Company Signs Framework Agreement with Alcoa for 240,000 Tons of Pre-Baked Anodes

The company released its third-quarter report for 2024, revealing revenue of 9.919 billion yuan ($1.36 billion), a year-on-year decline of 16.86%. Net profit attributable to shareholders was 217 million yuan ($29.8 million), while net profit after deductions stood at 135 million yuan ($18.5 million). Despite the overall revenue decline, the profitability of the pre-baked anode business remained stable, particularly in the third quarter. During this period, the company recorded revenue of 3.444 billion yuan ($472.7 million) and a net profit of 185 million yuan ($25.4 million), representing a year-on-year increase of 141.24%.

The company also announced the signing of a sales framework agreement with Alcoa to supply approximately 240,000 tons of pre-baked anodes in 2025 to Alcoa's subsidiaries in Canada, Spain, and Bekancourt. This agreement marks a significant step in strengthening strategic cooperation with Alcoa, the largest primary aluminum producer in the United States. As of the end of 2023, Alcoa had a nominal production capacity of about 3.1 million tons of primary aluminum, underscoring its strategic importance as a partner.

The profitability of the anode industry is expected to recover as market fundamentals stabilize. The company reported a net profit of 185 million yuan ($25.4 million) for the third quarter, largely driven by a gain in fair value of approximately 160 million yuan ($21.9 million) resulting from the early return of shares by a performance pledge party. After accounting for losses from the negative electrode business, net profit after deductions was 23 million yuan ($3.2 million), a year-on-year decline of 71.26%, primarily due to a 66 million yuan ($9 million) loss in the negative electrode segment. Excluding these losses, the pre-baked anode business showed stable profitability, suggesting that prices and profits may have reached their lowest point, with a potential rebound on the horizon.

The framework agreement with Alcoa's subsidiaries positions the company as a key supplier to international markets and demonstrates growing recognition of its brand. The company remains focused on expanding its export market and actively pursuing an overseas growth strategy to enhance its presence in global markets. The supply of pre-baked anodes to Alcoa is a crucial component of achieving this objective.

The company projects earnings per share (EPS) of 0.67, 1.61, and 2.26 yuan for 2024, 2025, and 2026, respectively, with price-to-earnings (PE) ratios of 19, 8, and 6. The company remains optimistic about its growth prospects and has maintained a "Buy" rating as profitability in the anode sector is expected to improve.

Nevertheless, certain risks persist, including potential declines in industry demand and intensified competition that could further pressure product prices and gross margins. The company is closely monitoring these risks as it continues to execute its strategic plans.