Incident: The company expects to achieve net profit of 3278 to 47.34 million yuan in 23, -91 to -87% year on year; deducted non-net profit of 5963 to 77.98 million yuan, -87 to -83% year on year. Net profit for 23Q4 was 8905 to 103.61 million yuan, +176.4% ~ +267.2% year over month, +29.7% ~ +50.9% month on month; after deducting non-net profit of 8700-105.35 million yuan, +1613.6% ~ +2144.8% year on month, +4.0% to +26.0% month-on-month, the annual results achieved positive profit.
Negative electrode prices gradually stabilized, and self-supply cost reduction drove profit recovery: due to a combination of factors such as the end of the NEV subsidy policy, low sales season during the 2023 Spring Festival, and inventory removal, the growth rate of demand for anode materials has slowed. At the same time, the anode industry has structural excess capacity, industry competition intensified, and the price of artificial graphite anodes fell rapidly. The company was affected by high-priced inventory. Cost pressure was high in the first three quarters, and performance was greatly affected. With the gradual stabilization of negative electrode prices since the third quarter, combined with the company's introduction of a series of cost reduction and efficiency measures, the company's profitability has improved quarterly. In terms of the graphitization self-supply rate, the first half of the year absorbed early high-price outsourcing, and the actual self-supply rate was low. With the advancement of new capacity construction projects, the graphitization self-sufficiency rate reached more than 70%, effectively relieving cost pressure, and Q4 profit increased significantly from month to month.
Repurchase efforts were increased, and the maximum repurchase amount was raised from 200 million yuan to 700 million yuan: The company issued an announcement on February 5 stating that it plans to increase repurchase efforts and adjust the total repurchase capital from no less than 100 million yuan (inclusive) and no more than 200 million yuan (inclusive) to no less than 350 million yuan (inclusive) and no more than 700 million yuan (inclusive), of which the lower limit of repurchase capital was increased by 250 million yuan to 350 million yuan (inclusive), and the upper limit was increased by 500 million yuan to 700 million yuan. This move shows the company's confidence in future development and recognition of long-term value, and helps strengthen investors' confidence in the company.
Furthermore, the repurchased company shares are intended to be used for employee stock ownership plans or equity incentives, which is conducive to fully mobilizing the enthusiasm of the company's employees and promoting the company's stable, healthy and sustainable development.
Investment advice: The cost reduction brought about by the company's increased graphitization self-supply rate has been reflected, and negative electrode profits have been repaired.
In addition, fast charging is the company's main product, and will benefit from a rapid increase in the penetration rate of fast charging in the future. We expect the company to achieve operating income of 49.30/60.87/9.406 billion yuan and net profit to mother of 0.42/386/664 million yuan in 2023-2025. The corresponding PE was 143.23/15.72/9.13 times, respectively, giving a “gain” rating.
Risk warning: Demand in the lithium battery industry falls short of expectations; risk of deteriorating competitive pattern in the anode industry; risk of policy changes; risk of fluctuations in raw material prices; risk of overcapacity.