Yunnan Aluminum (000807) semi-annual report comment: three factors drive high growth

Yunnan Aluminum (000807) semi-annual report comment: three factors drive high growth

Matters: The company announced its semi-annual report for 2019 and realized revenue of 108.

4.5 billion, an annual increase of 3.

44%, net profit attributable to shareholders of listed companies1.

6.1 billion, an annual increase of 232.

98%, EPS of 0.

06 yuan, basically consistent with the company’s democratic performance announcement.

Ping An’s view: Three factors play a role in increasing performance: The company’s performance growth is mainly driven by three factors: 1) In the first half of 2019, Zhaotong Phase I occurred, and the Heqing Phase I project went into operation, and the company’s electrolytic aluminum output was 87, maintaining growth every year.Increase by 13%; 2) In the first half of 2019, the electrolytic aluminum industry has an orderly supply, and output has only increased by 2.

2%, to support the price, electrolytic aluminum prices stabilized, while the main raw material alumina,北京夜生活网 the impact of overseas supply shocks subsided, prices fell, the company’s electrolytic aluminum profit level increased, the first half of the comprehensive gross profit margin gradually increased by about 1.
.

1 up to 12%; 3) Overall, the company received government subsidies of about 76 million yuan in the first half of the year, which also had a positive impact on the company’s profits.

Inventory decline, supply growth, electrolytic aluminum price support: higher inventory in the previous period has always been an important factor in electrolytic aluminum price. In the first half of 2019, electrolytic aluminum has declined in both stock exchanges and social stocks, and has initially approached normal.Level, inventory suppression on electrolytic aluminum prices has greatly reduced.

In addition, after the electrolytic 无锡夜网 aluminum supply-side reform in 2017, the illegal electrolytic aluminum production capacity has been cleared. In the future, the equivalent and reduction substitution policies will be implemented to increase the long-term electrolytic aluminum production capacity.

Combining inventory and production capacity, we judge that the price of electrolytic aluminum may continue to stabilize and rise in the future.

With compliance under construction capacity, the company’s electrolytic aluminum scale has the biggest room for improvement: the company’s existing hydropower aluminum capacity is 210. At the same time, the company has a scale of under construction compliance capacity. Zhaotong Phase II, Heqing Phase II, Wenshan and other hydroelectric aluminum will be transformed in the future.After the project is completed, the company’s electrolytic aluminum production capacity will exceed 300 inches.

In the context of sufficient electrolytic aluminum production capacity, the company is one of the few companies with an electrolytic aluminum production capacity scale and constantly improving space.

Profit forecast and investment rating: Adjust the performance forecast based on the company’s latest operating situation.
In 2021, the EPS will be 0.

15, 0.

25 and 0.

32 yuan (previous average 0.

08/0.

16/0.

21 yuan), the PE corresponding to the closing price on August 28, 2019 was 35, 20 and 16 times, respectively, maintaining the “recommended” investment rating.

Risk reminders: (1) Risk of product price fluctuations.

The company’s main products are aluminum ingots and aluminum processed products, whose prices are affected by many factors such as changes in raw materials, demand, and the macroeconomic environment. Price changes are interchangeable, which has a significant impact on the company’s profit; (2) the risk of electricity price adjustment.

Electricity is the main cost component of electrolytic aluminum. Although Yunnan has abundant hydropower resources, which helps the company to obtain preferential electricity prices, if the power producers and power grid companies increase their prices, the company will face pressure to overcome costs; (3) the risk of environmental protection policies.

With the in-depth implementation of the “Environmental Protection Law of the People’s Republic of China”, the “Implementation Scheme for the Control of Pollutant Discharge Permits” and the corresponding supporting laws and regulations, the supervision and enforcement of environmental protection departments have become more stringent, and the company’s environmental protection measures have increased risks.