Anhui Xinbo Aluminum Co.Ltd(003038) (003038)
Industry: similar to adhesive film, it focuses on working capital, cost control and financing ability.
1. Business model: the entry threshold of aluminum frame industry is low, but it focuses on working capital. The core competitive elements are cost control and financing ability.
2. Demand: aluminum frame is a just needed auxiliary material with mature technology and no substitution risk. China’s favorable policies superimpose overseas photovoltaic parity to drive the global demand for components, thus driving the large-scale volume of aluminum frame. It is estimated that the global demand will be 2.1 million tons in 2025 and the CAGR will reach 18% in 2020-2025.
3. Supply: due to low barriers to entry, the aluminum frame industry had a decentralized pattern and the total share of Cr4 was less than 40%. In 2021, the rise of aluminum price will reduce the space of processing fees and accelerate the industry concentration. We believe that in the future, large factories in the industry will have significant scale advantages, better yield and accelerate the expansion of production, and the competition pattern will tend to be concentrated.
Anhui Xinbo Aluminum Co.Ltd(003038) : why increase market share and improve profitability?
We believe that the company’s strong cost control ability + strong financing ability + high customer stickiness can increase market share in the process of industry concentration. In addition, the expansion and finishing transformation of the company in the fields of automobile lightweight and rail transit are expected to contribute to the secondary growth
1. Cost control: the company’s yield is higher than the industry average, and can provide products of the same quality with low processing cost; After listing, we paid attention to the improvement of yield rate, increased R & D investment and R & D expense rate from 3.6% in 2020 to 4.7% in 3q21.
2. Financing ability: the company is the only listed company among the top four photovoltaic aluminum frame manufacturers. After listing, the company’s financing ability is enhanced, which is conducive to expanding production and alleviating the pressure of working capital, helping to improve market share and reduce discount expenses. The financial expenses are expected to decrease by 0.4-0.5%.
3. Customer stickiness: the founder started from aluminum sales, the management team has rich sales experience, maintains good relations with historical non photovoltaic customers, gives play to his sales strengths in the photovoltaic field, vertically binds old customers and horizontally expands new customers. At present, he has entered the supply chain of first-line component factories such as Jingke, Longji and Jingao.
4. Sustained growth: the company’s medium and short-term market share is likely to increase. It is expected that the shipment of photovoltaic products will be 8.0/15.2/227000 tons in 2021-23, with a market share of 8% / 12% / 15%. In addition, the volume of rail transit, automobile lightweight and other fields is expected to become the second growth curve of the company.
Profit forecast and valuation
In the short term, shipments are growing rapidly. Using sotp method, the target market value of the company is 10.8 billion yuan and the target price is 101 yuan, which has 16% upward space compared with the current stock price, and is rated as “buy”.
In the long run, it will benefit from the increase of market share. Assuming that the global PV installed capacity will reach 350 / 400gw in 2025, the company will sell all PV aluminum components, and the net profit per ton will be 12000 yuan. Under the condition of 25% market share, the net profit attributable to the parent company will reach 580-660 million yuan, which is valued at 30 times, with a corresponding market value of 17.3-19.7 billion yuan and a market value space of 48% – 70%.
Risk tip: the installed capacity of the industry, the yield increase or the aluminum frame market is less than expected; Price rise of aluminum ingots; Transaction change.
