The company's net profit to mother fell 16% year over year in 2023. In 2023, we achieved operating income of 26.44 billion yuan (-4.8%), net profit attributable to mother of 1.35 billion yuan (-15.7%), net profit after deducting non-return to mother of 1.05 billion yuan (-16.3%), and net operating cash flow of 670 million yuan. Among them, 2024Q1 revenue was 7.19 billion yuan (+17.9% YoY, +2.8%), net profit attributable to mother was 360 million yuan (+2.3% YoY, +94% month-on-month), and net profit excluding non-return to mother was 270 million yuan (-3.4% YoY, +125% month-on-month).
Mingtai Aluminum's sheet, strip, and foil production and sales reached a record high. In 2023, the company sold 1.25 million tons of aluminum sheet and foil, an increase of 80,000 tons over the same period last year. Since 2024, with the production volume of new materials and the weak recovery of downstream demand, the company's production and sales volume reached a record high. In March 2024, sales volume exceeded 120,000 tons in a single month. In terms of unit profit, in 2023, the company's gross profit of aluminum plate belt was 1,713 yuan/ton, and the gross profit of aluminum foil was 2,543 yuan/ton. Dividing the quarterly net profit from the mother of the quarter by the quarterly foil sales volume, simply estimating the profit per ton of strip foil, 2024Q1 rebounded to 1,065 yuan/ton.
In terms of balance sheet, as of the end of 2024Q1, the company's balance ratio was 24.7%, which is a significant decrease from the level of 33.3% at the end of 2022. Accounts receivable and notes receivable amounted to $4.36 billion, an increase of $1.14 billion over the end of 2022. The main reason was an increase in sales volume and an extension of some customer accounts; inventory was $4.58 billion, an increase of 700 million yuan over the end of 2022. In terms of liabilities, accounts payable and notes payable at the end of 2024Q1 amounted to $3.33 billion, an increase of $700 million over the end of 2022.
In terms of key projects, the new green aluminum alloy material project with an annual output of 700,000 tons of new green aluminum alloy materials completed the construction of 1+4 hot continuous rolling mills and 1850 cold rolling mills, etc., to help the company achieve the goal of producing and selling 2 million tons of aluminum sheet and foil and 1.4 million tons of recycled aluminum as soon as possible.
Risk warning: There is a risk that processing costs will decline and sales will fall short of expectations due to fierce market competition or low demand.
Investment advice: Maintain a “buy” rating.
Referring to domestic and foreign demand and processing costs for strip foil since the beginning of the year, the company's revenue for 2024/2025/2026 is expected to be 313/345/37.8 billion yuan, with a year-on-year growth rate of 18.4/10.3/ 9.3%, and net profit to mother of 14.99/16.5/ 1.15 billion yuan, respectively, a year-on-year growth rate of 11.3/10.2/ 9.9%, EPS 1.21/1.33/1.46 yuan, respectively. The PE multiples corresponding to the current stock price are 11.1/10.1/9.1, respectively. Production capacity in the aluminum sheet and foil industry has expanded a lot in recent years, and processing costs are under pressure. Demand has recovered weakly since this year. Mingtai Aluminum has strong cost control capabilities, and can maintain a high level of profit while guaranteeing sales volume. In recent years, we have built an advantage in relegation and utilization of recycled aluminum. Under the general trend of carbon reduction in aluminum processing products, the advantages are prominent, the market space is broad, and the “buy” rating is maintained.