\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 677 Henan Mingtai Al.Industrial Co.Ltd(601677) )
Investment logic
Aluminum processing leader, profit significantly through the cycle.
As one of the leading aluminum processing enterprises in China, the company has been deeply engaged in the main business for many years. The current business scope covers the production of aluminum sector, strip and foil, aluminum profile and the comprehensive utilization of renewable resources. Through structural optimization, the company has increased the added value of products, driven the growth of processing costs, and reduced the cost of raw materials by distributing recycled aluminum upstream.
Over the past decade, the compound growth rate of the company's revenue / net profit attributable to the parent company was 14% / 22%, significantly crossing the cycle. Dismantling findings: 1) volume: the company continues to invest capital to expand production capacity, and the compound growth rate of production and marketing has reached 13% in the past decade. 2) Profit: from 2011 to 2015, facing the pressure of sluggish demand, the company reduced costs by purchasing power plants and self-made gas to effectively resist the downward impact of the industry; From 2015 to 2020, without significant improvement in the industry environment, the company achieved contrarian growth in profit level through product structure upgrading; In 2021, with the help of industry demand recovery + supply pattern optimization + product structure upgrading, the company's profit growth rate exceeded 80%.
Aluminum processing industry: pattern optimization. Dismantling the performance of several listed aluminum processing enterprises, it is found that overcapacity + slowing demand in the past few years have exacerbated the competition situation of the industry. Ordinary enterprises in the industry have gone through a round of clearing, the proportion of leading cities has continued to increase, and the industry pattern has been optimized, but Cr6 is less than 20%, and there is still room for improvement.
Electrolytic aluminum has strong support. Since 22q2, the resumption of production at the supply side has accelerated due to the poor demand in China, and the price of electrolytic aluminum has experienced a round of adjustment. Considering that the company has a certain production cycle, the fluctuation of aluminum price will have a certain impact on the company's performance. It is expected that the supply and demand of electrolytic aluminum will maintain a tight balance in 22-24 years, and the aluminum price has strong support.
The logic of increasing product added value and reducing cost of recycled aluminum continues to be deduced.
The company continues the pace of capacity expansion + structural optimization, with a target output of 2 million tons in 2025, with a compound growth rate of 15% over 21 years. The increase of high-end demand + large-scale production capacity drive the continuous rise of both volume and price of the company's products.
The company is the leader of China's guaranteed utilization of recycled aluminum. At present, it has a capacity of 680000 tons of recycled aluminum and 700000 tons under construction. The purchase cost of recycled aluminum raw materials is lower and enjoys certain tax incentives. Through the capacity expansion of recycled aluminum, the company further consolidated its cost advantage while ensuring the supply of raw materials.
Investment advice
It is predicted that the net profit attributable to the parent company in 22-24 years will be RMB 2.67/34.0/4.07 billion, with a year-on-year increase of + 44.3% / + 27.0% / + 19.5% 8%, realizing eps2 77 / 3.52/4.21 yuan, corresponding to pe9.00 yuan 5 / 7.5 / 6.3x. Considering the growth of the company in the next few years and referring to the average PE of 13 times in the same industry, the company gives a valuation of 13 times the performance in 22 years, with a corresponding market value of 32.1 billion yuan and a target price of 33.21 yuan. It is given a "buy" rating for the first time.
Risk
Aluminum price fluctuates, demand is less than expected, project construction is less than expected, exchange rate fluctuates, directors and supervisors reduce their holdings.
