Incident: The company released its report for the first quarter of '24. In 24Q1, it achieved revenue of 79.771 billion yuan, -10.41% year over year; net profit to mother of 10.510 billion yuan, +7.00% year over year; net profit after deduction of 9.247 billion yuan, +18.56% year over year. Net cash flow from the company's operating activities was 28.358 billion yuan, +35.25% year-on-year, and profit for the first quarter exceeded expectations.
Shipments also increased in the first quarter, and the company's gross margin situation improved. 24Q1 shipped a total of 95 GWh of lithium batteries, of which energy storage accounts for nearly 20% and other business revenue accounts for about 4%. In terms of average sales price, the average price of 24Q1 lithium batteries fell to about 0.84 yuan/Wh per watt-hour, down about 0.20 yuan/Wh from the 23-year average price. The average price drop was mainly due to a drop in the price of upstream raw materials. Gross profit per watt-hour was about 0.22 yuan/Wh, down 0.015 yuan/Wh from '23. 24Q1 shipments increased by about 25% compared to 23Q1. The company's shipment growth led to an improvement in the company's capacity utilization rate and increased the company's gross margin. 24Q1's gross profit margin was 26.42%, up 5.15 pct year-on-year from 23Q1.
Revenue from tax incentives increased dramatically, and R&D expenses fell slightly due to lower raw material prices. The company's other revenue for 24Q1 was 3.266 billion yuan, an increase of 1,839 billion yuan over 23Q1. Of this, the government subsidy is about 1.8 billion yuan, and the others mainly benefit from preferential tax policies for advanced manufacturing industries. 24Q1's R&D expenses were 4.340 billion yuan, a year-on-year decrease of 6.71%. The decline in R&D expenses was mainly due to a year-on-year decline in the price of R&D materials, which led to a decrease in R&D material expenditure.
Shenxing Battery and Kirin Battery were loaded at an accelerated pace, and the Tianheng Energy Storage System was launched. During the reporting period, the company's Shenxing Battery and Kirin Battery accelerated loading and began large-scale delivery. On March 28, the Xiaomi SU7 all-round series with Shenxing battery and the Kirin battery all-purpose series were released; on March 2, the ideal pure electric model MEGA was loaded and launched with 5G fast-charging Kirin batteries. At the same time, the company is still concerned about the application of condensed batteries in emerging fields such as flying cars. On April 9, the company released the world's first 5-year zero attenuation 6.25 MWh Tianheng energy storage system, and achieved large-scale mass production. The battery uses lithium iron phosphate materials, and the energy density is as high as 430 Wh/L, achieving a 30% increase in energy density per area. Accelerated loading of Shenxing Battery and Kirin Battery and large-scale mass production of Tianheng energy storage systems accelerate the company's high-end product process, and is optimistic that profit elasticity will be released throughout the year.
Investment advice: We expect the company to achieve revenue of 4364/5052/586.9 billion yuan in 2024-2026, net profit to mother of 490.69/581.15/682 billion yuan, EPS of 11.15/13.21/15.61 yuan respectively, and PE 18/15/13 times, maintaining the “recommended” rating.
Risk warning: Competition in the lithium battery market is intensifying, technology route selection risks, and downstream demand is sluggish.