Dangsheng Technology released its 2023 annual report, and the profit level increased year-on-year. In 2023, the company achieved revenue of 15.13 billion yuan, -29% year on year; net profit to mother of 1.92 billion yuan, -15% year over year; net profit after deducting non-return to mother of 1.98 billion yuan, -14.9% year on year. Achieved a gross profit margin of 18.1%/12.7%, an increase of 0.7/2.1pct over the previous year. Among them, Q4 achieved revenue of 2.58 billion yuan, -38% month-on-month; net profit to mother of 430 million yuan, -24% month-on-month; and net profit after deducting non-return to mother of 340 million yuan, -40% month-on-month. Achieved a gross net profit margin of 17.0%/16.7%, a month-on-month increase of -2.7/+3.1 pct.
In 2023, due to falling lithium carbonate prices and increased competition in the industry, the company's sales price declined somewhat. By the end of 2023, the company had built a production capacity of 110,000 tons, with an actual production capacity of 83,000 tons in 2023 (including 77,000 tons of diverse materials and 60,000 tons of lithium cobalate). In 2023, the company produced 610,000 tons of lithium battery materials (including 55,000 tons of multi-materials, 0.33 million tons of lithium cobalate, and 0.29 million tons of lithium manganese iron phosphate), with a capacity utilization rate of 73.3%. Judging from sales volume and price, the company sold 62,700 tons of lithium battery materials in 2023, corresponding to a single ton selling price of 233,000 yuan, -25.4% over the same period last year. Due to the sharp drop in the price of lithium carbonate in 2023 and increased competition in the industry, the unit price of the company's cathode materials has been reduced.
The overseas layout is progressing smoothly, and the cost advantage is consolidated with upstream cooperation. At present, the company has supplied lithium battery cathode materials to countries and regions such as China, Japan, South Korea, Europe and the United States, and its customers cover leading global lithium battery companies such as LG, SkON, BYD, Everweft Lithium Energy, and China Airlines. Furthermore, the company has successfully set up enterprises such as Dangsheng (Hong Kong) Investment, Dangsheng (Luxembourg), and Dangsheng (Finland) New Materials, etc., and the company is steadily advancing the European New Materials Industry Base project. At the same time, the company has cooperated with high-quality suppliers such as Zhongwei Co., Ltd., Huayou Cobalt, and Grimmie in key mineral resources such as nickel, cobalt, and lithium through procurement orders, technical cooperation, and investment participation. Cooperation with upstream suppliers can not only maintain supply chain security, but also continue to strengthen cost competitiveness.
Actively promote product layout in multiple fields. The company has formed a relatively complete product layout in terms of cathode materials. 1) Ternary materials: Currently, the company's ultra-high nickel products have excellent performance in performance indicators such as cycle life and ratio; medium nickel high-voltage products have achieved full coverage of 5, 6, and 7 series, and have the advantages of high safety, low cost, and long life. 2) Lithium iron phosphate (manganese): It has been introduced to first-class domestic customers and sold. 3) Solid state battery cathode materials: Ultra-high nickel products were shipped in hundreds of tons during the year, continuously increasing the supply share of solid-state battery customers such as Huineng, Qingtao, Weilan New Energy, and Ganfeng Lithium, and successfully used in solid-state models of global first-tier car companies such as SAIC Motor Group and Vietnam VinFast. 4) Sodium cathode materials: Layered oxide, polyanionic and other sodium electrocathode materials have been arranged to supply hundreds of tons to many customers at home and abroad. 5) Lithium cobalate: The company's high-capacity lithium cobalate is applied in batches in digital consumer products, and the application space for high-rate lithium cobalate products in the fields of drones and aircraft models is gradually expanding. 6) Lithium-rich manganese-based cathode: An invention patent related to a novel lithium-manganese-based product has been authorized in Korea, and 100 kg shipments have now been made to many domestic and foreign battery customers.
Profit forecast: Taking into account the price reduction transmission of terminal car companies, the net profit for 2024-2026 is expected to be 12.2/14.2/1.62 billion yuan, up -36.5%/16.0%/14.5% year-on-year. Based on the closing price on April 8, the corresponding PE is 18.4/15.8/13.8 times, respectively. Maintain a “buy” rating.
Risk warning: downstream demand falls short of expectations; risk of fluctuating upstream raw material prices; the company's capacity construction and launch falls short of expectations; the company's new products and new customer development progress falls short of expectations.