The company released its mid-2023 report that it made a profit of-36 million yuan in the first half of the year, down 105.37% from the same period last year. The company's performance is under short-term pressure affected by the price of raw materials, and the volume of sodium and electric materials is expected to be released.

Support the main points of rating

2023H1 profit decreased by 105.37% compared with the same period last year: the company released the mid-2023 report that revenue in the first half of the year was 3.258 billion yuan, down 40.11% from the same period last year; profit was-36 million yuan, down 105.37% from the same period last year, and non-profit was deducted from-35 million yuan, down 105.39% from the same period last year. According to the company's performance estimates, 2023Q2 made a profit of-106 million yuan, a decrease of 132.89% over the same period last year, and deducted non-profit of-107 million yuan, a decrease of 133.64% over the same period last year.

Profit pressure in the first half of the year, the proportion of high-nickel materials increased: due to the weak recovery of the industry, the company's sales revenue of ternary materials decreased in the first half of the year compared with the same period last year. In addition, the price of raw materials has also changed greatly, showing a sharp decline from November 2022 to April 2023 and rebounding slightly from April to June 2023. The sharp fluctuation of raw material prices has also led to higher production costs and lower gross profit margin. At the same time, provision for inventory impairment. According to the data disclosed by the company's China Daily, the company's sales revenue of cathode materials reached 3.224 billion yuan in the first half of the year, down 40.05% from the same period last year, and the gross profit margin was 3.48%, down 14.85% from the same period last year. The company has a good reputation in the field of single crystal materials. From the perspective of product structure, the company's sales revenue of high-nickel products accounted for more than 40% in the first half of the year, compared with 35% in the same period last year, indicating that the company's high-nickel single crystal materials have strong market competitiveness.

Sodium cathode materials have been shipped: as an important technological development direction in the future, the company actively carries out layout in this field. Two models equipped with sodium batteries have entered the new car announcement of the Ministry of Industry and Information Technology for the first time this year, and there is a broad market space in the future. Up to now, the company has achieved 100-ton sales, with a high concentration of customers, of which the largest customer accounts for more than 70% of continuous batch production in August 2023. In the future, with the continuous improvement of sodium ion battery permeability, the company's sodium cathode material shipments are expected to grow on a large scale, and the performance is expected to benefit directly.

Valuation

Combined with the company announcement and the recent situation of the industry, we adjust the company's forecast earnings per share for 2023-2025 to 0.55 yuan per share (the original forecast for 2023-2025 diluted earnings per share is 1.97 pounds 2.48 cents 2.74 yuan), corresponding to a price-to-earnings ratio of 42.1 times earnings per share, 14.1 pounds, 10.7 times; maintain the overweight rating.

Main risks faced by rating

The demand of the industrial chain falls short of expectations; the price of raw materials fluctuates unfavourably; the industrial policy of new energy vehicles falls short of expectations; the power of new energy vehicle products falls short of expectations.