\u3000\u3000 Anhui Xinbo Aluminum Co.Ltd(003038) (003038)
The company is a professional aluminum processing enterprise, and the photovoltaic business drives the rapid growth of performance. The company has been deeply engaged in the aluminum processing industry for more than ten years. Starting from the aluminum profile of civil buildings, the company has gradually developed the market of high-end industrial aluminum profile and aluminum parts. In recent years, the company has focused on the photovoltaic aluminum frame industry and successively entered the supply system of head photovoltaic module manufacturers such as Jingke, Jingao and Longji. The photovoltaic business has driven the rapid growth of the company’s performance. From 2017 to 2021, the average annual compound growth rate of the company’s operating revenue and net profit attributable to the parent company was as high as 45.3% / 41.6% respectively.
The market space of photovoltaic aluminum frame is broad, and the market pattern is gradually concentrated. 1) Large industry space: in the era of parity, the photovoltaic industry has entered a long-term growth track, and the overall market scale has increased steadily. Aluminum frame is one of the auxiliary materials with the highest cost proportion in components, which is expected to fully benefit from the rapid growth of photovoltaic installation. We estimate that the global photovoltaic aluminum frame market is expected to exceed 45 billion yuan in 2025, corresponding to an average compound growth rate of nearly 20% from 2021 to 2025. 2) Strong profit certainty: the photovoltaic aluminum frame adopts the pricing mode of “aluminum price + processing fee”, and the profit space is less affected by the price fluctuation of raw materials. Since the second quarter of 2020, the price of aluminum ingots has continued to rise, while the company’s single ton processing fee and profit remain relatively stable. We believe that “increasing volume and stabilizing profit” is the long-term development trend of the industry. 3) The market pattern is better: compared with the main photovoltaic industry chain, the auxiliary material link has less risk of technical subversion, strong heavy capital metallicity, and obvious advantages of head manufacturers. Compared with other auxiliary material links such as glass / adhesive film / backplane, the current photovoltaic aluminum frame market pattern is still relatively scattered. With the rapid improvement of the concentration of downstream components, the “big to big” cooperation mode will gradually become the mainstream, and the photovoltaic aluminum frame market is expected to focus on the head.
The core advantages of the company are prominent, and the listing and fund-raising help the rapid expansion. 1) Production side: the company is one of the few manufacturers with full process production capacity in the industry, with excellent product quality and cost control ability. The capacity utilization rate of the company before listing has been highly saturated. After listing and fund-raising, the company’s capacity has expanded rapidly. We expect that the total capacity in 2023 is expected to be close to 300000 tons, more than three times higher than 70000 tons in 2020. 2) Operation side: thanks to the high working capital turnover efficiency, the company’s roe is at the leading level in the aluminum processing industry. Under the industry mode of focusing on capital, taking the lead in listing will enable the company to have stronger capital strength and more smooth financing channels, so as to better meet the large-scale procurement needs of downstream customers and realize the rapid expansion of business. 3) Client: the quality requirements of photovoltaic aluminum frame are strict and the certification cycle is long. At present, the company has successfully entered the supply system of three head module manufacturers: Jingke, Jingao and Longji. In 2021, the module capacity of the three main customers has expanded significantly, and the company’s photovoltaic aluminum frame has a rapid volume. At the same time, with the expansion of the procurement scale of downstream component customers, the mode of direct procurement of finished parts rather than semi-finished profiles may gradually become the mainstream. We expect that the company’s product structure will continue to be optimized, and the proportion of high-profit industrial aluminum parts is expected to further increase.
Investment suggestion: in the era of parity, the global photovoltaic installed capacity is growing rapidly, and the aluminum frame, as the core auxiliary material, has a broad market space. At the same time, the market pattern continues to improve. We believe that the company has strong comprehensive competitive strength in production, operation and client. After listing in 2021, the production capacity and capital scale will be greatly expanded, and the business expansion is expected to accelerate. It is estimated that the company will achieve revenue of RMB 4.673/71.05/8.965 billion from 2022 to 2024 respectively, and net profit attributable to the parent company of RMB 251 / 4.27/523 million, with a year-on-year increase of 108% / 70% / 23%. For the first time, the company will be given a “Buy-A” investment rating, with a six-month target price of RMB 90.00, corresponding to about 38 times of PE in 2022.
Risk tip: the installed capacity of photovoltaic is less than expected, the industry competition intensifies, the progress of production expansion projects is less than expected, and the profit forecast is quite different from the actual situation.
