Incidents. On March 25, 2023, the company achieved full-year revenue of 15.405 billion yuan, and realized net profit of 1,891 billion yuan, or -66.92% year-on-year, after deducting net profit of 1,824 billion yuan, or -67.08% year-on-year. The overall performance was in line with early report expectations.
Q4 Performance split. Revenue and net profit: The company's 2023Q4 revenue was 3.281 billion yuan, -44.29% YoY, -20.71%, net profit to mother was 139 million yuan, -89.74% YoY, -70.02% month-on-month, net profit after deduction of 114 million yuan, -91.10% YoY and -73.93% YoY. Gross profit margin: 2023Q4 gross margin was 16.96%, same increase -13.94 pct, circular increase -7.36 pct. Net interest rate: 2023Q4 net interest rate was 4.05%, -19.56pcts year-on-year, and -7.52pcts month-on-month. Expense rate: The company's expense ratio for the 2023Q4 period was 9.72%, year-on-year -4.62pct. Among them, sales, management, R&D, and finance expenses were 0.51%, 3.62%, 4.13%, and 1.46%, respectively.
Electrolyte profits are under pressure. In terms of shipment volume, the company sold 396,000 tons of electrolyte in '23, an increase of 24% over the previous year, and shipped about 109,000 tons in the fourth quarter. In terms of profit per ton, the company's net profit per ton of electrolyte was 0.4-0.5 million per ton. We estimate that the net profit of Q4 electrolyte tons was about 0.2-0.25 million per ton. The main reason for the month-on-month decline in net profit was: 1. Industry competition intensified and electrolyte processing costs declined further. 2. The price of lithium carbonate remained in the price reduction channel in the fourth quarter, and unit profit was affected by depreciation.
The integrated layout has significant advantages, and the market share is gradually increasing. The self-supply ratio of the company's core raw materials continues to increase. The self-supply ratio of 6F and LiFSi reached more than 93%, and the self-supply ratio of some additives exceeded 80%. Following that, with 4C fast charging and 4680 large cylindrical batteries, the company expects the LiFSi addition ratio to increase steadily, effectively increasing the profit per ton of electrolyte. In terms of overseas layout, the company's German OEM factory was successfully put into operation, the North American electrolyte project continued to advance, and the development of overseas customers was accelerated, and a Korean sample room was set up to accurately support Korean customers such as LG and SDI. In terms of market share, with the improvement of the company's integrated layout and the accelerated release of production capacity, the company's domestic electrolyte market share increased to 36.4% in '23
Profits of ferrophosphate are under pressure, and the resource cycle is being arranged in depth. The main reasons for the company's loss of iron phosphate in '23 were:
1. Downstream warehousing+commissioning of new production capacity equipment. The overall operating rate fell short of expectations, 2. The market price war exceeded expectations.
The company actively optimizes the iron phosphate process, continuously improves product performance and reduces costs, and is expected to achieve break-even in 24 years. In terms of resource recycling business, the company put into operation a lithium carbonate purification production line and began research and development of a lithium carbonate hydrometallurgy process to build a full-chain processing capacity from raw ore end to high-grade pure lithium carbonate.
Investment advice: We expect the company to achieve revenue of 153.68, 194.72, and 23.897 billion yuan in 2024-2026, year-on-year growth rates of -0.2%, 26.7%, and net profit to mother of 14.92, 23.63 billion yuan, and 3.205 billion yuan, respectively. The corresponding PE at the current time is 26, 16, and 12 times. The corresponding PE is 26, 16, and 12 times. Considering the company's integrated layout, the profit advantage is obvious. Currently, it is at the bottom of the cycle and maintains a “recommended” rating.
Risk warning: NEV sales fell short of expectations, industry competition intensified, raw material fluctuations exceeded expectations, and the pace of production capacity release fell short of expectations.