\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 07 Yunnan Aluminium Co.Ltd(000807) )
Event: the company released its annual report for 2021 on the evening of March 21, and achieved a revenue of 41.67 billion yuan in 2021, a year-on-year increase of 41%; The net profit attributable to the parent company was 3.32 billion yuan, a year-on-year increase of 268%; The net profit attributable to the parent company after deduction was RMB 3.31 billion, a year-on-year increase of 330%.
Comments:
The dual control of power restriction and energy consumption affected the release of production capacity, and the output of electrolytic aluminum decreased by 4% year-on-year. Benefiting from the rising aluminum price, the profitability of the company improved significantly in 2021, with a comprehensive gross profit margin of 20.4%, a year-on-year increase of 6.2 percentage points. 1) The revenue of electrolytic aluminum sector was 19.1 billion yuan, a year-on-year increase of 15.5%; The gross profit margin was 25.7%, with a year-on-year increase of 9.5 percentage points; The output of primary aluminum was 2.3 million tons, with a year-on-year decrease of 4%, mainly due to the influence of Yunnan Province’s double control policy of power restriction and energy consumption in 2021. 2) The revenue of aluminum processing sector was 22.09 billion yuan, a year-on-year increase of 76%; The output of aluminum alloy and aluminum processing products was 1.242 million tons, a year-on-year increase of 25%; The gross profit margin was 16.2%, with a year-on-year increase of 4.4 percentage points. Asset impairment totaled 1.985 billion yuan, dragging down performance growth. In 2021, the company accrued a total asset impairment loss of 1.985 billion yuan, accounting for 59.8% of the company’s net profit attributable to the parent, mainly for idle and inefficient assets. Including 1.698 billion yuan of impairment loss of fixed assets, 234 million yuan of impairment loss of intangible assets, 38.86 million yuan of impairment loss of construction in progress and 13.93 million yuan of inventory impairment loss.
Roe rose to a high since 2008 and the asset liability ratio fell to an all-time low. Diluted roe rose to 18.2% in 2021, a year-on-year increase of + 10.6 percentage points. The sales expense rate was 0.16%, with a year-on-year increase of – 1.54 percentage points, mainly because the freight was included in the operating cost; The management fee rate was 1.99%, with a year-on-year increase of -1.74 percentage points; The financial expense ratio was 1.41%, with a year-on-year increase of – 0.78 percentage points, mainly due to the completion of the non-public offering of shares of 3 billion yuan raised by Wenshan green aluminum project in 2021; Meanwhile, the asset liability ratio decreased from 66.5% in 2020 to 44.7% (the lowest in History) in 2021, with a year-on-year increase of – 21.8 percentage points.
Supply disturbance, improved demand and continued to be optimistic about the rise of aluminum price. China’s electrolytic aluminum enterprises have gradually resumed production, but due to the epidemic in Baise, Guangxi, 420000 tons of production has been stopped, and the speed of output increase is overall or slow; Energy prices are high, European aluminum companies are still expected to further reduce production, and overseas supply continues to be disturbed. As of March 18, the national spot inventory of electrolytic aluminum was 1.089 million tons, down 55000 tons from the inventory peak on March 7, entering the inventory removal cycle; It is expected that from mid to late March, the construction of downstream enterprises will accelerate the recovery. Supply disturbance and improved demand continued to bullish aluminum prices.
Profit forecast, valuation and rating: considering the limited overseas supply and the slow recovery of China’s output, the aluminum price in 2022 / 2023 / 2024 was raised to 20000 / 19500 / 19500 yuan / ton. At the same time, the company’s aluminum production capacity is expected to be released gradually, and the company’s profit forecast is adjusted accordingly. It is expected that the net profit in 2022 / 2023 will be 5.7/6.4 billion yuan, with an increase of 3.4% / 0.3% respectively. The net profit forecast in 2024 will be 7.1 billion yuan, and the PE corresponding to the current stock price will be 8.4/7.4/6.7 times respectively, maintaining the “overweight” rating.
Risk warning: the water from Yunnan is less than expected; The progress of projects under construction is less than expected, and there is a risk of sharp decline in aluminum price.
