\u3000\u3000 Xinjiang Joinworld Co.Ltd(600888) (600888)
Event overview: on January 15, the company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company is RMB 751-821 million, a year-on-year increase of + 114-134%, deducting the net profit not attributable to the parent company of RMB 851-921 million, a year-on-year increase of + 157-179%.
Analysis and judgment: the rise in price and volume contributed to a significant increase in performance in 2021, and the high price of alumina dragged down Q4 performance. In a single quarter, the net profit attributable to the parent company in 21q4 was 157 ~ 227 million yuan, with a significant year-on-year increase of 42 ~ 105% and a month on month decrease of 15.3% ~ 41.4%; The net profit deducted from non parent company was RMB 257 ~ 327 million, with a significant year-on-year increase of 205 ~ 288% and a month-on-month increase of 1% ~ 28.5%. Reasons for performance changes: 1) price: in 2021, the prices of the company’s main products increased year-on-year. Electronic aluminum foil and electrode foil products benefited from strong downstream demand and prices rose. The high aluminum price led to a significant year-on-year increase in the profit per ton of aluminum in 2021, but the high alumina price led to a sharp decline in the profit per ton of aluminum in Q4, which dragged down the company’s Q4 performance; 2) Volume: in order to meet the strong demand of downstream, the company has improved the production capacity of the existing production line through technical transformation, and the non-public offering project continued to build a large volume in 2019, and the sales volume of electronic aluminum foil and electrode foil products increased year-on-year; 3) The company’s participation in Tianchi energy has benefited from the sharp rise in coal prices this year and the significant increase in investment income; 4) The amortization of equity incentive expenses is expected to affect the release of 2021q4 profits.
China’s comprehensive supplier of electronic grade high-end aluminum materials continues to expand production, benefiting from new energy, semiconductor and aviation Addsino Co.Ltd(000547) opportunities. 1) The company has one of the largest high-purity aluminum production bases in the world, with an annual production capacity of 180000 tons of primary high-purity aluminum, about 50000 tons of high-purity aluminum, 35000 tons of electronic aluminum foil and 23 million square meters of synthetic foil; 2) The company’s non-public offering project in 2019 will expand the production of 15 million square meters of foil, which is expected to be fully put into operation in 2022h2, which will benefit from the large demand in the fields of new energy vehicles, photovoltaic and wind power; 3) The company’s share allotment project in 2021 will expand the production capacity of 15000 tons of high-purity aluminum, 500 tons of ultra-high-purity aluminum based sputtering target blank (applied to semiconductor chips, flat panel displays, etc.), and 3000 tons of strong and high toughness aluminum alloy large section billet (applied to aerospace field). The high gross profit margin of the expansion project will bring high elasticity to the company’s performance.
The electrode foil industry has ushered in the inflection point of supply and demand, the price adjustment of downstream aluminum electrolytic capacitors has ushered in, the space for electrode foil price increase has been opened, and the current round of electrode foil price increase may be expected to continue. 1) The core of this round of price rise in the electrode foil industry is driven by the demand growth of emerging application fields downstream, rather than just supply side disturbance. On the supply side, the price of aluminum, the main raw material of electrode foil, and phosphoric acid, the auxiliary material, rose sharply. At the same time, power rationing and rising electricity charges pushed up the cost of electrode foil and supported the price rise; On the demand side, benefiting from the inflection point of demand growth in emerging fields (new energy vehicles, new energy power generation and charging piles) in 2021, the industry has changed from slight surplus to tight supply and demand. We believe that the supply and demand of electrode foil may continue to be tight in the future. 2) Downstream capacitor manufacturers have started a new round of price adjustment in October. For example, the price of Hunan Aihua Group Co.Ltd(603989) whole line products has increased by 15-20%, the price of Nantong Jianghai Capacitor Co.Ltd(002484) has increased by 10%, and the average price increase in the capacitor industry is 10-20%. The price adjustment of aluminum electrolytic capacitor will be conducive to the price conduction of electrode foil, and the price increase space may be opened in the future.
Investment suggestion: we estimate that the net profit attributable to the parent company from 2021 to 2023 will be RMB 786 million, RMB 1109 million and RMB 1307 million respectively. Based on the closing price on January 14, 2022, the corresponding PE will be 14x, 10x and 8x respectively. The company will be given a “recommended” rating for the first time.
Risk tip: the price of aluminum has fallen sharply, and the progress of the project is less than expected; The price of electrode foil fell sharply.
