Key points of investment
The bottom of the negative electrode is established, and we expect the supply and demand pattern to improve markedly in 2025. We expect the anode industry to supply 2.3 million tons in 2024, with a capacity utilization rate of 74%; leading production expansion will slow down and new entrants will suspend production expansion; we expect supply of 2.7 million tons in 2025, an increase of 18% over the previous year, and the capacity utilization rate will increase to close to 80%. In the 24Q1 anode segment, some low-price orders fell to around 15,000 yuan/ton, and the superimposed raw petroleum coke increased slightly by 100-500 yuan/ton. As a result, apart from the leader, which still had a profit of about 3,000 yuan/ton, the rest of the manufacturers were basically in a state of marginal profit or loss. With the increase in capacity utilization in April '24, prices for some low price orders have recovered slightly, and the bottom of the industry has been established. We expect prices to reverse in 24H2-25.
Benefiting from the amount of fast charging anodes, the company has reached full production, and we expect shipments to maintain a 40% increase in 2024. The company is the largest supplier in the Ningde era, and in 24, the company became the main supplier of Ningde Sheng Xing batteries. In March, production schedule doubled to 15,000 tons. We expect a further increase to 18,000 tons in April. Full production has already been achieved, and additional external production capacity will be added starting in May. We expect to ship 33,000 tons in 24Q1, up 40% year on year, Q2 shipments are expected to increase 50% + to 50,000 tons, and we expect to ship 200,000 tons in 24, up 40% year on year. We expect the company to add 100,000 tons of production capacity in 2025, and shipments can maintain 30% growth in 25, fully benefiting from the double growth rate brought about by industry demand+increased market share of battery leaders.
Profits continue to be superior to peers, cost advantages have been established, and profits are expected to pick up in 2025. In '24, the company's graphitized electricity consumption per ton was 6,000 degrees, which is lower than the industry average of 0.8-10,000 degrees. We estimate that the 24Q1 company's graphitization cost is about 0.55 million yuan/ton, and the integrated base layout+unit investment amount is lower, reducing transportation costs and depreciation costs. Taken together, we expect the company's anode cost to be about 0.2-0.3 million yuan/ton lower than that of competitors in '24. We expect the company's net profit per unit of 0.3-0.35 million yuan/ton in 24Q1. The price reduction at the beginning of '24 will be fully reflected in 24Q2. We expect 24Q2 profit to fall slightly to less than 30,000 yuan/ton. We expect profit per ton to be around 30,000 yuan/ton in '24, and it is expected to recover to 0.3-0.4 million yuan/ton in '25
Investment advice: Considering the decline in oversupply profits in the anode industry, we lowered the company's 2023-2025 net profit forecast to 7.1/6.2/870 million yuan (originally estimated 7.5/8.2/1.1 billion yuan), -45%/-14%/+40%, corresponding PE is 12x/14x/110x. Consider that the company is the negative cost leader, and the cost advantage can be maintained for a long time. We will give 20xPE in 2024, corresponding to a target price of 47 yuan, maintaining a “buy” rating.
Risk warning: Electric vehicle sales fell short of expectations, and industry competition intensified.