Description of the event
Zhuhai Guanyu released the 2023 annual report performance report, achieving revenue of 11.45 billion yuan, a year-on-year increase of 4.3%, and net profit to mother of 340 million yuan, an increase of 275.4% year-on-year, after deducting 230 million yuan in non-net profit, an increase of 1153% over the previous year. From this, it is estimated that 2023Q4 achieved revenue of 2.91 billion yuan, up 10.4% year on year and down 5.1% month on month; net profit to mother was 52 million yuan, up 744.2% year on year, down 65.1% month on month; after deducting non-net profit of 0.1 billion yuan, reversing losses year on year. The results were at the center of previous forecasts.
Incident comments
Looking at the full year, the company's net profit to mother and net profit after deduction increased by 275.4% and 1152.5%, respectively, over the same period last year, mainly due to a combination of factors such as the rise in the exchange rate of the US dollar against the RMB, the decline in the market price of raw materials, and the continuous promotion of refined management to improve production and operation efficiency. The company's battery consumption is expected to remain basically flat in the fourth quarter, and the gross margin level remains stable. During the downturn in the industry, companies bucked the trend and expanded their market share, and their market share continued to increase. The mobile phone battery sector is gradually developing new markets and new customers, which is expected to contribute significantly in the future. Furthermore, the gradual expansion of overseas customers is expected to play an exemplary role among domestic mobile phone manufacturers and further increase revenue and profit. The power business still falls short of expectations, and there has been an increase on the revenue side, mainly due to the development of new customers and expansion in new fields such as household storage. However, increased competition in the market has dragged down the profit level of this business.
The company issued an announcement to plan Zhejiang Guanyu's capital increase and share expansion and the introduction of external investors. It is expected to be completed by the middle of this year. At that time, the share ratio will drop further from 73.69%, and the ownership loss is expected to shrink further. The company's future strategy aims to maintain its leading position in the consumer battery industry, concentrate resources and technical advantages to develop automotive start-stop, PHEV high-power batteries and drone businesses, and carefully seize business opportunities for new energy vehicles, energy storage, and two-wheeler batteries. Zhejiang Guanyu's capital increase and share expansion and introduction of external investors will promote the implementation of the company's development strategy. This strategic adjustment helps the company focus on traditional advantages and break through the direction of potential. The net profit for 2024 is expected to be 1,015 million yuan, corresponding to PE 16 times. We continue to recommend it.
Risk warning
1. Risk of consumer battery sales falling short of expectations;
2. The project progress falls short of the expected risk.