Event: on October 27, the company released its third quarterly report of 2023. In the first three quarters, the company achieved revenue of 6.492 billion yuan,-34.68% of the same period last year, and net profit of-727 million yuan,-202.61% of the same period last year. Of this total, 23Q3 achieved revenue of 2.678 billion yuan in a single quarter, with a quarter-on-quarter profit of + 54.76%, and a net profit of-73 million yuan and a month-on-month profit of + 83.18%, significantly reducing losses compared with the second quarter.

The operating data has been improved compared with the previous month, and the rate of reducing cost and increasing cost has been reduced. In terms of expense rate, the management expenses in the third quarter were-42.28%, the financial expenses were-9.53%, and the sales expenses were-0.61%. The company continued to expand its product matrix, further increased its R & D investment, and spent 164 million yuan in R & D in a single quarter, an increase of 22.40% over the same period last year.

It is proposed to list in Hong Kong to solve the overseas production capacity construction funds. The company submitted an application for the listing of H-shares to the Hong Kong Stock Exchange on October 24, and the amount of financing will be used for the construction of the second phase of the Indonesian plant. As the first domestic enterprise to build an overseas factory to produce lithium iron phosphate, it grabs the overseas market by virtue of the first-mover advantage. The introduction of overseas customers has made clear progress, has officially entered the LGES supplier system, and with a number of other international well-known battery factories for pilot testing.

The demand for low conductivity coolant for electric vehicles is just around the corner, which has become a new profit growth point for the company. Since July 1, 23, the national standard of "motor vehicle coolant" has been officially implemented, and the company has made a product layout around the new energy cooling system. The recently launched Aneng low conductivity special coolant product has the Heng'an low conductivity corrosion inhibition technology newly developed by Longqi, which can be widely used in new energy electric vehicles, heavy trucks, energy storage power stations, hydrogen fuel cells, charging piles and other fields.

We will actively promote the layout of industrial integration and continue to broaden the product matrix. The company is active in all aspects of layout, as the only company in the industry with lithium carbonate processing capacity, the processing plant was ignited on August 16, and the product is expected to be produced in November; in terms of iron phosphate, the company plans to build an one-to-one matching iron phosphate capacity; provide a variety of LFP cathode materials, for low-temperature "iron lithium 1" and low-cost "Regeneration No. 1" are unique products in the industry.

Investment suggestion: we estimate that the company's operating income from 2023 to 2025 will be RMB 98.4811474max 32157 million, compared with the same period last year, and the year-on-year net profit will be RMB 1.642 billion and-168.2% RMB 296.6%, respectively.

The corresponding PE in 24-25 years is 5 times higher than that in 7 years. In the next 24-25 years, the company's overseas lithium iron phosphate production capacity is about to be released, the demand of the superimposed coolant industry is increasing, and the impact of large fluctuations in lithium carbonate prices on the company is gradually dispelled, maintaining the company's "overweight" rating.

Risk hint: downstream demand is lower than expected; the company's capacity release rate is not as fast as expected.