Cost stabilization+the aluminum industry is booming. In addition to enjoying the increased profits brought about by the high boom in the aluminum industry, Yangfan Sailing Company is a well-deserved electrolytic aluminum leader. At the same time, the upward layout of raw materials reduces risk exposure, lays out aluminum processing and weight reduction to increase the added value of products, and the strategic plan is clear. Furthermore, the company's biggest risk exposure pre-baked anode and coal prices operate at a low level. Compared with its peers, the company can also enjoy the increased profit margin brought about by the decline in raw material prices. We expect the company to achieve revenue of 1441.0, 1467.4, and 149.05 billion yuan in 2024-2026, with year-on-year changes of +5.8%, +1.8%, and +1.6% year-on-year, and net profit attributable to the parent company of 195.3, 195.7, and 19.58 billion yuan, respectively, and +70.4%, +0.2% year-on-year, and EPS of 2.06, 2.07 and 2.07 yuan/share, respectively. PE corresponding to the closing price on June 11, 2024 was 5.8, 5.8, and 5.8 times, respectively, covered for the first time, and gave a “buy” rating.
The integrated layout of the aluminum industry chain was adjusted in line with the dual carbon era. The company established an integrated upstream and downstream industrial chain with electrolytic aluminum as the core, laying out 6.46 million tons/year of electrolytic aluminum production capacity; (1) forward integrated layout: the company participated in SMB to lay out bauxite production capacity in Guinea, and also laid out Australian bauxite procurement channels to support alumina production capacity in Shandong. In addition, the company deployed bauxite-alumina integrated production capacity in Indonesia, with an overall aluminum self-sufficiency rate of over 100%; (2) Backward integrated layout: the company laid out 1.17 million tons of aluminum processing materials in Binzhou, Shandong Endeavour Research and development of lightweight materials to improve overall fluctuation resistance. (3) Industrial support: The company's previous electrolytic aluminum production capacity was concentrated in Shandong, mainly coal and electricity. In order to adapt to the dual-carbon era, the company plans to relocate part of its production capacity to Yunnan, adjust the energy structure, and implement all projects to be relocated. The production capacity of electrolytic aluminum in Yunnan reached 3.96 million tons/year, accounting for 61.3%.
The dividend ratio is ahead of peers, showing the company's medium- to long-term investment value. Since its listing in 2011, the company has achieved a cumulative net profit of RMB 102,562 billion, a dividend rate of 37.4%, and a dividend rate of 9.86% in 2023, leading its peers and outstanding investment value.
Risk warning: (1) Prices of coal and pre-baked anodes fluctuated greatly; (2) aluminum prices and alumina prices fell sharply; (3) Guinea bauxite production and transportation were disrupted by emergencies and were unable to provide stable supply; (4) Electricity levels exceeded expectations during the dry water period in Yunnan.