Incidents. On April 8, 2024, the company released its 2023 annual report. It achieved annual revenue of 11.446 billion yuan, a year-on-year increase of 4.29%, and realized net profit of 344 million yuan, an increase of 278.45% over the previous year, and net profit after deducting non-return to mother of 231 million yuan, an increase of 1170.55% over the previous year.
Q4 Performance split. Revenue and net profit: The company's 2023Q4 revenue was 2.905 billion yuan, +10.19%, -5.25% month-on-month, net profit to mother was 55 million yuan, +785.48% year-on-year, -63.40% month-on-month, net profit after deducting net profit of 12 million yuan, +133.29% year-on-year and -90.00% month-on-month. Gross profit margin: 2023Q4 gross margin was 26.42%, +13.57pcts year over year, and -2.41pcts month-on-month. Net interest rate: 2023Q4 net interest rate was 0.12%, +1.13pcts yoy, -3.11pcts month-on-month. Expense rate: The company's expense ratio for the 2023Q4 period was 27.02%, +17.16pct. Among them, sales, management, R&D, and finance expenses were 0.38%, 12.81%, 11.81%, and 2.03%, respectively.
The consumer business has developed new roots, and the market position is stable. In 2023, the company's consumer business achieved revenue of 10.48 billion yuan, a year-on-year increase of 4.13%, gross profit margin of 27.60%, and a year-on-year increase of 8.98 pcts, mainly benefiting from lower prices of upstream raw materials and cost reduction and efficiency through refined management. 1) Laptop category: According to Techno Systems Research data, the market share of lithium batteries for the company's laptop products reached 31.1% in '23, ranking second in the world. 2) Mobile phone category: The company achieved mass production of Apple phone battery products for the first time during the reporting period. According to TechnoSystems Research data, the company's smartphone lithium battery market share reached 8.18% in '23, an increase of 0.75pcts over the previous year, ranking fifth in the world. 3) Consumer PACK: The company's consumer battery pack self-supply rate has reached 35.44%, an increase of 7 pcts over the previous year. In addition, the company is actively expanding high-value-added electronic products such as smart wearables and drones, and the consumer business is expected to grow rapidly.
The mobile storage business is progressing steadily, and the release of low-voltage batteries is imminent. In 2023, the company's moving and storage business achieved revenue of 548 million yuan, a year-on-year increase of 37.92%, and a gross profit margin of -15.05%, an increase of 15.79 pcts year-on-year. 1) Power category: In '23, the company's automotive low-voltage lithium batteries have been shipped in batches. Recently, the company has received fixed orders for Stellantis 12V automotive low-voltage lithium batteries, and the low-voltage lithium battery business is about to begin. In addition, the company is developing third-generation start-stop batteries based on second-generation 12V start-stop batteries, which is expected to increase low-temperature power performance by 30-50%. In terms of production capacity, Zhejiang's 4 GWh power and energy storage project is under construction. With the release of the company's production capacity, it is expected to exert scale effects and reduce costs. 2) Energy storage category: During the reporting period, the company continued to supply customers such as Sonnen and Nanwang Technology. At the same time, the company participated in the 50MW inverter booster integrated cabin project for Foshan Baotang Energy Storage Station, the largest energy storage power station in the Guangdong-Hong Kong-Macao Greater Bay Area, and the household storage and large storage business continued to expand.
Investment advice: We expect the company to achieve revenue of 139.77, 16.754, and 19.018 billion yuan in 2024-2026, with a year-on-year increase of 22.1%, 19.9%, and 18.9%, and net profit to mother of 10.11, 13.80, and 1,755 billion yuan, with a year-on-year increase of 193.7%, 36.6%, and 27.1%, corresponding PE of 14, 11, and 8 times. In view of the steady growth of the company's consumer business, losses in the mobile storage business gradually narrowed, maintaining a “recommended” rating.
Risk warning: Competition in the industry intensified, raw material prices fluctuated beyond expectations, and downstream market demand growth fell short of expectations.