Introduction to this report:
The company's Q4 performance fell slightly short of expectations, and losses in the power storage business continued to affect performance. I am optimistic about the growth potential of the company's consumer business with downstream recovery and the growth in performance brought about by the mobile phone business.
Key points of investment:
Maintain an “Overweight” rating. Considering the company's power business losses, the downgrade company's EPS for 23-25 was 0.30 (-0.05) yuan, 0.76 (-0.30) yuan, and 1.06 (-0.20) yuan. Refer to the comparable company's 24-year 23XPE, and the target price for the downgrade company was 17.48 (-8.52) yuan.
The results fell slightly short of expectations. The company expects to achieve revenue of 113-11.6 billion yuan in 23, an increase of 3%-6%; net profit to mother of 3-360 million yuan, an increase of 230%-296%; net profit after deducting non-return to mother of 220,000-260 million yuan, an increase of 1106%-1325%. Looking at the average value, Q4 net profit to mother was 41 million yuan, up 583% from the same period, down 72%; Q4 net profit from non-return to mother was 121 million yuan, turning a loss into a profit from the previous year, and a decrease of 83%. The impairment was $305 million in '23, of which Q4 depreciated $40 million.
The overall consumer electronics market is improving, and the entry of mobile services into new customers brings more opportunities. Benefiting from the recovery in consumer electronics demand since Q2 '23, the decline in raw material prices, and a significant improvement in the company's refined management company's performance, the company has successfully entered the supply chain of leading brands and achieved batch shipments in new consumer demand fields such as AR equipment. We believe that the company achieved mass production of Apple phone batteries for the first time in the first half of '23, which is expected to increase the company's share in the mobile phone sector.
Power energy storage focuses on differentiation, capital increases and stock expansion enhances competitiveness. The company carefully grasps the business opportunities for new energy vehicles, energy storage, and two-wheeler batteries. In the field of power batteries, the company focuses on low-voltage start-stop batteries for automobiles; in terms of energy storage batteries, the company has successively entered the supply chain of domestic and foreign customers such as ZTE, Sonnen, and Nanwang Technology. We believe that under the company's holding subsidiary Zhejiang Guanyu's recent capital increase and share expansion and introduction of battle investment plans, the strength and competitiveness of Zhejiang Guanyu Capital is expected to improve in the future, and equity dilution will also help drive performance and reduce losses at the parent company level.
Risk warning: Consumer electronics demand recovery falls short of expectations, power business losses fall short of expectations