Core views
In 2023, the company achieved revenue of 3.415 billion yuan, +18% year on year, net profit to mother of 53 million yuan, -87% year on year, net profit before deducting 0.06 billion yuan, or -98% year on year. In terms of volume, the company had a nominal production capacity of 55,500 tons at the end of 2023, and achieved copper foil sales of 44,000 tons in 2023, +38% over the same period, including 32,300 tons of lithium copper foil, accounting for 73%. On the positive side, due to the release of a lot of new production capacity in the industry, intense competition, and phased imbalances between supply and demand, copper foil sales and processing fees have dropped drastically, compounding preparations for inventory price drops and accounts receivable credit impairment losses, causing pressure on the company's profit side.
occurrences
The company released its 2023 annual report.
In 2023, the company achieved revenue of 3.415 billion yuan, +18% year on year, net profit to mother of 53 million yuan, -87% year on year, net profit before deducting 0.06 billion yuan, or -98% year on year.
Among them, the 2023Q4 company achieved revenue of 943 million yuan, +19% year-on-month, net profit of 0.28 million yuan, year-on-month net profit of -74% year-on-month, reversing losses month-on-month, after deducting net profit of 0.8 billion yuan, or -90% year-on-month.
Brief review
In terms of products, the product structure of the company's lithium battery copper foil is mainly 6 μm and below. At the same time, 5 μm and 4.5 μm ultra-thin lithium copper foil have been mass-produced and sold. The development of 6 μm medium and high elongation copper foil has been completed and shipped in batches; standard copper foil product specifications are relatively complete, covering 10 μm to 140 μm, and gradually extended to the high-end standard copper foil field.
In terms of production capacity, the company currently has two major electrolytic copper foil production bases, Yunmeng and Anlu. The 13,000-ton high-performance copper foil construction project was put into operation in batches in the second half of 2023. By the end of 2023, the company's nominal production capacity had increased from 42,500 tons to 55,500 tons.
In terms of production and sales, in 2023, the company achieved 47,000 tons of copper foil output, +34%, sales volume +38% year over year, with an overall capacity utilization rate of 102.6%, including 32,300 tons of lithium copper foil, accounting for 73%, and 12,000 tons of standard copper foil, accounting for 27%.
In terms of revenue, the company's lithium copper foil revenue in 2023 was 2.49 billion yuan, +17% year on year, and standard copper foil revenue was 90 billion yuan, +18% year over year.
On the customer side, the company's lithium battery copper foil customers include battery manufacturers for power, energy storage, etc., and standard copper foil customers include copper clad boards, printed circuit boards and other consumer electronics manufacturers.
Through years of accumulation, the company has successfully entered the qualified supplier system for many high-end customers, and has established solid partnerships with customers.
In terms of profit, in 2023, the company's lithium battery copper foil gross profit margin was 5.8%, year-on-year -16.7pct, and the standard copper foil gross profit margin was 5.7%, year-on-year -7.4pct; measured by sales volume and net profit to mother, corresponding to a net profit of 0.12 million yuan per ton, under overall pressure, mainly due to: 1) The industry released a lot of new production capacity, intense competition, a phased imbalance between supply and demand. Copper foil sales and processing fees dropped sharply, leading to a sharp drop in the company's product gross margin; 2) Affected by declining processing fees and changes in customer account periods, the company's inventory withdrawal calculation Price drop preparation and accounts receivable credit impairment losses , affecting profits.
Investment advice: The price war in the copper foil industry has been going on for more than a year. Due to the continuous decline in processing fees, some end companies have already cut production or stopped production. The industry has accelerated its exit, and the pattern is expected to close. In 2024-25, the company's net profit to mother is estimated to be 1.06 million yuan or 194 million yuan, corresponding to 40 or 22 times PE.
Risk analysis
1) Downstream NEV production and sales fall short of expectations: the sales side may fall short of expectations due to channel removal and weak demand; the production side may fall short of expectations due to large fluctuations in upstream raw material prices, power restrictions, etc., which in turn affects the company's related business shipments and profitability.
2) Industry competition intensifies risks: The company's electrolytic copper foil industry is scattered in other parts of the pattern. Currently, processing costs in the industry are at a historically low level. There is a risk that competition will intensify and processing costs will decline, further affecting the company's profitability.
3) The progress of the company's key projects falls short of expectations: As a participant in the new energy circuit, the promotion of key projects such as electrolytic copper foil and composite fluid collector is the key to supporting revenue and profit, and is also a reflection of the company's growth. Failure to advance key projects as expected will affect current and long-term results.