Recommended logic: 1) European demand recovery + Southeast Asian incentive replacement, electric two-wheeler demand restart growth. Subsidies in Southeast Asia promote the conversion of motorcycle oil to electricity. The sales of motorcycles in the six ASEAN countries are about 1300 per year. If all of them are replaced by electric motorcycles, it corresponds to a lithium battery market of nearly 40 billion yuan per year. 2) the demand for overseas energy storage continues to expand. According to the European Photovoltaic Association, the new deployment of European household storage will reach 7.3GWh in 2025, and the CAGR will be 17% in the past 4 years, and the total operation scale will exceed 44GWh. 3) 23H1 notebook computer consumption shows obvious signs of recovery, superimposed multi-application scenario development, consumer lithium battery business is expected to return to the growth track. 4) the price of lithium carbonate, the core raw material upstream of the company, dropped sharply by 300,000 yuan / ton this year, and the pressure on the cost side was reduced. We calculate that for every 10,000 yuan / ton reduction in lithium carbonate price, the corresponding lithium battery cost will be reduced by about 5 yuan / kWh.
The demand for 23H1 bicycles declines in stages, and the medium-and long-term space is huge. 23H1, the company's light vehicle lithium-ion battery business achieved revenue of 470 million yuan,-34.9% compared with the same period last year, mainly affected by overseas inflation, geopolitics, product destocking and other factors. In the medium and long term, the replacement demand of overseas electric motorcycle markets such as Southeast Asia and India broke out, and the company actively laid out emerging markets, grasped growth points, and developed products such as scooter batteries, tricycle batteries, mobile robot batteries and so on. Open up the future downstream market space.
Energy storage business + 254% year-on-year, industrial and commercial energy storage to achieve small batch shipments. 23H1, the company's energy storage business is growing at a high speed, with an income of 440 million yuan, + 253.7% compared with the same period last year. From the perspective of sub-structure, the proportion of household storage has further increased, and the proportion of revenue has exceeded that of portable energy storage. In addition, the company actively develops energy storage categories, 23H1 small and medium-sized industrial and commercial energy storage to achieve small-batch shipments, further enrich the energy storage product matrix. At present, the energy storage industry as a whole is still in the initial stage of low permeability and high growth rate.
The supply-side destocking of consumer electronics continues and the demand-side slowly recovers. 23H1, the consumer electronics battery sector, achieved sales revenue of 294 million yuan, + 16.8% year-on-year, significantly higher than the bottom of demand in 2022. According to TrendForce data, 23Q2, the main downstream of the company's consumer lithium battery products-laptop terminal inventory pressure relief, demand replenishment. With the decline in the price of upstream raw materials, superimposed demand recovery and market segmentation driven by innovation, the consumer lithium battery market may usher in a development inflection point.
The price of lithium carbonate has dropped, and the pressure on the cost end of the company's self-supply cell has been reduced. According to Baichuan Yingfu data, the price of lithium carbonate, the core upstream raw material of 23H1, has dropped sharply, from 500,000 yuan / ton at the beginning of the year to a minimum of 170,000 yuan / ton, corresponding to the release cost of more than 150,000 yuan / kWh. Since the beginning of 2023, the company's 1.5GWh "Golden Hoop stick" large cylindrical battery production line has achieved mass production, overseas production capacity has been steadily built, and the degree of product integration has been strengthened. With the further release of lithium carbonate supply and the relaxation of supply and demand in the future, prices are expected to return to the historical average, and there is still room for the company's cell production costs to decline.
Profit forecast and investment advice: the company deeply ploughs the overseas two-wheeled lithium battery market and is deeply bound with downstream customers through channels throughout Asia, Europe and Africa. With the outbreak of overseas small-scale energy storage demand in recent years, the company actively develops products, expands customers, and fully enjoys the growth dividend of the industry. We expect the compound growth rate of homing net profit in the next three years to be 46.7%. It will be 20 times PE in 2024, with a target price of 48.20 yuan, with a "buy" rating for the first time.
Risk tips: business risk; technical risk; financial risk; industry competition risk; macro environmental risk.