantly compared to the same period. The mid-term dividend ratio exceeded expectations. The company announced the mid-term profit distribution plan, with 2.3 yuan (tax included) for every 10 shares, with a dividend ratio of 31.67%; the company's dividend ratios for the full year of 2021-2023 are 12%, 12%, and 20% respectively. We expect the company's dividend ratio to exceed expectations for the whole year.

Company α: Strong quantitative increase certainty (elasticity) +report quality improvement (dividends) +green power resource advantage. The market believes that the company is a beta type. Following the rise and fall of aluminum prices, we believe that the company has strong alpha: aggressive, the price of electrolytic aluminum rises and falls easily, the company has strong certainty in volume growth and sufficient performance flexibility; it can be maintained, balance sheet repair+report quality improvement, and shareholder returns can be expected to be increased. 1) The electrolytic aluminum industry is highly concentrated, and future volume increases are mainly due to mergers and acquisitions; under the circumstances where the entire industry's output is relatively rigid, the company's 2024 electrolytic aluminum production target will increase by 12.52% compared to 2023. The performance is flexible enough, and the increase is invaluable.

2) In 2018-2023, the company's balance sheet was repaired, and the report quality was significantly improved, and its profitability was significantly improved, and it has the ability to increase dividend ratios and shareholder returns; at the same time, central enterprises include market value management assessment targets in the performance evaluation index system. We expect the company to strengthen shareholder returns and increase dividend ratios worth looking forward to; 3) Under the dual carbon target, green aluminum is an inevitable trend and direction for the development of the electrolytic aluminum industry. Relying on the advantages of Yunnan Province's rich green power resources, the brand and economic value will be further enhanced.

Profit forecast: In 2024-2026, we expect the company's EPS to be 1.40, 1.52, and 1.64 yuan, respectively, and PE will be 11, 10, and 9 times, respectively, maintaining a “buy” rating.

Risk warning: Downstream demand and projects under construction fall short of expectations, disturbances in raw materials, deterioration of the competitive landscape, etc.