Key points of investment
Incident: Toyomoto discloses its 2022 annual report.
In 2022, the company achieved revenue of 1,736 million yuan, +116% year on year; achieved net profit of 151 million yuan, +184% year on year; net profit attributable to the mother was 155 million yuan, +200% year on year.
The performance fell short of previous forecasts. The main reasons were: (1) the revenue and profit of certain contract orders were delayed until 23 years due to prudential principles; (2) accounts receivable from core customers increased dramatically at the end of the period. According to the principles of consistency and prudence in accounting policies, the portion of accounts receivable within 1 year of account age was prepared for bad debts at 5% of the total amount.
In 2022, the company's gross profit margin was 18.27%, +3pcts year on year; net profit margin was 8.69%, +2pcts year on year.
Volume and price split: In 2022, the company sold 99,600 tons of lithium battery cathodes, with revenue of 1,496 million yuan, accounting for 86% of revenue. The unit price was 156,600 yuan/ton, net profit was about 128 million yuan, and net profit per ton was 13,400 yuan/ton.
On a quarterly basis, in 22Q4, the company achieved revenue of 522 million yuan, achieved net profit of 410,000 yuan to the mother, and achieved net profit of 4.99 million yuan after deducting non-return to the mother. In 22Q4, the company made an impulse stock preparation at the end of the year, but due to large fluctuations in raw material prices for lithium carbonate and iron phosphate and the slowdown in downstream demand to remove warehouses, procurement and production were mismatched, and Q4 profits were put under phased pressure. The combination of these two accounting prudent treatments led to fluctuations in Q4 profits.
A large amount of new production capacity will be invested in 2023, and customers and technical reserves are sufficient. The company has built 125,000 tons of lithium iron phosphate production capacity, which is expected to reach 300,000 tons by the end of 2023. In addition, a total of 300,000 tons of iron phosphate are planned, and the integrated layout is gradually progressing, which is expected to achieve self-supply of raw materials. The company's current customers are mainly BYD (accounting for 60% of the company's revenue in 2022) and Penghui, and has entered the supplier systems of Ningde Era and Xiamen Haichen, with long-term growth potential on the two major tracks of power and energy storage. In 2022, the company's R&D investment increased 50% year-on-year, and there are plans for new technologies such as lithium supplements, lithium manganese-ferromanganese, sodium electrocathodes, and solid-state battery cathodes.
Profit forecasting and valuation
We expect the company's revenue for 2023-2025 to be 97.48/156.70/199.50 billion yuan, an increase of 461.58%/60.76%/27.31% over the previous year; the estimated net profit attributable to the mother was 2.88/657/994 million yuan, an increase of 90.73%/128.23%/51.36% over the previous year; the corresponding PE was 24.33/10.66/7.04 times respectively, giving a “increase in holdings” rating.
Risk warning
Downstream demand fell short of expectations; market competition increased the risk; the impact of fluctuations in raw material prices; the company's production capacity investment fell short of expectations; and the risk of new customer development falling short of expectations.
Profit forecasts and financial metrics