The company released its three-quarter report for 2023. The net profit loss for the first three quarters was 56 million yuan, which was narrower than the interim report; with the removal of high-priced inventories and the increase in the level of self-supply of graphitization, the company's business situation improved; and the purchase rating was maintained.
Key points to support ratings
The net profit loss for the first three quarters of 2023 was 56 million yuan, which is narrower than the loss reported in the interim report: the company released the third quarter report of 2023. The net profit loss for the first three quarters was 562656 million yuan, after deducting losses of 2,736 yuan.
850,000 yuan. According to the company's performance estimates, net profit of 68.6562 million yuan was realized in the third quarter of 2023, a year-on-year decrease of 57.93%, an increase of 561.12% over the previous year; net profit after deducting 83.625,700 yuan, a year-on-year decrease of 53.59%, an increase of 260.16% over the previous year.
Operating cash flow has improved significantly, and the inventory structure has become more reasonable: in the second half of 2022, the price of outsourced graphite processing fell rapidly, and the company's large-scale inventory caused cost changes to lag behind, and profit pressure was high.
The company's net operating cash flow for the first three quarters of 2023 was 511 million yuan, an increase of 124.18% over the previous year. The improvement was obvious. The inventory book value fell from 2,953 billion yuan at the beginning of the year to 2.115 billion yuan at the end of the reporting period, a decrease of 28.37%, and the inventory structure became more reasonable.
Negative electrode production and sales improved, and profitability improved month-on-month: with the gradual elimination of high-priced inventory, the company's profitability recovered month-on-month. In the third quarter, the company's gross sales margin was 16.74%, down 1.69 percentage points year on year and up 3.73 percentage points month on month; net sales profit margin was 4.40%, down 5.03 percentage points year on year, and increased 4.87 percentage points month-on-month to turn loss into profit. We expect the company's anode sales volume to be about 40,000 tons in the third quarter, and the capacity utilization rate will reach 80%-90%, which is at a high level. Currently, the first phase of the company's Gui'an New Area base project is in the capacity release stage, and the Yunnan Qujing base is actively advancing. As related production lines are completed and put into operation one after another, the company's anode production and sales are expected to be supported.
Fast charging products have been used in batches, actively exploring overseas markets: The company's fast charging anode has been successfully applied in batches on clients and has become one of the company's main products. Currently, the production line can meet the market's demand for fast charging anode. The company has achieved batch supply to SK On and LGES in South Korea, and the development of other overseas customers is progressing according to plan, and the share of overseas sales is expected to increase further in the future.
valuations
Under the current share capital, considering the company's asset impairment losses and increased competition in the negative industry, we adjusted the company's 2023-2025 earnings per share forecast to 0.03/0.59/0.93 yuan (the original forecast was 1.59/2.16/- yuan), corresponding to a price-earnings ratio of 357.6/18.2/11.6 times; maintaining the buying rating.
The main risks faced by ratings
There have been adverse fluctuations in raw material prices, NEV industry policies have fallen short of expectations, NEV product strength has fallen short of expectations, industry chain demand has fallen short of expectations, and the impact of the epidemic has exceeded expectations.