\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 07 Yunnan Aluminium Co.Ltd(000807) )
Event: Yunnan Aluminium Co.Ltd(000807) released the annual report of 2021. During the reporting period, the company achieved an operating revenue of 41.669 billion, a year-on-year increase of 40.90%, a net profit attributable to the parent company of 3.319 billion, a year-on-year increase of 267.74%, deducting a net profit not attributable to the parent company of 3.312 billion, a year-on-year increase of 329.63%; In Q4 of 21 years, the operating revenue was 9.546 billion, a year-on-year decrease of 1.38%, a month on month decrease of 7.25%, and the net profit attributable to the parent company was 87 million, a year-on-year decrease of 73.75% and a month on month decrease of 92.93%.
During the reporting period, the company’s limited film production and sales fell year-on-year, but the high boom of the aluminum industry led to the growth of the company’s performance.
From the perspective of volume, during the reporting period, the company produced 2411300 tons (yoy-0.51%) of aluminum products, and the sales and use volume was 2437200 tons (YoY + 0.26%). Among them, 1367000 tons of alumina (YoY + 5.96%), 781700 tons of carbon (YoY + 10.86%), 2 Beijing Comens New Materials Co.Ltd(300200) tons of raw aluminum (yoy-4.41%), 1241900 tons of aluminum alloy and aluminum processing products (YoY + 24.81%), and the alloying rate reached 54%. The year-on-year decline in raw aluminum production in 21 years is mainly due to the company’s reduction of electrolytic aluminum production capacity of about 770000 tons as of September 21 due to the influence of the “dual control of energy consumption” policy and the power restriction policy implemented by Yunnan Province due to power shortage since May.
From the perspective of price, under the influence of the red line of production capacity and the dual control policy of energy consumption, the overall supply and demand of the aluminum industry in 2021 is tight, the prosperity of the industry continues to rise, and the aluminum price continues to be high. During the reporting period, the average price of aluminum A00 in the Yangtze nonferrous metals market was 1889811 yuan / ton (YoY + 33.18%), with an increase of 30.60% at the end of the year compared with the beginning of the year. The company’s main products focus on the aluminum industry, benefiting from the continuous high aluminum price, and the company’s performance has increased significantly in 21 years.
The provision for asset impairment affects the company’s performance in the short term. Due to the company’s industrial upgrading, energy conservation and consumption reduction and other factors, the company has formulated transformation, cleaning or disposal plans for old machinery and equipment that do not meet the needs of energy conservation and consumption reduction in the future, and conducted impairment tests accordingly. In 2021, the company accrued asset impairment of 1.985 billion yuan, accounting for 42.34% of the total profit of the company, of which 823 million yuan was accrued in Q4 in 21 years. The company’s provision for asset impairment will affect the company’s performance in the short term, but in the long run, it will reduce the burden on environmental protection, which is in line with the company’s development strategy of “green aluminum integration”.
The company has a complete hydropower aluminum integrated industrial chain. 1) The company’s upstream layout of electrolytic aluminum is conducive to further reduce costs, maintain overall cost stability, and give full play to the synergy of the industrial chain. During the reporting period, the company strengthened the development of bauxite in Wenshan area. At the same time, the phase I of the 900000 ton anode carbon project jointly constructed with Sunstone Development Co.Ltd(603612) has been successfully put into operation. After the project is completed, the self-sufficiency rate of anode carbon of the company will be further improved. 2) The company extends the industrial chain downward and upgrades its products to medium and high-end products such as power battery aluminum foil and ultra-thin aluminum foil, so as to increase the added value of products and improve the profitability and anti risk ability of the company. By the end of 2021, the company has the scale advantages of green aluminum integrated chemical industry with an annual production capacity of 3.04 million tons of bauxite, 1.4 million tons of alumina, 800000 tons of carbon products, 2.78 million tons of hydropower aluminum, 1.4 million tons of aluminum alloy, 135000 tons of aluminum strip and 36000 tons of aluminum foil.
Uncertainty on the supply side remains, and aluminum prices are expected to remain high under the support of low inventories. 1) On the supply side, the national strategy of “carbon neutralization” has been continuously promoted. Under the dual control policy of energy consumption, there are repeated risks of superimposed epidemic situations, and the stability of electrolytic aluminum enterprises’ production is still uncertain; Overseas, the situation in Russia and Ukraine may further raise the power price in Europe, which will be transmitted to the supply of electrolytic aluminum. The export restrictions brought by Russia and Ukraine may increase the possibility of further production reduction and shutdown of aluminum plants in Europe and Russia. 2) On the demand side, the Federal Reserve has started the cycle of raising interest rates and shrinking the table. We judge that the demand in traditional fields has the possibility of marginal weakening. At the same time, the demand for aluminum in new energy field is difficult to make up for the slowdown in demand caused by the weakening of real estate in the short term, and the transmission of “steady growth” policy to actual demand still needs time. However, considering that the new supply of electrolytic aluminum is difficult to see elasticity, low inventory will form a good support for aluminum price, and it is expected that aluminum price will continue to be high in 22 years.
Profit forecast and investment suggestions: the company has the competitive advantage of green aluminum integration. It can reduce the company’s cost under the synergistic effect and expand downward at the same time, or it will improve the company’s profitability and gradually realize the growth logic. Based on the 2022 output guidelines disclosed in the company’s annual report (1.4 million tons of alumina, 2.69 million tons of electrolytic aluminum, 1.39 million tons of aluminum alloy and processed products, and 780000 tons of carbon products), we expect the company’s electrolytic aluminum output to be 269 / 281 / 301 million tons in 22-24 years. We increase the assumption of aluminum price. The aluminum price in 22-24 years is 2.0/2.121000 yuan / ton, It is estimated that the net profit attributable to the parent company in 22-24 years is RMB 5.064/63.08/6.887 billion respectively (it is estimated that it is RMB 3.977/4.135 billion respectively in the previous 22-23 years), and the corresponding PE in 22-24 years is 9.7/7.8/7.1x respectively. Maintain the company’s “buy” rating.
Risk warning event: macroeconomic fluctuation exceeds the expected risk; The risk of weak aluminum demand and declining profits; The risk of industrial policy changes exceeding expectations; Risk of raw material price fluctuation exceeding expectations; The risk that the construction of projects under construction is slower than expected; Uncertainty risk of acquisition project; Repeated epidemic risk, etc.
