Key points of investment
Performance summary: The company released its semi-annual report for 2023. In the first half of 2023, the company achieved operating income of 8.130 billion yuan, an increase of 2.09%; realized net profit of 409 million yuan, a year-on-year decrease of 171.97%; realized net profit after deduction was -412 million yuan, a year-on-year decrease of -172.43%.
The decline in anode profit was compounded by asset impairment losses, and the company's mid-report performance was under significant pressure. The company's loss in performance in the first half of 2023 was mainly due to a sharp decline in profits in the company's anode industry combined with inventory superposition. (1) Amount:
In the first half of 2023, the company produced 1.4559 million tons of pre-baked anodes, up 10.02% year on year; sold 1,4209 million tons of pre-baked anodes, up 12.28% year on year, of which export sales were 294,800 tons, down 11.76% year on year, and domestic sales of 1.1261 million tons, up 20.90% year on year. (2) Profit: Prices of petroleum coke and pre-baked anodes continued to decline rapidly in the first half of 2023, putting pressure on industry profits. According to Baichuan Yingfu data, the 2023H1 pre-baked anode industry lost an average tonne loss of 111 yuan, and the industry has entered a loss range.
Furthermore, 2023H1's asset impairment losses reached 366 million yuan, further putting pressure on the company's performance.
On a quarterly basis, the company's net profit for Q1 and Q2 was -273 million yuan and -136 million yuan respectively. The main reason for the improvement in Q2 performance was a decrease in asset impairment losses. The company's Q2 asset impairment loss was 75 million yuan, a decrease of 216 million yuan compared to Q1.
The company's anode production and sales volume is steadily expanding. The company currently has a production capacity of 2.82 million tons of pre-baked anodes. In the future, with the gradual commissioning of the 300,000 ton aluminum carbon material project in Suotong in Longxi, the 1 million ton calcined coke project in Zhijiang, Hubei, and the 340,000 ton pre-baked anode and 300,000 ton post-calcined coke project in Shandong, the company is expected to reach a production capacity of 5 million tons by 2025.
The new construction project is progressing smoothly, and lithium battery anode products will be released rapidly. During the reporting period, the first phase of the new 40,000-ton graphitization project and the Shengyuan anode project were put into operation in one step with 25,000 tons of graphitization production capacity. The 770MW photovoltaic power generation project has been mainly completed. It is expected to be electrified in the second half of 2023, and 80,000 tons of anode material production capacity is expected by the end of 2023. In the first half of the year, the company produced 12,900 tons of lithium battery anode products and sold 0.94 million tons of lithium battery anode products; it produced 61.81 million capacitors and sold 56.4092 million capacitor products. As the company's lithium battery anode project progresses steadily, the production and sales volume of the company's lithium battery anode products will increase rapidly, contributing to profits.
The company actively lays out overseas markets. In the context of the domestic electrolytic aluminum ceiling, overseas raw aluminum production capacity will usher in a new development cycle, and the company will actively lay out overseas markets. On May 31, 2023, the company and EGA signed a “Memorandum of Understanding on Investment” to jointly establish a joint venture in the UAE to use the joint venture as the implementing entity to build a pre-baked anode production base (hereinafter referred to as the “Project”) to meet the needs of EGA and surrounding regions for pre-baked anode products.
Profit forecast and investment advice: With the steady progress of new construction projects, the company's pre-baked anode production and sales volume will continue to rise in the future. Furthermore, through the acquisition of Xinyuan shares and the construction of a 200,000 ton lithium battery anode material integration project, the company quickly entered lithium battery anode materials, starting the company's second growth curve. The “pre-baked anode+lithium battery anode” two-wheel drive the company's performance increased. We adjusted our profit forecast. We expect the company's net profit from 2023-2025 to be 1.81, 9.15 billion yuan, and 1,135 million yuan respectively, EPS 0.33, 1.69, and 2.10 yuan respectively, and PE corresponding to the closing price on September 1 will be 49.0, 9.7, and 7.8 times, respectively, maintaining the “increase in holdings” rating.
Risk warning: A sharp decline in downstream demand, large fluctuations in raw materials and energy costs, project commissioning falling short of expectations, etc.