Changyuan Lithium Co., Ltd. released a quick report on its 2023 results. Reduced inventory prices and the consolidation of projects under construction dragged down performance.
In 2023, the company achieved operating income of 10.73 billion yuan, -40% year on year; net profit to mother - 120 million yuan, -108% year on year; net profit after deducting non-return to mother - 190 million yuan, -114% year on year. Among them, Q4 achieved operating income of 2.36 billion yuan, or -32% month-on-month; net profit to mother of -200 million yuan, -152% year-on-year, changing profit from profit to loss; net profit not attributable to mother of -220 million yuan, -160% year-on-year, and -3456% month-on-month.
1) Volume: Affected by downstream companies' inventory removal, the company shipped 62,300 tons of cathode materials in 2023, -6% year-on-year; of these, Q4 is expected to ship 20,000 tons, -3% month-on-month.
2) Price/benefit: When considering only cathode materials on the revenue side, we expect the average sales price of the company's cathode materials to be 172,000 yuan per ton in 2023, -37%. Among them, the average price of Q4 cathode materials per ton is 116,000 yuan, -30% month-on-month, mainly due to the sharp drop in the prices of lithium carbonate and nickel sulfate.
2023Q4 is expected to lose profit per ton of cathode materials, mainly due to 1) rapid fluctuations in raw material prices, and inventory depreciation of the company's lithium carbonate and finished products; 2) the completion and transformation of the second phase of the production expansion project and lithium iron phosphate production line at the end of the year, driving up depreciation costs and affecting the profit per ton.
Lithium iron phosphate achieved kiloton-level shipments, and major customers successfully verified it. Currently, the company's shipments of ternary cathode materials are mainly medium nickel high-voltage products. In terms of new products/technological progress, 1) High nickel ternary: High nickel cathode material single crystallization technology and short-process green production technology have reached the leading international level and have been used in the production of high nickel single crystal products. 2) Lithium iron phosphate cathode: We expect that the production capacity of 60,000 tons will be fully completed and put into operation by the end of 2023, batch shipments will begin at the end of 2023Q3, and kiloton shipments have been achieved as of November 2023. In terms of overseas expansion, at present, the company's overseas markets are mainly in Japan. PPES orders from Toyota in 2023Q3 have already begun to be supplied, and the introduction of other mainstream overseas customers is progressing smoothly. The company's cooperation with Axens is actively progressing according to the project plan.
Profit forecast: Considering the intensification of competition in the ternary industry, we adjusted the company's 2023-2025 net profit to -1.2, 4.4 million yuan, and 5.2 billion yuan, with year-on-year increases of -108.4%, 456.4%, and 16.4%. Based on the closing price on February 23, 2024, the corresponding PE was -90.5/25.4/21.8 times, respectively.
Maintain an “increase in holdings” rating.
Risk warning: raw material prices fluctuated beyond expectations; downstream market demand fell short of expectations; new product development fell short of expectations.