G Guan Aluminium (000831) is a non-ferrous metal leading company with great development prospects. Under the background of several times reduction in alumina prices, changes in actual controllers, and rapid growth of aluminum power industry chain, the market outlook is expected to be in the process of snatching chips. Break through the previous highs and achieve a strong daily limit, which is expected to blowout and become a leader in the non-ferrous metals sector.
Under the background of the gradual recovery of the electrolytic aluminum industry, electrolytic aluminum companies with the following conditions are more worth investing: From the perspective of cost, one is that the proportion of long-term supply of alumina is high, thus providing stable and low-cost alumina supply channels; It is a cheap and stable power supply, and it is better that the company can do aluminum power joint ventures. From the perspective of the industrial chain, enterprises with longer industry chains can maintain stable profitability and effectively avoid the risk of shifting profits in different links of the industrial chain. The more complete industrial chain includes bauxite-alumina-electro-aluminum - Aluminium deep processing and so on. From the perspective of scale, with the warming of the industry, the expansion of the company's scale and output will bring about profitable growth. We believe that in the current electrolytic aluminum listed companies, Guanlv shares (000831) has many points mentioned above. At present, its long-term investment value is underestimated, and it is worth investors to pay close attention to it.
1. Directional additional issuance to achieve aluminum joint venture
G Guanlv announced that it intends to purchase more than 110 million shares through private placement, to acquire group thermal power plants and to invest in 10,000 tons of high-purity aluminum projects. We believe that the aluminum power associates and high-purity aluminum projects will significantly increase company profit after 2007. . The Group's captive power plant was restarted in March 2006 and is expected to be completed by September 2007. According to the situation of similar thermal power plants in Shanxi Province, it is expected that the power supply cost of the captive power plant after completion will be lower than 0.24 yuan/kWh, and the company is currently purchasing electricity online. For 0.342 yuan/kWh, the fully-finished company will save 120 million yuan in cost, and will contribute 0.4 billion yuan in profits in 2007.
The company's high-purity aluminum project infrastructure has been basically completed, according to company estimates, the project will reach the company after the completion of production of 33 million yuan net profit, after the funds are in place, it is expected in 2007 to achieve 10,000 tons of output. Huasheng Aluminum, which is a joint venture with Chinalco, started production in April 2006. It will achieve 120,000 tons of output this year and fully achieve 220,000 tons of production capacity in 2007. According to our preliminary calculations (shown in Table 1), it is difficult for Huasheng Aluminum in 2006. Profits will be realized, and in 2007, G Guan Aluminum will contribute RMB 96 million in investment income.
As the 75KA electrolytic aluminum production line is restricted from production and transformation, the first half of the year will affect the production of 20,000 tons of G Guan aluminum. With the resumption of production of the production line in August, the profitability of the company's headquarters will improve in the second half. The three-year imported alumina long-term orders signed by the company will expire at the end of 2006. The company is preparing to sign new orders. From the current trend of imported alumina prices, the long-term price ratio is expected to be below 16%.
Assume that the company completed the issuance of 110 million shares in 2006 to achieve the acquisition of the group's power plants. We expect G Guan Aluminum's earnings per share in 2006, 07 and 08 to be 0.21 yuan, 0.56 yuan and 0.74 yuan, respectively, and Aluminium Alliance and Huasheng Aluminum's earnings contribution will be gradually reflected, maintaining the company's overweight rating.
2, G off aluminum; into rapid growth
Some researchers believe that the high PE value of domestic electrolytic aluminum companies is in line with the characteristics of the industry recovering from the trough. In 2007, the reasonable dynamic PE level given to domestic electrolytic aluminum companies was not excessive between 10-12 times. Based on this estimate, G Guan Aluminium's value per share is between 8.10 yuan and 9.72 yuan. At present, the company's stock price has been greatly undervalued, so the company's investment rating from neutral raised to "recommended."
The researcher stated that the company's performance rebounded significantly in 2006 and grew rapidly in 2007. From the perspective of the development speed of alumina, the alumina production capacity will increase substantially in the future, so the price will return to profitability from the windfall; and from the perspective of the electrolytic aluminum industry, the macro Regulation, electrolytic aluminum production capacity has been greatly reduced, the current excess capacity of 2.3 million tons due to the rapid recovery of downstream infrastructure and machinery auto industry can be greatly digested, from the global demand, aluminum prices can be better supported. It can be judged that the difference between aluminum prices and alumina prices will further widen, and the profitability of the electrolytic aluminum industry will rebound. Based on the market price of aluminum ingots in the past two years of 20,000 yuan/ton, it is estimated that the company's EPS for 2006-2008 will be 0.41 respectively. 0.81 and 1.22 yuan, annual growth rate of 197% and 51%, respectively.
3. The possibility of further integration with Chinalco in the future
It is understood that after the cooperation between Huasheng Aluminum, at present, both Chinalco and Guanlv have the consideration of further integration between the two parties. We believe that Guan Aluminum has become a member of Chinalco and is a beneficial choice for both parties. Together with the upcoming production of refined aluminum (high-purity aluminum) projects, Guanlv has formed a large-scale aluminum deep-processing industry. China's aluminum industry is entirely likely to see its deep processing capability, following Lan Aluminum (600,296) and aluminum (600,472). Jiao Wanfang (000612) will further include Guan Aluminium, which will lead to the adjacent Shanxi Aluminum Plant of Chinalco (with an annual output of 2.2 million tons of alumina and 280,000 tons of electrolytic aluminum) and Huaze Aluminum (a joint venture with Yuze Power, 28 10,000 tons of electrolytic aluminum production capacity, Huasheng Aluminum and Guanlv Stock have gradually become China Aluminum's integrated production base for the alumina-electrolytic aluminum-aluminum deep processing industry chain in North China. For Guanlv, adding Chinalco will not only provide a stable supply of alumina, but more importantly it will be better positioned and developed. The possibility of further integration with Chinalco will also improve Guanl's valuation to some extent. Starting in the second half of 2006, the company's headquarters will be fully released. According to the assumption that the average annual price is 20,000 yuan/ton, we predict that the earnings per share of Guanlium in 2006 and 2007 will be 0.40 yuan and 080 yuan respectively, and the current stock price is seriously undervalued.
4, futures prices drive up
Seen from the secondary market, G Guan Aluminium (000831) has always been active in shares, and has a continuous daily limit record in the session. As a share price of only 5 yuan, the stock is one of the relatively low-priced stocks in the non-ferrous metal sector. Due to the recent international and The domestic aluminum futures prices continue to rise, which is expected to drive the development of blowouts at G Guan Aluminum.
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