Event: The company publishes its 2023 annual report. In 2023, the company achieved revenue of 10.511 billion yuan, +21.47% year on year; realized net profit of 1.01 billion yuan, +33.47% year on year, net profit of 115,800 yuan without return to mother, +37.12% year on year; gross sales margin of 23.58%, -0.28 pct year on year, net sales margin of 11.59%, and +1.04 pct year on year. Among them, 23Q4 achieved revenue of 2,743 billion yuan, +2.22%/-3.79%; realized net profit of 406 million yuan, +32.54%/+41.82% year-on-month, net profit of 386 million yuan, +33.77%/+40.16% month-on-month. Q4 profit increased significantly, mainly due to depreciation of some customers and increased profit after VAT deduction. Without considering this impact, the net interest rate could remain above 10%. The company's overall performance is in line with market expectations.
Downstream installed capacity continues to rise, and the company's lithium battery structural components are profitable and resilient. According to SNE Research data, the global power battery loading volume in 2023 was 705.5 GWh, +38.6% year-on-year, and downstream customer orders for the company's precision power battery structural parts continued to increase. Furthermore, the company exchanges price for volume. While reducing product prices, the company maintains strong profit resilience through various methods such as improving the level of automation, increasing yield, and improving product structure. In 2023, the company's lithium battery structural parts business achieved revenue of 10.064 billion yuan, +20.87% year-on-year, and the gross profit margin of the lithium battery structural parts business was 24.14%, -0.25pct year on year.
Overseas markets continue to expand, and it is expected that new production bases will gradually be completed and put into operation. In 2023, the company continued to expand domestic and foreign markets, and signed a “Material Sale and Supply Contract” with a well-known European lithium battery manufacturer to supply the covers needed for approximately 350 million sets of square lithium batteries during the validity period. In terms of overseas factories, the company's first factory in Hungary has reached full production, and equipment for the second plant is gradually being put in place. The German and Swedish plants are also expected to gradually expand this year. As the company's new production capacity is further released, the scale advantage is expected to reduce production costs and increase efficiency, and the company's long-term profitability is expected to remain stable.
Investment advice: Consider that the company's overseas business is progressing smoothly, product profitability is strong, and the company's leading position in lithium battery structural components is stable. We expect the company to achieve net profit of 14.50/18.13/2.198 billion yuan in 24-26, +20.8%/+25.0%/+21.2% year-on-year, corresponding EPS of 5.37/6.72/8.14 yuan, giving it a “buy” rating.
Risk warning: downstream demand falls short of expectations; capacity construction falls short of expectations; industry competition intensifies