Core Viewpoint - The company is a global leader in the aluminum industry, focusing on a full industrial chain from power generation to aluminum processing, with a strong emphasis on shareholder returns and sustainable growth [1][2]. Group 1: Company Overview - Established in 1994, the company operates 13 production bases in Indonesia and China, with significant capacities in bauxite, alumina, electrolytic aluminum, and aluminum processing [1]. - The company has a concentrated ownership structure, with the Zhang family holding 65.53% of the equity, and has distributed a total cash dividend of 52.49 billion yuan since its listing in 2011, with an average dividend payout ratio of 44.3% [1]. Group 2: Competitive Advantages - The company has a leading position in electrolytic aluminum production, with an average cost of 13,232 yuan per ton in 2024, benefiting from self-supplied bauxite and alumina [1]. - The energy structure is expected to improve with falling coal prices and the completion of renewable energy projects, aiming for a significant increase in green electricity usage [1]. - The company has secured high-quality bauxite and alumina resources, ensuring stable production costs, with a self-sufficiency rate of over 160% for alumina [1]. Group 3: Future Growth and Projects - The company is expanding into high-end low-carbon development with plans for aluminum processing capacity to reach 1.52 million tons, alongside projects in automotive lightweight materials [1]. - The company is involved in the West Simandou iron ore project in Guinea, expected to start production in 2025, which will contribute significantly to future earnings [2]. - Projected net profits for 2025-2027 are estimated at 20.77 billion yuan, 22.38 billion yuan, and 23.45 billion yuan, with a target price of 17.0 HKD based on a 7x PE ratio [2].

Core Viewpoint - The article discusses the current state and future trends of the recycled aluminum alloy industry, emphasizing the importance of aluminum alloys in the automotive sector and the challenges posed by supply constraints and production inefficiencies [2][3][4][5][10]. Industry Chain Structure - The aluminum industry chain consists of three segments: upstream (waste aluminum, A00 aluminum ingots, silicon, waste copper), midstream (recycled casting aluminum alloy production, mainly by small and medium-sized private enterprises), and downstream (70% used in automotive and motorcycle applications) [2][5]. Current Industry Status and Trends - In 2024, the recycled aluminum production is projected to reach 10.55 million tons, with casting aluminum alloys accounting for 59% (6.2 million tons) and a low capacity utilization rate of only 34%-40% [3][21]. - The industry is characterized by high capacity but low operational rates, with a tight supply of waste aluminum due to an incomplete recycling system [5][21]. New Capacity Additions - New capacity for casting aluminum alloys is expected to increase by 1.32 million tons in 2024 and 1.25 million tons in 2025, with a faster growth rate for recycled wrought aluminum [4][22]. Cost Analysis - The cost structure for ADC12 includes waste aluminum, silicon, copper, and natural gas, with waste aluminum being the largest cost component [6][66]. - The price difference between waste aluminum and primary aluminum is a critical factor, with a threshold of 1,500 RMB indicating when primary aluminum becomes more cost-effective [6][70]. Downstream Demand Trends - The penetration of new energy vehicles is expected to increase aluminum usage, but the growth rate of wrought aluminum alloys is anticipated to be faster [8][56]. Investment Logic - Short-term focus on price arbitrage opportunities between waste aluminum and ADC12, while long-term demand is supported by automotive lightweighting and electrification trends, though risks from recycled wrought aluminum substitutes should be monitored [10][56]. Waste Aluminum Industry - Domestic waste aluminum accounts for 85% of the supply, with 57% from old materials and 28% from new materials, indicating a strong reliance on domestic sources [39][40]. - The automotive sector is the largest source of waste aluminum, contributing 41% to the total supply [42]. Casting Aluminum Alloy Production Process - The production process involves pre-treatment, melting, and casting, with a focus on optimizing the physical properties of aluminum alloy ingots [44][46]. Downstream Demand for Casting Aluminum Alloys - The automotive and motorcycle industries account for approximately 70% of the downstream consumption of casting aluminum alloys, with significant potential for growth in aluminum usage due to lightweighting and electrification [54][56].

