Incident: The company announced its 2023 performance forecast, which achieved net profit of 5-6 billion yuan, a decrease of 57-64%; net profit deducted of 43-53 billion yuan, a decrease of 63-70%, of which Q4 net profit to mother was 0.32-132 million yuan, a decrease of 62-91%, -73%-+12% month-on-month; deducted non-net profit of 0.14-114 million yuan, a decrease of 69-96%, and -88%-2% month-on-month, which is basically in line with market expectations.
23Q4 battery foil shipments fell by 8% +, and single-ton profit remained flat month-on-month. On the shipping side, we expect the company to ship nearly 130,000 tons of battery foil in '23, with an increase of about 18%. Of these, 23Q4 is expected to ship nearly 35,000 tons, a drop of more than 8%; as downstream demand recovers, we expect the company's battery foil shipments to reach 150,000 to 160,000 tons in '24, achieving an increase of about 20%. In terms of profit, we estimate that Q4 deducted non-profit of about 0.35 million yuan per ton, which was flat from month to month. The annual deduction of non-profit per ton was nearly 40,000 yuan, a decrease of about 40%; we expect profit per ton to remain around 30,000 yuan in '24.
23Q4 overseas packaging foil continued to lose money, and air conditioning foil+board belt had a break-even balance. We expect to ship about 220,000 tons of packaging foil in 23, a decrease of 30% +, of which Q4 shipped about 50,000 tons, and demand is expected to slowly recover in 24; the company currently has production capacity of 120,000 tons of food packaging foil in Italy plus 15,000 tons in Germany, but due to losses due to weak demand for overseas food packaging foil and high production costs for overseas manufacturers, Q4 food packaging foil will lose more than 50 million yuan in total. Overseas bases can then be converted into battery foil production capacity, and we expect to gradually turn losses into profits in 24-25. 23Q4 air conditioning foil shipped about 100,000 tons, an increase of 60% + over the previous month, and basically maintained a break-even balance.
Profit forecast and investment rating: Due to weak demand for overseas packaging foil, we lowered the company's net profit from 2023-2025 to 5.5/6.0/7.3 billion yuan (originally estimated at 6.1/7.5/1.0 billion yuan), -60%/+10%/+21%, corresponding PE was 15x/14x/12x. Considering that the company is a leading battery aluminum foil leader, leading the peers in production expansion speed, we gave 20xPE in 2024, with a target price of 13.6 yuan to maintain the “buy” rating.
Risk warning: Prices of raw materials continue to rise, battery foil production expansion falls short of expectations, and competition is intensifying.