Maintain an increase in holdings rating. The negative impact of high-priced raw material inventories in the previous period has gradually subsided. Considering the deterioration in profit due to increased competition in the industry, the downsizing company's 2023-2024 EPS was 0.03 (-1.61) yuan and 0.62 (-1.72) yuan, and the 2025 EPS was added to 0.71 yuan. Referring to similar comparable companies, they gave 21 XPE in 2024, corresponding to the target price of 13.02 (-19.73) yuan.
The performance fell short of expectations. The company announced that in the first three quarters of 2023, the company achieved revenue of 3,522 billion yuan, a decrease of 5.95%; net profit of the mother - 56 million yuan, a decrease of 113.2%; net profit after deduction of net profit of 27 million yuan, a decrease of 105.9%. Among them, 23Q3 revenue was 1,288 million yuan, down 24.79%, up 7.96%; net profit was 69 million yuan, down 57.93%, up 590%; net profit after deduction was 884 million yuan, down 53.59%, and up 265.22%. The interest expenses accrued by the Shenzhen Venture Capital New Materials Fund in the first three quarters were 51 million yuan, and Q3 expenses were 17 million yuan, which had a significant impact on non-financial profit and loss projects.
Profitability is picking up. The gross margin of the Q3 company was 16.7%, up 3.7 pct from Q2; the net profit margin was 4.4%, which turned a loss into a win over Q2. We believe that with 1) the digestion of high-ranking raw material inventories on the material side; 2) the gradual increase in the self-sufficiency rate of integrated cost-side graphitization projects; and 3) the strengthening of internal cost control, the company's profitability is expected to increase steadily.
Vigorous expansion of overseas customers. While continuing to deepen cooperation with existing major customers, the company explores potential key customers and energy storage battery customers and makes every effort to develop the international market. At present, it has achieved batch supply to customers such as SK On and LGES in South Korea, and the customer structure has been further enriched, providing a better guarantee for long-term performance growth.
Risk warning: competition in the industry is intensifying, demand for electric vehicles falls short of expectations, and improper management of company inventories