Introduction to this report:
In order to develop new products for new customers, high cost investment is a drag on short-term performance, but with the gradual implementation of new projects, the scale of the company is expected to expand rapidly and achieve a growth rate that surpasses the industry.
Key points of investment:
Maintain an increase in holdings rating. Due to the high initial investment in market development, we lowered our forecast EPS for 2023-2025 to 0.59 (-0.62) /2.40 (-0.97) /4.84 (-0.02) yuan.
Referring to the average PE valuation of comparable companies in 2024, and considering the smooth introduction of the company's new customers, it is expected to surpass the industry's growth rate. The company will be given 15 times PE in 2024, the target price will be lowered to 36 (-24.66) yuan, and the holding increase rating will be maintained.
The performance was slightly lower than expected: The company released a performance forecast to achieve operating income of 44-4.7 billion yuan in 2023, an increase of 25.5-34.1% year on year, net profit to mother of 0.45 to 58 billion yuan, a year-on-year decrease of 65.6-71.7%; net profit after deducting non-return to mother of 0.8-100 million yuan, a year-on-year decrease of 49.3-59.4%. Based on the median calculation, the company achieved operating income of 1,544 billion yuan in 2023Q4, an increase of 102.1% year on year, a year-on-year increase of 20.4%, net profit to mother of 0.055 billion yuan, after deducting net profit of non-return to mother of 0.07 billion yuan.
Actively expand new customers and seek rapid scale expansion. In the field of notebook computers, the company has gradually won recognition from many leading international customers with its long-term stable supply. In the mobile phone field, the company successfully achieved batch supply to some brands through technology accumulation and experience in laptop products. In terms of the cylindrical battery business, the company is actively expanding in segments such as portable energy storage, two-wheelers, and e-cigarettes. The multi-sector layout will drive the company to expand rapidly.
The relocation and expansion of production capacity is about to be completed, and the impact of costs on performance is expected to subside. In order to support the company's market development needs, the company integrated all production capacity into two new production bases in Huizhou to increase production capacity while also significantly optimizing production efficiency. Among them, the first phase of the Tonghu Industrial Park project is expected to reach the scheduled state of use by 2024.
Risk warning: Demand falls short of expectations, new customer development falls short of expectations, raw material prices fluctuate.