NANSHAN ALUMINIUM(SH:600219) EBSCN·2024-02-29 16:00Investment Rating - The report maintains a "Buy" rating for Nanshan Aluminum (600219.SH) [2][3] Core Views - The company's revenue for 2023 was 28.84 billion yuan, a year-on-year decrease of 17.5%, while the net profit attributable to shareholders was 3.47 billion yuan, down 1.2% year-on-year [1][2] - The decline in performance is attributed to weak overseas demand and a drop in aluminum prices, impacting the aluminum processing segment [2] - The company plans to increase its dividend payout ratio to at least 40% of net profit for 2023, significantly up from 13% the previous year, resulting in a dividend yield of 4% based on the stock price as of February 28, 2024 [2][3] Summary by Sections Financial Performance - In 2023, the comprehensive gross margin was 20.3%, a decrease of 0.6 percentage points from the previous year [2] - The alumina segment saw a revenue increase of 57% year-on-year, with sales volume reaching 3.529 million tons, up 18.7% [2] - The aluminum processing segment experienced a revenue decline, with aluminum profile revenue down 11.8% and aluminum foil revenue down 19.8% [2] Quarterly Analysis - In Q4 2023, the net profit attributable to shareholders was 1.33 billion yuan, a quarter-on-quarter increase of 60.7%, primarily due to the recognition of transfer income from electrolytic aluminum quotas [2] - The non-recurring net profit for Q4 2023 was 640 million yuan, a quarter-on-quarter decline of 19.8% due to decreased sales and processing fees in the aluminum processing segment [2] Product Development and Strategy - The proportion of high-end products in total aluminum sales increased to 14%, with high-end products contributing 30% to total gross profit, up 9 percentage points year-on-year [2] - The company is expanding its production capacity in Indonesia, planning to build a facility with an annual output of 250,000 tons of electrolytic aluminum and 260,000 tons of carbon products [2] Dividend and Share Buyback Plans - The company plans to repurchase and cancel shares worth at least 300 million yuan annually from 2024 to 2026 [2] - The increased dividend and share buyback strategy reflects the company's commitment to returning value to shareholders [2] Earnings Forecast and Valuation - The report lowers the earnings forecast for 2024 and 2025, estimating net profits of 3.77 billion yuan and 4.06 billion yuan, respectively, which represents a downward adjustment of 9.4% and 11.1% [2] - The projected P/E ratios for 2024, 2025, and 2026 are 9, 9, and 8 times, respectively, indicating that the recent stock price decline has already factored in the expected earnings drop [2]