Industry Outlook - The Chinese government has introduced several macro development plans and industrial policies, such as the 14th Five-Year Plan and the New Energy Vehicle Industry Development Plan (2021-2035), which encourage innovation and green development in new materials and new energy sectors [1] - The Ministry of Industry and Information Technology has issued the "Aluminum Industry High-Quality Development Implementation Plan (2025-2027)", aiming for a 3%-5% increase in domestic aluminum resources and over 15 million tons of recycled aluminum production by 2027 [2] Company Performance - In Q1 2025, the company achieved a revenue of CNY 347,589.43 million, representing a year-on-year growth of 19.83%, and a net profit attributable to shareholders of CNY 11,662.67 million, with a year-on-year increase of 125.50% [4][6] - For the full year 2024, the company reported a revenue of CNY 1,397,651.34 million, reflecting a growth of 17.01% compared to the previous year [7] Competitive Advantages - The company has established a comprehensive core technology system in the recycled aluminum sector, with five key advantages: intelligent sorting pre-treatment system, low-carbon combustion system, waste heat recovery, precise alloy composition control, and a digital quality control platform [3] Future Growth Strategies - The company plans to drive future profitability through a dual strategy of "recycled casting aluminum alloy + recycled deformed aluminum alloy" and will focus on optimizing sales and procurement strategies, increasing capacity utilization, and reducing costs [5][10] - The company aims to expand its production capacity in the casting and deformed aluminum alloy sectors, leveraging domestic capital markets to seize industry integration opportunities [9][10] Financial Management - The company is addressing rising debt levels, which increased from 55% to 75% over three years, by exploring various financing methods and controlling operational funding needs [8] - The company has a current production capacity of 1.05 million tons, with a utilization rate of approximately 78% in 2024, exceeding the industry average [13]

Core Viewpoint - The company is experiencing significant growth in revenue and profit, driven by increased sales volume and improved product structure, despite the cancellation of export tax rebates for aluminum products [3][5]. Financial Performance - In 2024, the company achieved operating revenue of 32.321 billion yuan, a year-on-year increase of 22.23%, and a net profit attributable to shareholders of 1.748 billion yuan, up 29.76% [3]. - In Q1 2025, the company reported operating revenue of 8.124 billion yuan, a year-on-year increase of 13.07%, and a net profit of 440 million yuan, up 21.46% [3]. Sales and Profitability - In 2024, the company sold 1.4672 million tons of products, a year-on-year increase of 18.8%, with a net profit per ton of 1,191.7 yuan, an increase of 100.5 yuan per ton compared to 2023 [4]. - The quarterly net profit per ton for 2024 was 1,052.6 yuan in Q1, 1,904.4 yuan in Q2, 893.3 yuan in Q3, and 907.0 yuan in Q4 [4]. Market Impact of Policy Changes - The cancellation of export tax rebates for aluminum products starting December 1, 2024, is not expected to significantly impact sales, as the company anticipates maintaining sales of over 120,000 tons, indicating strong acceptance of new pricing by foreign clients [5]. Industry Developments - The inclusion of electrolytic aluminum in the national carbon market is approaching, with significant benefits for recycled aluminum, which has a much lower carbon footprint compared to traditional methods [6]. - The production of 1 ton of recycled aluminum emits only 0.2 tons of CO2, compared to 13 tons for traditional methods, leading to substantial carbon tax savings [6]. Capacity Expansion and Product Development - The company is expanding its production capacity and improving its product structure by focusing on high-end materials for sectors such as new energy, automotive, and semiconductors [7]. - Plans include the construction of a high-end heat treatment line and the exploration of advanced product technologies in automotive and aerospace applications [7].

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected investment return that exceeds the market benchmark by more than 15% over the next 6-12 months [5][16]. Core Views - The company achieved a significant year-on-year increase in net profit per ton in 2024, with a total revenue of 32.32 billion yuan, up 22.23% year-on-year, and a net profit of 1.75 billion yuan, up 29.76% year-on-year [1]. - The company is expanding its product structure by increasing its focus on high-end applications in sectors such as new energy, electronics, and automotive, which has improved its product mix [1][3]. - The cancellation of export tax rebates for aluminum products starting December 1, 2024, is not expected to significantly impact sales, as foreign clients are adapting to new pricing methods [2]. - The company is actively developing high-end products and expanding its production capacity in response to market demands, particularly in the fields of new energy and automotive materials [3]. Summary by Sections Financial Performance - In 2024, the company sold 1.4672 million tons of products, a year-on-year increase of 18.8%, with a net profit per ton of 1,191.7 yuan, an increase of 100.5 yuan per ton compared to 2023 [1]. - For Q1 2025, the company reported a revenue of 8.124 billion yuan, a 13.07% increase year-on-year, and a net profit of 440 million yuan, up 21.46% year-on-year [1]. Revenue and Profit Forecast - The company’s revenue is projected to grow to 35.78 billion yuan in 2025 and 38.60 billion yuan in 2026, with corresponding net profits of 2.04 billion yuan and 2.27 billion yuan [4][12]. - The report has adjusted profit forecasts upwards, expecting net profits of 2.04 billion yuan for 2025, 2.27 billion yuan for 2026, and introducing a new forecast of 2.48 billion yuan for 2027 [3]. Market and Industry Context - The company is positioned well within the global aluminum market, which relies heavily on Chinese aluminum exports due to its established production capabilities and skilled workforce [2]. - The integration of electrolytic aluminum into the national carbon market is anticipated to benefit the company, particularly in the production of recycled aluminum, which has significantly lower carbon emissions [2].