Investment events
In 2023, the company achieved total revenue of 4.318 billion yuan, up 27.62% year on year; net profit to mother was 116 million yuan, up 41.93% year on year; net profit without return to mother was 111 million yuan, up 76.07% year on year, which is within the forecast range.
Key points of investment
23 years of rapid revenue growth and improved profitability
The company's revenue for 23 years was 4.318 billion yuan, a year-on-year increase of 27.62%, mainly due to: 1) a further increase in domestic market share; 2) Nanfu Battery actively developed the 2B market in 2023, and OEM business revenue increased dramatically. Through cost control and customer structure optimization, the company increased the gross profit margin of the OEM business. The company's overall gross profit margin was 47.39%, up 0.83 percentage points year on year; net profit margin to mother was 2.68%, up 0.27 percentage points year on year.
The domestic share of alkaline batteries has increased, and brand recognition continues to increase. According to Nielsen data, “Nanfu” alkaline manganese battery products sold the most in the Chinese market for 31 consecutive years (1993-2023). The sales share in the retail market for alkaline 5 and 7 battery categories in China was 85.9%, which is a steady increase compared to '22. The “Nanfu” brand has ranked first in the dry battery category in the Chnbrand China Brand Strength Index for many years. As a well-known enterprise in the Chinese battery industry, Nanfu Battery will further consolidate its leading position in the alkaline battery market and develop new technology battery products such as lithium-ion batteries and lithium primary batteries to further strengthen its influence in the industry.
OEM business has achieved high growth, and international competitiveness continues to improve
In 2023, Nanfu Battery actively explored foreign markets and achieved OEM sales revenue of 832 million yuan, an increase of 82.32% over the previous year. The company's main OEM customers are large domestic traders, well-known domestic electronic equipment manufacturers, internationally renowned battery brands, international commercial chain enterprises, large international traders, and internationally renowned electronic equipment manufacturers, etc. The products sold are mainly branded products.
Profit forecasting and valuation
Maintain profit forecasts and maintain a “buy” rating. The company is a leading alkaline battery. Export OEM is growing rapidly, and consumption of lithium batteries+energy storage opens up room for growth. We expect the company's net profit forecast to be 1.79 million yuan and 198 million yuan for 24-25, and an additional 2026 net profit forecast of 227 million yuan, corresponding EPS of 1.23, 1.36, and 1.56 yuan/share. The PE corresponding to the current stock price is 38, 35, and 30 times, respectively. Maintain a “buy” rating.
Risk warning
Downstream demand falls short of expectations; there is a risk of fluctuations in raw material prices; and there is uncertainty about business development in the energy storage sector.