The company released its 2023 annual report and achieved a profit of 1,891 billion yuan for the whole year, down 66.92% year on year. The company's electrolyte shipments continued to grow, market share gradually increased, and maintained an increase in holdings rating.
Key points to support ratings
Profit in 2023 decreased by 66.92% year on year, in line with expectations: the company released the 2023 annual report and achieved profit of 1,891 billion yuan for the whole year, a year-on-year decrease of 66.92%; deducted non-profit of 1,824 billion yuan, a year-on-year decrease of 67.08%. According to the company's performance calculation, the company achieved profit of 139 million yuan in 2023Q4, a year-on-year decrease of 89.74%, and a decrease of 70.02% month-on-month; realized deduction of 114 million yuan for nonprofit, a year-on-year decrease of 91.10% and a year-on-year decrease of 73.93%. The company previously released a performance forecast and is expected to achieve a profit of 1,800-2.00 billion yuan in 2023, a year-on-year decrease of 68.50%-65.00%. The company's performance was in line with expectations.
Shipments of lithium battery materials have maintained rapid growth, and the daily chemical business has remained stable: in 2023, the company maintained rapid growth in sales of core products as the overall growth rate of the electrolyte market slowed and industry competition intensified. The company achieved annual electrolyte sales of 396,000 tons, an increase of about 24% over the previous year. Due to fluctuations in raw material prices, etc., the company's profit on electrolyte products declined. In terms of cathode materials, the rapid drop in product prices has led to a decline in profits, putting pressure on profit levels. According to the annual report, the company's lithium-ion battery materials achieved annual sales of 612,200 tons, with revenue of 14.104 billion yuan, a year-on-year decrease of 32.26% and a gross profit margin of 25.26%, a year-on-year decrease of 13.29 percentage points. In terms of daily chemical materials, product sales have maintained steady growth, and are deeply tied to major domestic and foreign customers. In 2023, the company's daily chemical materials and specialty chemicals achieved revenue of 1,017 billion yuan, a year-on-year decrease of 10.43%, and a gross profit margin of 35.84%, an increase of 6.01 percentage points over the previous year.
The degree of integration gradually increased, and the market share remained leading: the company's self-supply ratio of core raw materials continued to increase, the self-supply ratio of liquid lithium hexafluorophosphate and LiFSi materials reached more than 93%, and the self-supply ratio of some core additives reached more than 80%. The company continues to lead the domestic market share of electrolytes, further increasing to 36.4% in 2023.
valuations
Based on the company's annual report, considering that the LiPF6 market is still facing price pressure, we adjusted the company's 2024-2026 earnings forecast to 0.68/1.04/1.39 yuan (the original forecast for 2024-2026 was 1.40/1.73/- yuan), corresponding to a price-earnings ratio of 32.1/20.9/15.7 times; maintaining an increase in holdings rating.
The main risks faced by ratings
Demand in the industrial chain fell short of expectations; raw material prices fluctuated unfavourably; NEV industry policies fell short of expectations; NEV products fell short of expectations.