Key points of investment
23H1's net profit was 350 million yuan, a year-on-year decrease of 41.28%, in line with market expectations. In 2023, H1's revenue was 9.219 billion yuan, down 19.46% from the previous year; net profit of the parent company was 350 million yuan, down 41.28% from the previous year; after deducting non-net profit of 304 million yuan, a year-on-year decrease of 48.69%. In 2023, Q2 achieved revenue of 4.71 billion yuan, a year-on-year decrease of 18.77%, and a year-on-year increase of 4.47%; net profit of 196 million yuan, a year-on-year decrease of 48.68%, a year-on-year increase of 26.53%, after deducting non-return net profit of 162 million yuan, a year-on-year decrease of 59.6%, and a year-on-year increase of 13.63%.
About 31,000 tons of battery foil were shipped in 23Q2, and profit per ton declined slightly due to processing costs. The company shipped about 56,000 tons of battery foil in the first half of the year, an increase of nearly 30% over the previous year. Of these, 23Q2 shipped about 31,000 tons, an increase of about 25% over the previous year. The initial volume of downstream orders in Q3 was obvious. We expect the company to ship 14-150,000 tons of battery foil in '23, an increase of 30-40% over the previous year. In terms of profit, we estimate that Q2 deducts non-profit of about 40,000 yuan per ton, a year-on-month decrease of about 20%. This is mainly due to a slight reduction in processing fees from May to June. Currently, battery foil processing fees are basically stable, and the share of charcoal-coated aluminum foil has increased. The profit per ton is expected to remain around 40,000 yuan in the second half of the year.
Demand for packaging foils is relatively weak, and air conditioning foil+strip remains marginal. In the first half of the year, we shipped about 110,000 tons of single and double zero foil, a year-on-year decrease of 35%. Of these, Q2 shipped about 50,000 tons, a year-on-year decrease of about 10%. Considering weak downstream demand, annual shipments are expected to be 200,000 to 250,000 tons; in terms of profit, Q2 packaging foil is less than 600-700 yuan per ton of non-profit, down slightly month-on-month, and is expected to contribute about 100 million yuan in profit for the whole year. Air conditioning foil+board Q2 shipped 100,000 to 110,000 tons. A single ton deducted a non-profit of about 100 yuan, maintaining a marginal profit.
Profit forecast and investment rating: Due to lower processing fees, we revised the company's net profit for 2023-2025 to 8.0/10.7/1.36 billion yuan (the original forecast was 12.0/15.9/2.08 billion yuan), compared to -42%/+33%/+28%. The corresponding PE is 18x/14x/11x. Considering that the company is a leading battery aluminum foil, the production expansion rate is ahead of peers, giving 20xPE in 2024, with a target price of 24.2 yuan, maintaining the “buy” rating.
Risk warning: Prices of raw materials continue to rise, battery foil production expansion falls short of expectations, and competition is intensifying.