Event: The company released its 2023 performance forecast. The company is expected to achieve net profit of 1.08 to 1.28 billion yuan in 2023, +19.84% to +42.04% year-on-year, and achieve net profit without deduction of 1.05 to 1.25 billion yuan, or +24.16% to +47.81% year-on-year. Among them, we expect 23Q4 to achieve net profit of 285-485 million yuan, -7.36% to +57.64%, and -0.41% to +69.48% month-on-month; realized net profit without return to mother of 279-479 million yuan, -3.49% to +65.81% year-on-year, and +1.12% to +73.73% month-on-month. The performance exceeded market expectations.
We expect a net return rate of about 11% in '23, and the profitability of the company's structural components is strong. The company exchanges price for volume. While reducing product prices, it maintains strong profit resilience through various methods such as increasing the level of automation, increasing yield, and improving product structure. At the same time, value-added tax rebates and government subsidies increase profits. We expect the 23Q4 company's net interest rate to be about 13%-14%, a significant increase over the previous month. We expect the net interest rate to be around 11% for the full year of '23. The company benefits from internal share guarantees from leading customers. The scale advantage is further enhanced as downstream demand grows, and the company's profitability is expected to remain steady in the long run.
Domestic production continues to expand, and overseas business is expected to usher in rapid growth. On January 6, the company announced that it plans to use no more than 1.2 billion yuan of self-raised capital to invest in the construction of the “Shenzhen New Energy Battery Precision Structural Parts Production Base Project”, which mainly produces precision structural parts for NEV power batteries, precision structural parts for energy storage batteries, and precision structural parts for consumer batteries. The construction period is about 2.5 years, and the total annual output value will be about 3.3 billion yuan after delivery.
On the overseas side, out of the company's 3 overseas production bases, the Hungarian production base has reached full production. The German and Swedish production bases are in the trial production stage for supporting customers. It is expected that profits will be achieved in 24 years, and the company's overseas business is expected to enter a period of rapid growth.
Investment advice: As a leader in lithium battery structural components, the company's profitability is strong and resilient. We expect the company to achieve net profit of 11.80/14.20/17.36 billion yuan in 2023-2025, +30.9%/+20.3%/+22.3% year-on-year respectively, corresponding EPS of 4.37/5.26/6.44 yuan, maintaining a “buy” rating.
Risk warning: capacity construction falls short of expectations; industry competition intensifies; downstream demand falls short of expectations.