China Aluminum (601600) Annual Report Commentary Report: Electrolytic Aluminum and Inventory Impairment Affect Performance, Inventory Desalination, Profit Recovery, Expected
The company released its 2018 annual report and achieved operating income of 1802.
4 ‰, reduced by 0 every year.
43%, total profit 24.
3 ‰, 20 years ago.
3%, net profit attributable to mother 8.
7 ‰, 38 years ago.
4%, net profit of non-attributed mothers1.
580,000 yuan, an average of 80% in ten years.
Among them, Q4 belongs to the parent net doping 6.
2.6 billion, lower than market expectations.
Both volume and price rose. Alumina profit kept growing.
In 2018, the company’s coal sales were 745 tons, an annual increase of 5%, an average of about 3035 yuan per ton, and an annual increase of 2%.
Alumina plate realized gross profit 61.
300 million yuan, profit before tax 35.
6 ppm, a ten-year increase of 8.
2%, mainly due to both volume and price.
In April 2018, the shutdown of Hydro Alumina in Norway pushed up the global alumina price, and the company’s alumina self-sufficiency ratio exceeded 100%.
Rising costs / lower aluminum prices lead to electrolytic aluminum doping.
Although the company’s electrolytic aluminum sales volume in 2018 was 429, an increase of 20%, it was subject to the decline in the price of tandem electrolytic aluminum8.
44%, especially the average price of electrolytic aluminum in the fourth quarter of 2018 was 13,806 yuan / ton, a 9% decrease, while the average price of alumina was still at a high of 3101 yuan / ton, product prices were lowered to double the cost of high pressure, and the electrolytic aluminum plate penetration taxProfit before profit 8.
6.8 billion, dragging down the company’s performance.
Asset impairment is a significant drag on performance, and Qiangqiang is expected to start a new era of reform.
The company’s debt-to-equity swap was implemented in 2018, the asset-liability ratio improved again to 66%, financial expenses remained flat, management expenses increased and reorganized, but asset impairment losses24.
7.2 billion US dollars in real terms dragged down performance (inventory fell 22.
China Copper Group, a wholly-owned subsidiary of the company’s major shareholder, has now acquired 51% equity of Yunnan Metallurgical Group without compensation. The group promised to start planning the integration of the competition between China Aluminum and Yunnan Aluminum in the same industry in 2019.The transfer of 19 electrolytic aluminum production capacity to the cost advantage region Yunqing Holding Heqing Yixin Aluminum may gradually start the integration.
With the substantial implementation of integration, the company’s alumina raw material advantages and Yunalumi’s hydropower advantages play a synergistic role to further optimize costs and increase profitability.
The production reduction has been carried out until the inventory is de-allocated, and the electrolytic aluminum profit repair can be expected.
Subject to low-end electrolytic aluminum production at the end of 2018, more than 200 inches of shutdown capacity appeared again. In the first 佛山桑拿网 two months of 2019, the price of electrolytic aluminum was still oscillating at a low level, due to electricity price negotiations / raw material cost issues and other shutdown capacity of about 40 tons.
However, due to the influence of the Spring Festival, Q1 is the time for traditional inventory growth. In the first two months of 2019, domestic inventory rose by 45 to about 175 inches, which was changed to 20%.
At this point in time, monetary and fiscal policy margins are likely to continue. Infrastructure investment is likely to pick up. The demand for electrolytic aluminum is higher than last year. At the same time, the increase in production capacity at low aluminum prices may continue.Gradually usher in the process of destocking and improving profitability.
Earnings forecast: Consider the decline in electrolytic 青岛夜网 aluminum since the first quarter of 20194.
6%, the alumina Q1 is 8% lower than the average price in 2018, and the price shock is lower than expected. We lower the net profit attributable to mothers for 2019-2021.
200 million, 29.
400 million (previous average 41.
100 million, 57.
8 trillion), 43 trillion, according to the current share capital corresponding to EPS are 0.
13 yuan / share, 0.17 yuan / share (previous average 0.
28 yuan / share, 0.
39 yuan / share), 0.
25 yuan / share, corresponding to the current price of PE is 31, 23 and 16 times.
Maintain the “overweight” rating.
Risk warning: electrolytic aluminum demand exceeds expectations, overseas alumina production is expected to exceed expectations, and asset impairment losses exceed expectations