Key points of investment
Incident: The company released its 2023 financial report, achieving total operating revenue of 10.511 billion yuan, an increase of 21.47% over the previous year, and net profit attributable to shareholders of listed companies of 1,2001 billion yuan, an increase of 33.47% over the previous year. The company plans to distribute a cash dividend of 15.00 yuan (tax included) for every 10 shares to all shareholders.
R&D investment has increased, and 46 series cylindrical battery case production line technology is mature. The company develops an interactive R&D model that fully connects with leading downstream high-end customers. It is guided by downstream customer needs and industry trends, which helps the company to determine its position in the customer supply chain as soon as possible, obtain product mass production rights, and ensure the company's technological first-mover advantage.
During the reporting period, the company focused on continuous research and innovation to improve the safety, reliability, capacity space, and weight reduction of precision structural parts of power batteries, as well as continuous optimization of the production process for precision structural parts of power batteries, etc., and achieved phased research and development results. Among them, the company has mature automation technology for the entire 46 series round power battery case manufacturing line, and can enter the mass production stage, improving production efficiency. By the end of the reporting period, the company had invested 636 million yuan in R&D, an increase of 16.75% over the previous year; the company and its subsidiaries had 409 patents, an increase of 19.24% over the previous year.
The geographical coverage of production capacity has been further improved, and overseas markets continue to expand. The company has 13 production bases for precision structural components of power batteries and 3 production bases in Europe in key regions of the domestic lithium battery industry, such as East China, South China, Central China, Northeast China, Southwest China, and Northwest China. Domestically, the company's production base in Nanchang, Jiangxi, Phase II, the Jiangsu Liyang production base, the Sichuan Yibin production base, the Hubei Jingmen production base, and the Guangdong Jiangmen production base have been put into operation or partially. On the overseas side, the company used self-financing to increase the capital of Kodali in Germany by 30 million euros and to Hungary by 32 million euros, further expanding the production capacity of the overseas production base; the company signed a “Material Sale and Supply Contract” with a well-known European lithium battery manufacturer, which agreed that the company would supply the lithium battery manufacturer with the covers required for an estimated 350 million square lithium-ion batteries; during the reporting period, the company achieved revenue of 534 million yuan in overseas regions, an increase of 118.27% over the previous year.
Profitability is stable, and capital strength is enhanced. During the reporting period, the company achieved total revenue of 10.511 billion yuan, an increase of 21.47% over the previous year; its main business, lithium battery structural components, achieved revenue of 10.064 billion yuan, an increase of 20.87% over the previous year. In 2023, the company's comprehensive gross profit margin was 23.58%, down 0.28pct year on year; net profit margin was 11.59%, up 1.04pct year on year, and profitability remained stable. During the reporting period, the company completed issuing RMB 334.716 million shares of common stock (A shares) to specific targets, raising net capital of 3.48 billion yuan. The total assets at the end of the reporting period reached 17.222 billion yuan, an increase of 21.38% over the previous year. In addition, during the reporting period, the company's operating activities generated net cash flow of 748 million yuan, an increase of 70.78% over the previous year, mainly due to an increase in sales scale and an increase in sales repayments in the current period.
Investment advice: The company is a leading enterprise in lithium battery structural components. The customer structure is excellent, profitability is stable, and the technological pioneer advantage is obvious. Considering the company's high potential for overseas market growth, we raised the company's profit forecast. The company's net profit for 2024-2026 is 1,280 billion yuan, 1,614 billion yuan, and 1,954 billion yuan respectively (the previous net profit forecasts for 2024-2025 were 1,274 billion yuan and 1,453 billion yuan, respectively), and the corresponding PE is 19.4, 15.4, and 12.7 times, respectively, maintaining the “buy-A” rating.
Risk warning: NEV sales fell short of expectations, the company's new production line fell short of expectations, prices of upstream resources fluctuated greatly, industry competition intensified, etc.