Incidents:
The company released its 2023 annual report. In 2023, the company achieved operating income of 28.844 billion yuan, -17.47%; net profit to mother of 3.474 billion yuan, -1.18% year-on-year; net profit after deducting non-return to mother of 2,715 billion yuan, -29.03% year-on-year. Among them, net profit for the fourth quarter of 2023 was 100 million yuan of 1,332 billion yuan, +99.76% year-on-year, +60.7% month-on-month, and net profit after deducting non-return to mother was 639 million yuan, -37.61% year-on-year, and -19.8% month-on-month.
The increase in the share of high-end products and the amount of alumina released in Indonesia hedged the decline in aluminum prices and production, and sales of electrolytic aluminum increased Q4 non-recurring profits and losses.
In 2023, the company publicly transferred a total of 336,000 tons of electrolytic aluminum production capacity, with a total transaction price of about 2,229 million yuan, of which the company's illiquid asset disposal profit and loss in 2023 was 755 million yuan.
Price: According to Tonghuashun, the closing price of SHFE aluminum in 2023 was 18624.9 yuan/ton, -6.5% (or -1289 yuan/ton), the average price of alumina was 2900.6 yuan/ton, -1.5% (or -42.9 yuan/ton); the average price of Q4 SHFE aluminum in 2023 was 18981 yuan/ton, +198.5 yuan/ton, year-on-year +225.7 yuan/ton. The average price of alumina was 2,958 yuan/ton, year-on-year +181.3 yuan/ton, +99.8 yuan/ton.
Volume: Alumina powder production was 3.52 million tons in '23, an increase of 19.73% over the previous year, mainly contributing to the overall production increase of 2 million tons of alumina in Indonesia during the reporting period. The production of electrolytic aluminum was 6771,000 tons, a year-on-year decline of 17.8%. High-end product sales accounted for about 14% of the company's total sales of aluminum products, an increase of more than 1 percentage point over the same period last year; the gross profit of high-end products accounted for about 30% of the company's total gross profit of aluminum products, an increase of nearly 9 percentage points over the same period last year.
With high dividends and simultaneous repurchases, the company actively improves shareholder returns, demonstrating confidence in long-term development.
According to the company's announcement, the listed company plans to distribute a cash dividend of 1.20 yuan (tax included) to all shareholders for every 10 shares, and the company's annual cash dividend ratio is 40.44%.
Previously, the company announced plans to repurchase shares and cancel them every year from 2024 to 2026 with no less than 300 million yuan of its own capital. As of February 29, 2024, the company had repurchased a total of 13.914 million shares through centralized bidding transactions, accounting for about 0.119% of the company's total share capital, and paid a total capital of 39.85 million yuan (excluding transaction fees).
According to the company's announcement, on February 4, 2024, the company received the “Letter of Commitment not to reduce the Company's shares during a specific period” issued by the holding stock Dongnanshan Group, promising not to reduce its holdings of the company's shares through the secondary market or bulk transactions for 6 months from February 4, 2024.
The third phase of automobile panels is progressing steadily, increasing the proportion of high-end products driving gross profit margins, and the layout of Indonesian electrolytic aluminum guarantees aluminum raw materials. The company currently has a production capacity of 200,000 tons of automobile panels, and the third phase of the 200,000 ton automobile board project is being stepped up. In April 2023, the company announced that it plans to invest in the construction of a project with an annual output of 250,000 tons of electrolytic aluminum and 260,000 tons of carbon in Bintan Industrial Park in Indonesia. The electrolytic aluminum factory area is expected to be completed in July 2026, and the carbon factory area is expected to be completed in April 2026. Early land preparation and key technical discussions are currently underway.
Investment advice:
We expect revenue for 2024-2026 to be 267.82, 294.04, and 32.050 billion yuan, respectively, and net profit of 37.43, 38.98, and 4.130 billion yuan, corresponding EPS is 0.32, 0.33, and 0.35 yuan/share, respectively. Currently, the corresponding PE price is 9.8, 9.4, and 8.8 times. Maintain a “buy-A” rating, and maintain a 6-month target price of 4.5 yuan/share.
Risk warning: aluminum prices fluctuate greatly, overseas business risks, terminal demand falls short of expectations, etc.