Long-term Lithium Division disclosed the semi-annual report of 2023, 23Q2 business improved month-on-month. 2023H1 achieved revenue of 4.89 billion, year-on-year-36%, net profit of 60 million, year-on-year-91%, and non-return net profit of 30 million, year-on-year-96%. Among them, Q2 achieved revenue of 2.96 billion, month-on-month ratio of + 53%; return-to-home net profit of 64 million, month-on-month ratio of + 6744%; deduction of non-return net profit of 51 million, month-on-month reversal of losses. 23Q2's comprehensive gross profit margin is 7.2%, month-on-month ratio is + 3.7pct, and net profit rate is 2.2%, month-on-month ratio + 2.1pct. As the downstream of 23Q1 is in the de-storage stage, the company's sales are low, capacity utilization is low, and profitability has declined. After entering Q2, driven by the volume of some power projects, the industry operating rate has rebounded, the company's capacity utilization has also recovered significantly, and the 23Q2 performance has improved significantly compared with the previous month.
Lithium salt price fluctuations superimposed industry competition intensified, the company's performance under short-term pressure. 2023H1, under the pressure of the withdrawal of the subsidy policy for new energy vehicles and the high inventory in the industrial chain, the downstream ternary demand is weak. In addition, in the context of continuous expansion of production capacity, the market competition is becoming more and more fierce. In the first half of the year, the company's three-yuan positive price and order quantity have decreased. However, from the Q2 performance, it is expected that the company's shipping level has recovered since June. In view of the sharp fluctuations in raw material prices in the first half of the year, the company has signed strategic procurement agreements with upstream head enterprises to enhance supply flexibility, and the cost pressure is expected to be alleviated quarter by quarter. Looking forward to the second half of the year, the company's profitability is expected to be repaired as raw material prices stabilize and decline slowly, as well as sales growth driven by rising downstream demand.
Positive layout of positive forward-looking technology, product structure is expected to accelerate upgrading. In the aspect of new technology, 1) power three yuan:
The ultra-high nickel single crystal cathode material of the company has achieved 100-ton shipment and has passed the audit of the large cylindrical power battery project; the second-generation high-power high-nickel NCA has achieved 100-ton delivery; the cost of high-voltage fast charging medium-high nickel ternary materials has been further reduced, and the stability samples of the production line batches have passed customer evaluation. 2) Lithium iron phosphate: batch stability verification and small batch trial production have been completed, orders from some major customers have been obtained, and Q3 is expected to be shipped. 3) Sodium cathode: the development of the first generation of layered materials is basically finalized to achieve tonnage sales; at the same time, the company also has R & D layout in Prussian blue and polyanion routes.
The next city for international customers will speed up the company's overseas layout. In February 2023, the company announced that it had received a fixed-point notice from PPES, a subsidiary of Toyota in Japan, and expected to carry out mass production of ternary cathode materials in Q3. According to Toyota's latest new energy vehicle plan, it aims to launch 10 new pure electric models by 2026, with an annual production capacity of 1.5 million electric vehicles, and to strengthen the development of long-lasting models (using high-nickel cathode materials). With the continuous progress of the designated project, the company's overseas shipments are expected to grow further in the future. In addition, the company has signed a memorandum of cooperation with the French company Axens to accelerate the construction of integrated positive production capacity in France by means of technical support, so as to further match the needs of European terminal customers and speed up the company's process of going out to sea.
Profit forecast: due to the intensification of competition in the Sanyuan positive industry this year, we adjusted the company's net return profit from 2023 to 2025 to RMB 7.9 billion, an increase of-75.5%, 117.2% and 85.3%, respectively, corresponding to a PE of 51.2, 23.6, 12.7 times. Maintain the "overweight" rating.
Risk tips: raw material prices fluctuate more than expected; downstream market demand is lower than expected; new product development is not as expected.