Event: the company released its three quarterly reports for 2020. In the first three quarters of 2020, the company's revenue was 3.893 billion yuan, up 11.87% over the same period last year; the net profit returned to the mother was 240 million yuan, up 85.90% from the same period last year; and the non-return net profit was 234 million yuan, an increase of 234.22% over the same period last year. Of this total, Q3's revenue in the single quarter was 1.545 billion yuan, up 22.94% over the same period last year; the net profit returned to the mother was 106 million yuan, up 175.21% from the same period last year; and the non-return net profit was 128 million yuan, an increase of 551.35% over the same period last year.

Performance increased significantly, the volume of electrode foil products. 1) the company's net profit increased by 85.90% in the first three quarters of 2020 compared with the same period last year, mainly due to the gradual commissioning of the ① fund-raising project "High-performance High-pressure corrosion foil Project with an annual output of 15 million square meters", which increased the raw material self-sufficiency rate of this link, and the technology superimposed on the new investment production line was relatively more advanced, the income of electrode foil products increased, the production cost decreased, and the gross profit margin increased significantly. The net profit of Tianchi Energy, a company with a stake in ②, increased significantly, with investment income rising to 113 million yuan from 75 million yuan in the same period last year. The cost decreased during ③. Sales expenses dropped to 81 million yuan from 92 million yuan in the same period last year, while financial expenses decreased to 173 million yuan from 201 million yuan in the same period last year, mainly due to a drop in short-term borrowing from 3.102 billion yuan in the same period last year to 1.622 billion yuan.

The company disclosed the plan for a public offering of securities in 2020, with a proposed rights issue of no more than 1.2 billion yuan. The company's largest shareholder, Special change Electric Co., Ltd. has issued a commitment to subscribe for the allotable shares of this rights issue in full in cash. The funds raised are mainly invested in 1) annual production of 15000 tons of three-layer high purity aluminum purification and supporting processing projects. The project will greatly improve the production efficiency of three-layer high purity aluminum, reduce production costs, and help to consolidate the company's market leading position in the industry. 2) the project with an annual output of 3000 tons of high-strength and high-toughness aluminum alloy large cross-section billet and the annual output of ultra-high purity aluminum-based sputtering target billet. The project will expand the advantages of the company's industrial chain, improve the industrial layout, and further strengthen the strategic position of the company's aluminum-based new materials industry. 3) replenish working capital and repay bank loans. The asset-liability ratio of 2017-2020H1 companies is more than 60%, and the high financial expenses have a great impact on the profitability of the company. By replenishing working capital and repaying bank loans, it will help the company to optimize its capital structure and reduce financial expenses and operating risks.

Profit forecast and investment advice. It is estimated that the return net profit of the company from 2020 to 2022 is 2.9,3.4 and 370 million yuan respectively, and the EPS is 0.28,0.33 and 0.36 yuan respectively. We are optimistic about the company's high-purity aluminum, electrode foil and other areas of application prospects, maintain the "hold" rating.

Risk tips: raw material price fluctuations, new business promotion is not as expected.