\u3000\u3 China Vanke Co.Ltd(000002) 532 Tianshan Aluminum Group Co.Ltd(002532) )
Event: on the evening of April 7, 2022, the company released its 2021 annual report. In 2021, the company achieved a revenue of 28.745 billion yuan, a year-on-year increase of 4.7%; The net profit attributable to the parent company was 3.833 billion yuan, a year-on-year increase of 100.4%; Net profit deducted from non parent company was 3.694 billion yuan, with a year-on-year increase of 97.7%. In 2021q4, the company achieved a revenue of 6.953 billion yuan, a year-on-year decrease of 15.1% and a month on month decrease of 2.6%; The net profit attributable to the parent company was 601 million yuan, a year-on-year decrease of 12.4% and a month on month decrease of 52.0%; Net profit deducted from non parent company was 551 million yuan, a year-on-year decrease of 18.5% and a month on month decrease of 54.5%. The performance is in line with our previous expectations.
The sharp rise of aluminum price and the rise of gross profit per ton of aluminum boosted the performance. In terms of products, the company’s profits mainly come from electrolytic aluminum, of which self-produced aluminum ingots contributed 6.03 billion yuan, a year-on-year increase of 59.5%, accounting for 92.5% of the total gross profit, and alumina contributed 290 million yuan, a year-on-year increase of 48.8%, accounting for 4.5% of the total gross profit. Volume: in 2021, the production and sales of aluminum ingots of the company were 1.154 million tons and 1.064 million tons, with a year-on-year increase of 2.1% and a decrease of 5.4% respectively; Alumina production and sales were 907000 tons and 750000 tons, with a year-on-year increase of 21.0% and 41.8% respectively. Business objectives for 2022: 1.15 million tons of raw aluminum, 2 million tons of alumina, 550000 tons of prebaked anode and 35000 tons of high-purity aluminum. Profit: the gross profit per ton of aluminum ingot produced by the company was 5665 yuan, an increase of 2315 yuan year-on-year, and the gross profit per ton of alumina was 348 yuan, an increase of 16 yuan year-on-year. The gross profit margin and net profit margin of the company were 22.8% and 13.3%, increasing by 9.1 PCT and 6.4 PCT respectively.
Dragged down by the rising price of thermal coal, the net profit attributable to the parent company in 2021q4 was – 52.0% month on month. The gross profit margin and net profit margin of 2021q4 company were 17.6% and 8.6%, up 6.2pct and 0.27pct respectively year-on-year, down 11.4pct and 8.9pct respectively month on month, the three fee rate was 4.65%, up 0.16pct month on month, the R & D rate was 1.2% and up 0.5pct month on month. The company’s Q4 performance declined, mainly due to the rising price of thermal coal and the rising cost of self owned power plants.
Future highlights: 1) the alumina project has been steadily promoted, the raw materials are basically self-sufficient, and the upstream integration layout is perfect. Guangxi phase II and phase III 1.7 million ton alumina projects are expected to reach production in the first half of 2022, and the production capacity of prebaked anode continues to be released. The company is basically self-sufficient in prebaked anode and alumina, while the self-sufficiency rate of power is 80% – 90%. Self-sufficiency in raw materials helps to improve the company’s cost control ability. 2) The high-purity aluminum project has been steadily promoted, and the layout of power battery foil has been accelerated. The 20000 ton high purity aluminum project of the company is expected to be put into operation in the middle of the year, with a new construction of 20000 tons. The production capacity will reach 80000 tons by the end of 2022 and 100000 tons in the long-term plan; In the field of battery foil, the company implemented the transformation and upgrading of the production line of 100000 tons of power battery foil, and built 100000 tons of cold rolling, striving to put into operation in 2023. The layout of the field of new energy vehicles will provide a new increment for the company’s performance. 3) Low energy cost and obvious regional advantages. The company’s electrolytic aluminum production capacity is distributed in resource rich Xinjiang with low energy cost. In the future, with the construction of Northwest scenery base, the company’s cost advantage may be further consolidated, which is also conducive to the future layout in the field of green power.
Investment suggestion: with the promotion of upstream alumina project, the company’s cost advantage will continue to consolidate and its performance may grow steadily. We expect that the company will realize a net profit attributable to the parent company of 5.654 billion yuan, 6.211 billion yuan and 6.533 billion yuan from 2022 to 2024, with EPS of 1.22 yuan, 1.34 yuan and 1.40 yuan respectively. The PE corresponding to the closing price on April 8 is 7, 6 and 6 times respectively, maintaining the “recommended” rating.
Risk tip: the price of thermal coal rises sharply, the release of production capacity is less than expected, and the downstream demand is less than expected
