Yunnan Aluminum (000807) Annual Report 2018 Comments: Falling Aluminum Prices Affect Company Performance Self-provided Electricity Rectification Will Favor Hydropower Aluminum Production Expansion Projects

Yunnan Aluminum (000807) Annual Report 2018 Comments: Falling Aluminum Prices Affect Company Performance Self-provided Electricity Rectification Will Favor Hydropower Aluminum Production Expansion Projects

Core points: 1.

Incident Cloud Aluminum released the 2018 annual report, and the company achieved operating income of 216 in 2018.

89 ‰, decreased by 1 per year.

99%; net profit attributable to parent company was -14.

6.6 billion, an annual decrease of 323.

14%; realized profit -0.

56 yuan.


Our analysis and judgment (I) Falling aluminum prices and increasing raw material costs have dragged down the company ‘s performance Since the fourth quarter of 2018, affected by factors such as the continued decline in the market price of aluminum products, the prices of major raw materials such as alumina, and continued growth, the company’s年第4季度 单季度业绩出现严重缺陷,并最终导致公司2018年经营业绩出现下降。
The average national electrolytic aluminum price in Q4 2018 was 13,877.

74 yuan / ton, a significant decrease from the same period of 8%.

77% and 3.

51%; the average price of alumina and prebaked anode for electrolytic aluminum is 2978.

70 yuan / ton and 3970.

29 yuan / ton, more than 3 yuan respectively.

39% and 4.


In 2018, the company’s gross profit margins for electrolytic aluminum and aluminum processed products were 6 respectively.

35% and 8.

06%, which are down by 5 each year.

43 and 7.

52 units.

In addition, in the fourth quarter of 2018, due to the decline in product inventory prices and the impairment of the old factory in Yongxin, the impairment loss was accrued6.

310,000 yuan, and the company increased the number of groove repairs to increase management costs to 6.

28 trillion, resulting in the company’s 2018 annual asset impairment losses and management expenses increased by 553%, 78.

5% to 6.

3.3 billion, 12.

6.2 billion, which also greatly affected the company’s performance.

(2) The relationship between the supply and demand of the aluminum industry continued to improve. The rectification of self-provided power is good for hydropower aluminum companies. With the continuous deepening of the supply-side reform of the aluminum industry, the electrolytic aluminum production capacity has gradually remained stable, and the future industrial structure will continue to be optimized.

According to the Ministry of Industry and Information Technology’s focus on the aluminum industry in 2019, strict control of electrolytic aluminum production capacity will be the future development trend of the industry, and production capacity has been formed.

According to Baichuan Information, the output of electrolytic aluminum from January to February 2019 was 561.

51 for the first time, a decrease of at least 2.

38%, with a starting capacity of 3540 in February.

55 is the lowest, decreasing by 2 every year.

06%; As of March 25, 2019, China’s aluminum ingot inventory was only 164.

In 2006, the average year-on-year period dropped sharply by 23.


At the same time, under the adjustment of the macroeconomic counter-cyclical policy, the fields of infrastructure supplementation and new energy vehicles have the potential for rapid development.During the two sessions, the Ministry of Finance stated that it would increase the scale of special bonds for local governments and planned to arrange special claims for local governments.

15 trillion yuan, an annual increase of 800 billion yuan, focusing on supporting projects under construction and making up for shortcomings.

In the future, aluminum demand will be supplemented by improvement, and the industry’s supply-demand relationship will improve.

In addition, the nationwide advance landing through the collection of self-supplied electricity costs will not support the rise in aluminum prices due to the nationwide implementation of backup electricity rectification. Hydropower aluminum companies mostly belong to outsourced electricity. The company said in its annual report that it willTaking full advantage of the policy support measures for hydropower aluminum electricity price support, the company will enjoy the fruits of the self-provided electricity rectification which has forced the growth of aluminum prices. The company estimates that the average cost of electricity is about zero.

About 33 yuan / kWh.

(III) The company’s hydropower aluminum production expansion and high-precision aluminum foil projects have steadily advanced. The company’s layout in hydropower aluminum, alumina, alumina, carbon and other expansion projects and aluminum foil, battery foil, and 杭州桑拿养生会所 aluminum welding development projects has been steadily progressing.

At present, the company’s polycarbonate production capacity reaches 140 mg / year, anode carbon production capacity is 60 g / year, electrolytic aluminum production capacity is 170 g / year, and aluminum alloy and aluminum processing capacity exceeds 80 g / year.

Along with the company’s Zhaotong, Heqing, Wenshan Hydropower Aluminum Projects and Yunluo Yuanxin 60t / year carbon second-phase project gradually put into production, the company’s electrolytic aluminum production capacity will exceed 300 tons / year, anode carbon production capacity exceeds 80 once a day,Aluminum alloy and aluminum processing capacity exceeds 100 per year.

In addition, through the completion of the alumina construction project replaced by Wenshan 80, the output of self-produced 苏州桑拿网 alumina has been increased; through aluminum foil, 3.

5 The construction of projects such as probe battery foil and aluminum welding materials has also enhanced the added value and profitability of the product.


Investment suggestion The company has a clear strategic direction in the expansion of hydropower aluminum production and high-precision aluminum foil. Benefiting from the continuous improvement of the supply and demand relationship in the aluminum industry, downstream demand substitution breakthroughs, and new capacity expansion, its performance release will tend to stabilize.

The company’s hydropower aluminum, aluminum oxide, anode carbon and other expansion projects and aluminum foil, aluminum battery foil, aluminum welding materials and other development projects are steadily advancing, and its future development space will also be expanded.

We expect the company’s EPS to be zero in 2019-2020.


53 yuan, corresponding to PE for 2019-2020 is 11.

83x / 8.

92x with a “Recommended” rating.


Risk warnings 1) Aluminum prices have fallen sharply; 2) Aluminum downstream consumption has fallen short of expectations; 3) New projects have been put into operation less than expected;