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Event description:
Yunnan Aluminium Release the third quarter report of 2012.
Event comment:
In the first three quarters, operating income increased by 11.4%, net profit decreased by 124%, and earnings per share was -0.014 yuan.
In the first three quarters of 2012, the company realized an operating revenue of 6.6 billion yuan, an increase of 11.4% over the same period last year; The net profit attributable to shareholders of the listed company was 21.95 million yuan, down 124% year on year, and the earnings per share during the reporting period was -0.014 yuan; Among them, the EPS of the third quarter is 0.002 yuan (the second quarter is -0.0005 yuan).
The decline of aluminum price and the rise of cost are the main reasons for the decline of the company's performance in the first three quarters. The average spot price of domestic aluminum in the first three quarters was 15776 yuan/ton, down 7.62% year on year; On the other hand, the company's average electricity price this year (electricity accounts for about 45% of the company's electrolytic aluminum cost) rose by 0.0211 yuan (tax included) to 0.5011 yuan/kilowatt hour (tax included), an increase of 4.4%. In addition, due to the increase of loan interest rate and loans during the reporting period, the company's financial expenses increased by 33.4% to 236 million yuan compared with the same period last year.
The Company's main focus in the future will be to achieve the production capacity of Wenshan Alumina Project. At present, Wenshan 800000 ton alumina project is in the trial production stage. As of August 21, the Wenshan Alumina Project has produced 11300 tons of commercial alumina. We believe that 800000 tons of aluminum oxide will significantly improve the company's earnings and is expected to contribute 0.12 yuan to the company's earnings per share (calculated by cost reduction) in the year when the project reaches the production capacity and meets the standard.
Maintain the judgment of weak aluminum price. Under the guidance of the national policy of electrolytic aluminum production capacity moving westward, the electrolytic aluminum production capacity in western China, mainly in Xinjiang, will continue to expand. With China's economic transformation, the weakening of Chinese factors will inevitably lead to the gradual downward trend of electrolytic aluminum demand growth. The embarrassing situation that the supply side of electrolytic aluminum continues to grow while the growth rate of the demand side declines will suppress the aluminum price. In addition, the cost side is still facing the risk of rising labor, electricity and other costs. It is difficult for the aluminum industry to improve its profit margin, and meager profits or even losses may become the medium - and short-term normal of the industry.
Maintain a "neutral" rating. We expect the company's EPS in 2012 and 2013 to be -0.012 yuan and 0.12 yuan respectively. In view of our judgment that the aluminum price will remain weak in the future and the company's aluminum oxide project is still in the trial production stage, the cost advantage has not been reflected, so the company's "neutral" rating is temporarily maintained.
Investment risks and limitations of conclusions. Investment risk tips: (1) Industry risk: aluminum price trend deviates greatly from our expectation; (2) Company risk: the progress of the Company's Wenshan Alumina Project is lower than expected.
We do not rule out that the above risks affect our conclusions.
