The company achieved net profit of 149 million yuan in 2023Q3, +565% year-on-year. In the first three quarters of 2023, the company achieved revenue of 8.540 billion yuan, +2% year-on-year; net profit of 290 million yuan, +241% year-on-year. 2023Q3 achieved revenue of 3,066 billion yuan, +18% and -1% month-on-month; net profit of 149 million yuan, +565%, -47% month-on-month; gross margin was 28.83%, +10.99pct, +3.44pct month-on-month; net profit margin was 3.23%, +2.37pct yoy, and -5.07pct month-on-month.
The company's Q3 consumer battery shipments increased slightly month-on-month, and the profitability performance was impressive. We estimate that the company's 2023Q3 consumer battery revenue is about 2.9-30 billion yuan, which is basically the same from month to month; consumer battery sales volume is close to 91 million units, a slight increase over the previous month; and the gross margin of consumer batteries is nearly 30%, a slight increase from month to month. The company's Q3 increase in Apple phone battery supply boosted sales growth; customer structure optimization combined with falling raw material prices drove continuous improvement in profitability.
The company is actively deepening customer cooperation, and the market share of consumer batteries is expected to rise steadily. In the laptop and tablet battery market, the company continues to expand its supply share among existing customers such as HP, Lenovo, Dell, Asus, Acer, Microsoft, Amazon, etc., and the supply share of Apple laptops continues to increase. In terms of the mobile phone battery market, the company has in-depth cooperation with Huawei, Honor, Xiaomi, OPPO, VIVO, Lenovo, ZTE, etc., and achieved mass production of Apple phone batteries for the first time in 2023H1, adding new opportunities for future mobile phone market share. In addition, the company is also actively expanding the market for emerging consumer electronics products such as smart wearables, drones, smart cleaning appliances, and power tools, continuously enriching the customer base and achieving rapid growth.
The company's power and energy storage business layout is progressing steadily. We estimate that the revenue of the company's 2023Q3 mobile storage business is close to 100 million yuan, and losses are around 150 million yuan. Losses may be mainly affected by factors such as insufficient capacity utilization and impairment losses from some inventories. In terms of starting and stopping batteries, the company has been recognized by domestic and foreign first-tier car companies such as SAIC Motor and Jaguar Land Rover, and has begun gradual mass production and shipment. In terms of household energy storage batteries, the company cooperates closely with Daqin, Sonnen, Aero, etc., and is actively developing overseas customers. In terms of grid-side energy storage, power generation side energy storage, and industrial and commercial energy storage, the company has accelerated the development and certification of 305Ah, 320Ah, 320+Ah capacity cells and 1-hour systems. In addition, the company is actively developing energy storage systems. In 2022 and 2023, the company won two bids for the South Grid large storage system project, with a total bid capacity of 445 MWh.
Risk warning: demand falls short of expectations; new customer development falls short of expectations; raw material prices fluctuate sharply.
Investment advice: Maintain profit forecasts and maintain an “increase in holdings” rating. We expect the company to achieve net profit of 478/11.15/1,621 billion yuan in 2023-2025, a year-on-year increase of +426/133/ 45%, EPS of 0.43/0.99/144 million yuan, respectively, and current PE of 47/20/14 times.