Matters:
The company released its 2024 quarterly report. During the reporting period, the company achieved revenue of 79.771 billion yuan, -10.41% year on year; realized net profit of 10.510 billion yuan, +7.00% year over year; realized net profit after deduction of 9.247 billion yuan, +18.56% year over year; achieved gross sales margin of 26.42%, an increase of 5.15 pcts over the previous year.
Comment:
The company shipped nearly 95 GWh in Q1, and is in a leading position in the world. 2024Q1 achieved battery system shipments of about 95 GWh, +18.8%/-20.8% month-on-month. Among them, power battery systems and energy storage battery systems sold about 76/19 GWh, respectively, exceeding market expectations. The company's global power and energy storage battery market share ranks first in the world. According to SNE Research data, the company's global power battery usage market share in January-February 2024 was 38.4%, +4.8pcts year-on-year. We expect the company's shipment volume to reach 476 GWh in 2024, +22.1% year-on-year, with power battery/energy storage battery systems being 387/89GW respectively, +20.6%/+29.0% year-on-year respectively.
The company's profitability has rebounded, and the profitability of a single Wh has been steady. 2024Q1's revenue was -10.41% year-on-year, mainly due to the continuous decline in the price of lithium salt as a raw material, which led to a decline in the unit sales price of lithium batteries. According to Xinyi information data, the average sales price of square lithium iron battery packs/square ternary (high nickel) battery packs dropped to 0.545/0.775 yuan/Wh respectively on March 29, 2024, a decrease of 37.0%/27.9% from the average price on March 31, 2023. 2024Q1's gross sales margin increased to 26.42%, up 5.15 pcts year on year, mainly due to the fact that the company's absolute revenue per hour remained stable, while the unit price of the product declined.
The company's new products have been released one after another, demonstrating the company's technological leadership. During the reporting period, the company's Shenxing Battery began large-scale mass production and delivery, and launched the world's first Xiaomi SU7. Through the original high-specific energy lithium iron phosphate material, the battery energy density increased by 10%, and CTB integration technology jointly developed by Xiaomi, the battery system volume utilization rate reached 77.8%, achieving a lithium iron phosphate battery with a battery life of over 800 kilometers for the first time in the industry; the company's 5G fast charging Kirin battery was loaded into the ideal pure electric MVP MEGA; the company's Panshi High Safety Skateboard chassis first landed on the Avita brand model, which will be mass-produced this year. In terms of energy storage battery systems, the company recently released the world's first “Tianheng” energy storage system with zero attenuation in 5 years, high energy of 6.25 MWh, and true safety in multiple dimensions, achieving an increase in energy density in a standard 20-foot container.
Investment advice: Affected by the intensive release of new products in power and energy storage technology, we raised the company's 24-26 profit forecast. We expect the company's net profit to be 606.73/727.45/82.901 billion yuan for 24-26 (the original forecast value was 573.01/692.1/79.189 billion yuan, up 5.9%/5.1%/4.7% respectively), corresponding to the closing price of PE on April 17, 14.2/11.9/10.4 times, respectively, maintaining the “Highly Recommended” rating.
Risk warning: 1) Market demand falls short of expectations Risk: As the global NEV penetration rate increases further, the growth rate of market demand may slow down, which will affect NEV production and sales, which in turn will adversely affect the development of the lithium battery industry. 2) Risk of changes in technology routes: Many well-known car companies, battery companies, materials companies, research institutes, etc. around the world have stepped up research and development of new technology routes. If new technology routes and products that can be industrialized, marketed, and developed on a large scale appear, the market competitiveness of existing enterprises in the industrial chain will be affected. 3) Risk of fluctuations in raw material prices: Power battery materials are greatly affected by the prices of commodities and chemical raw materials such as lithium, nickel, and cobalt. If the price of raw materials rises sharply, it will put a lot of pressure on the costs of middle and downstream battery materials and battery cell manufacturing processes. 4) Market competition has intensified risks: In recent years, the lithium-ion battery market has developed rapidly, continuously attracting new entrants to compete. At the same time, existing industrial chain companies are also expanding production capacity, and market competition is becoming more and more intense. Currently, the future development of enterprises in the industry faces a certain risk of increased market competition.