Q2 profits fell year-on-year and rebounded sharply from the previous month. In the first half of 2023, the company realized operating income of 14.501 billion yuan, year-on-year-19.04%, net profit of 1.313 billion yuan, year-on-year-28.08%, and non-return net profit of 1.279 billion yuan,-28.9% of the same period last year. Among them, the operating income in the second quarter was 7.666 billion yuan,-15.32% compared with the same period last year, 12.17% compared with the same period last year; the net profit returned to the mother was 794 million yuan,-28.06% from the same period last year, and 53.03% from the previous year; and the net profit after deducting non-return was 769 million yuan,-27.66% from the same period last year, and 50.87% from the previous year.

Continue to optimize the product structure, the proportion of high-end products continues to increase. The company is the first domestic manufacturer to achieve mass production of aluminum plates with four doors and two covers, and now has a production capacity of 200000 tons and 200000 tons under construction. At the same time, the company is the only one to supply mainframe factories such as Boeing Co, Airbus and Comac at the same time. The company focuses on developing high value-added products represented by automobile plate, aviation plate, power battery foil and so on. Sales of high-end products accounted for about 14% of the company's total aluminum sales, an increase of about 1 percentage point over the same period last year, while the gross margin of high-end products accounted for about 29% of the company's total gross margin of aluminum products, an increase of about 8 percentage points over the same period last year. In the future, with the release of the production capacity of high-end products, the profit share of the company's high-end products will further increase.

Transfer the capacity target of 336000 tons of electrolytic aluminum to speed up the layout of capacity in Indonesia. The company continues to optimize the industrial layout, transfer a total of 336000 tons of domestic electrolytic aluminum production capacity in an open way, and eliminate the production capacity with relatively backward cell type and high energy consumption. At the same time, Indonesia is rich in bauxite and coal resources, concentrated resources and energy two major advantages, with the natural advantages of the aluminum industry, the company speeds up the layout of Indonesian production capacity. The company currently has alumina production capacity of 3.4 million tons, including 2 million tons in Indonesia. The company plans to build an annual production capacity of 250000 tons of electrolytic aluminum and 260000 tons of carbon in Indonesia's Bintan Industrial Park, as well as supporting public and auxiliary facilities such as docks, reservoirs and slag yards. The electrolytic aluminum plant area is expected to be completed in July 2026, and the carbon plant area is expected to be completed in April 2026. In addition, the company has planned 1.1 million tons of recycled aluminum project, of which 100000 tons of recycled aluminum project has entered the equipment installation stage.

Investment suggestion: the company continues to plough the aluminum industry chain, optimize the industrial layout, and speed up the construction of electrolytic aluminum production capacity in Indonesia. After the completion of the production capacity of 200000 tons of automobile plate, the company will further consolidate the company's leading position in the domestic automobile plate industry, and enhance the proportion of high value-added products represented by aviation plate and automobile plate. It is estimated that in 2023-24-25, the company's operating income is expected to reach 43.105 million yuan respectively, and the net profit is expected to reach 37.86 billion yuan, 38.65 billion yuan, and 0.33 billion yuan, respectively, corresponding to EPS 0.32, 0.33, 0.40. For the first time, the company was given an "overweight" rating.

Risk hint: the construction progress of the project is not as expected; the demand for aluminum is weak and the processing fee has dropped sharply.