Zheshang Machinery [Huaton Cable] Major Recommendation: Africa electrolytic aluminum leader, alpha attributes will emerge!

English summary

Core logic: The company's African electrolytic aluminum project has begun to ramp up. Based on Angola's hydropower cost advantage, the company's profitability is significantly higher than domestic electrolytic aluminum enterprises. With the gradual commissioning and construction of phase I, phase II, and future projects, the company's alpha attributes above the industry will gradually emerge. 1. The company has outstanding hydropower cost advantages in Angola, Africa. Phase I electrolytic aluminum project (annual output of 120,000 tons) was successfully put into production in January this year; Phase II project (annual output of 240,000 tons of electrolytic aluminum) is progressing normally and is planned to be completed by 2027; the future planned total electrolytic aluminum capacity reaches 520,000 tons. Under current aluminum prices and neutral assumptions, the company's African electrolytic aluminum profit per ton is about 9,000 yuan. 2. The company has three main businesses: cables, oil and gas, and aluminum, and has laid out new businesses such as geophysical exploration services and material R&D. In the future, it is not only electrolytic aluminum, and valuation has potential for further improvement. 3. It is estimated that the company's net profit attributable to shareholders from 2026 to 2028 will be 790 million, 2.02 billion, and 3.08 billion yuan, with year-on-year growth of 176.6%, 155.9%, and 52.3%, corresponding to PE of 19, 7, and 5 times...