Incidents:
The company announced its annual results forecast for '23. For the whole of 2023, the company expects to achieve revenue of 113-11.6 billion yuan, an increase of 2.97%-5.70%; a net profit of 300-360 million yuan, an increase of 229.65%-295.58%; and an estimated net profit deducted from mother of 220—260 million yuan, an increase of 1105.55%-1324.74%.
Comment:
The 4Q23 performance revenue was in line with expectations, and profit was briefly under pressure. According to the company's performance forecast, in 4Q23, the company is expected to achieve revenue of 2,760-3060 million yuan, +5% to 16% year-on-year, and -10% to 0% month-on-month; achieve net profit of 0.10-70 billion yuan, and achieve non-net profit deducted from mother of 0.01 to 41 million yuan. We believe that the short-term pressure on 4Q23 company profits is mainly due to three major factors: 1) the scale efficiency of the mobile storage business has not yet been highlighted + production capacity climbing yield is low, and the gross margin of the business is clearly under pressure, which in turn drives the company's 4Q23 profit decline; 2) the impact of inventory price drop losses. According to the company's announcement, in 4Q23, the company's asset impairment losses reached 43 million yuan; 3) RMB appreciated slightly in 4Q23, and the company's exchange gains and losses fluctuated, affecting the company's profit.
In '24, consumer electronics ushered in a recovery, and new technology+new applications opened up a new space for consumer cells. 1) According to Canalys, global smartphone and PC shipments in '23 were 1.1 billion units/247 million units, respectively, -13%/-4% YoY. The company's revenue grew positively year over year in '23, and its market share increased against the trend. Looking ahead to 24 years, benefiting from the increase in Apple's customer share and breakthroughs in high-end Android phones, we expect the company's share in the mobile phone battery market to continue to increase, and the consumer sector revenue is expected to maintain rapid growth; 2) We expect the company's pack self-supply rate to reach 30% in 23. Currently, downstream customers are increasingly accepting the cell+pack joint supply model. Assuming that the company's pack self-supply ratio reaches 40% in 24, we expect the corresponding revenue increase to 3-4 billion yuan; 3) The accelerated spread of new technologies such as small steel cases+silicon-based anodes, AI New applications such as PC and MR are constantly emerging. As material costs stabilize, consumer batteries will enter a sharp rise in volume and price.
The mobile storage business strategy is clear, and losses can be expected to be reduced for 24 years. The company's mobile storage strategy focuses on applications such as start-stop, overseas household storage, and drones, and focuses on orders with positive marginal contributions. According to the company's announcement, the company is planning to increase capital and expand shares of the holding subsidiary Zhejiang Guanyu and introduce external investors. We believe that as the company's moving and storage sector begins the financing process and internal refined management accelerates, cost-side expenses are expected to decrease, and business losses are expected to narrow in 24 years.
Investment analysis opinion: Considering the increased competitive pressure in the company's mobile storage business industry, we lowered the company's net profit from 23-25 to 3.56/9.97/1,391 billion yuan (4.67/10.71/1,506 billion yuan before adjustment), corresponding to the closing price of January 23, PE 49/18/13 times, maintaining the “buy” rating.
Risk warning: the risk of raw material price fluctuations, downstream demand falling short of expectations, and capacity release falling short of expectations.