Events. On October 26, 2023, the company released its third quarterly report for 2023. In the first three quarters of 2023, the company achieved revenue of 8.786 billion yuan, a decrease of 5.49%, a net profit of 463 million yuan, a decrease of 73.25%, and a net profit of 408 million yuan, a decrease of 74.54%. In a single quarter, Q3 realized revenue of 3.521 billion yuan in 2023, an increase of 7.71%, a ring increase of 26.04%, a net profit of 194 million yuan, a decrease of 40.49%, a ring increase of 22.60%, a net profit of 181 million yuan, a decrease of 17.86%, a ring increase of 27.66%, a gross profit margin of 19.14%, the same minus 13.42pcts, a ring increase of 0.39pct, a net profit of 7.41%, a decrease of 29.98pcts, and a ring increase of 0.12pct.

Q3 Lithium hexafluorophosphate shipments are in line with expectations and have been steadily exported to Japan and South Korea. In 2023, Q3 company shipped more than 10,000 tons of lithium hexafluorophosphate, and is expected to ship about 40,000 tons of lithium hexafluorophosphate in the whole year. The company's current production technology of lithium hexafluorophosphate is the fourth generation, and the cost control capacity per ton is in the forefront of the industry. In the aspect of producing hydrofluoric acid from fluorosilicic acid, the company has made a technological breakthrough and has achieved mass production, and is expected to reduce its dependence on fluorite resources in the future; in terms of phosphorus resources, the company can directly use continuous reaction of phosphorus trichloride to reduce its dependence on phosphorus pentachloride; lithium fluoride is basically self-supplied. At present, lithium hexafluorophosphate has been steadily exported to Soulbrain, Enchem, Mitsubishi and other Japanese and South Korean enterprises, production and sales are in the forefront of the world, with the improvement of lithium hexafluorophosphate supply capacity, the company's market share is expected to increase.

With the increase of capital in Ningfu, Guangxi, the integration of new energy battery business is accelerated. The company has a total capacity of 8.5GWh, including lithium battery capacity 7.5GWh and sodium battery capacity 1GWh. In the first three quarters, power battery and energy storage battery shipped a total of 2.5-3GWh, of which energy storage battery shipments accounted for more than 30%. On October 17, the company issued an announcement on the capital increase in Ningfu, Guangxi. after the completion of the capital increase, the company's shareholding in Guangxi Ningfu will increase from 35.20% to 70.29%, realizing the accelerated integration of the new energy battery business. At present, Guangxi Ningfu Phase II 15GWh battery project has started construction, the company will form the production capacity layout of polyfluorinated new energy 10GWh and Guangxi Ningfu 20GWh in the future, the product system includes ternary, lithium iron phosphate and sodium ion batteries, and the product series includes ternary soft package, square iron lithium and large cylinder. With the growth of downstream demand and the release of the company's battery capacity, the company is expected to further enhance its supply capacity, and the new energy battery business will bring considerable profit growth space.

Aluminum fluoride plate makes a stable contribution to the company's overall income. In the first three quarters of 2023, thanks to the recovery of the aluminum fluoride market, the aluminum fluoride plate made a stable contribution to the company's overall revenue, accounting for 15% of the company's revenue. With the rapid expansion of the new materials plate and the new energy battery sector, it is expected that the traditional fluoride business will show a downward trend in the company's revenue share in the future.

Investment suggestion: we expect the company to achieve revenue of 131.30 yuan, 175.78 yuan and 23.162 billion yuan from 2023 to 2025, with year-on-year growth rates of 6.2%, 33.9% and 31.8%, respectively, and net profit of 7.16,10.90 and 1.573 billion yuan respectively, with year-on-year growth rates of-63.2%, 52.1% and 44.3% respectively. The current closing price corresponds to 23.162 billion times of PE in 2023-2025. Considering the strong growth of the company's new materials plate and new energy battery sector, business expansion continues to accelerate, and the "recommended" rating is maintained.

Risk tips: the risk of macro-political and economic fluctuations, the cost risk caused by the fluctuation of raw material prices, the risk of product and technology renewal, the management risk caused by the expansion of the company, and so on.