2023 results are in line with our expectations
The company announced its 2023 results: revenue of 10.511 billion yuan, up 21% year on year; net profit to mother of 1.01 billion yuan, up 33% year on year; net profit after deducting non-net profit of 1.16 billion yuan, up 37.1% year on year. The performance is in line with our expectations. Looking at a single quarter, 4Q23 revenue was 2,743 billion yuan, up 2.2% year on year, and net profit to mother was 406 million yuan, up 32% year on year.
Profits remained stable. In 2023/4Q23, the company's comprehensive gross margin was 23.6%/24.3%, a year-on-year decrease of 0.3/0.1ppt, and a month-on-month increase of 0.4ppt in the fourth quarter. The company's expense ratios for the 2023/4Q23 period were 10.0%/11.1% respectively, down 0.4 ppt/1.3 ppt year on year, respectively, mainly due to the increase in R&D expenses. In 2023/4Q23, the company's net interest rates were 11.4%/14.8%, respectively, up 1.0ppt/3.3ppt year-on-year respectively, mainly due to reduced holdings and increased government subsidies.
Operating cash inflows increased, and fixed assets grew steadily. The net cash inflow from the company's operating activities in 2023 was 748 million yuan, an increase of 310 million yuan over the previous year. As of the end of the 2023 period, the book value of the company's fixed assets was $6.446 billion, an increase of $1,430 billion over the end of the previous year.
Development trends
The industry maintained a stable profit and pattern amid headwinds. According to the China Association of Automobile Manufacturers and the China Automobile Power Battery Industry Innovation Alliance, in 2023, China's NEV sales volume was 9.45 million units, up 37% year on year, and the cumulative loading volume of power batteries was 388 GWh, up 32% year on year. Due to relatively overcapacity, the lithium battery industry chain is generally facing increased competition and falling prices. In 2023, the company maintained a relatively stable market share while maintaining steady profitability, which shows the company's superior competitive pattern and position in the industry. We expect the company to continue to follow the industry's growth in 2024.
Export business is growing steadily. In 2023, the company's overseas revenue was 534 million yuan, an increase of 118% over the previous year. Currently, the company has three overseas factories, and has entered the supply list of European battery manufacturers such as ACC and stable supply. We expect the company's overseas business to grow by more than 50% in 2024.
Profit forecasting and valuation
Maintain the 2024 EPS forecast of 5.13 yuan, and introduce the 2025 forecast of 6.00 yuan. The company currently trades at 17x/15x 24e/25e P/E. Considering the steady growth of the export business, the target price was raised by 8% to 105 yuan, corresponding to 20x/17x 2024e/25e P/E, with 20% room for growth.
risks
Sales of new energy vehicles fell short of expectations, and price competition in the industry intensified.