The company released its 2023 annual report and achieved net profit of 1.2 billion yuan for the whole year, an increase of 33% over the previous year; the company's profitability remained steady, capacity construction progressed steadily, market position continued to be consolidated; and maintained an increase in holdings rating.
Key points to support ratings
Net profit to the mother increased 33.25% year on year: the company released the 2023 annual report, achieving full year revenue of 10.511 billion yuan, an increase of 21.47%; realized net profit of 1,2001 billion yuan, an increase of 33.47% year on year; realized net profit without return to mother of 1,158 billion yuan, an increase of 37.12% year on year. According to the company's annual report estimates, net profit attributable to mother was 406 million yuan in the fourth quarter of 2023, up 31.91% year on year and 41.82% month on month; net profit without deduction to mother was 386 million yuan, up 33.77% year on year and 40.16% month on month. The company previously released a performance forecast and is expected to achieve a profit of 1,080-1,280 billion yuan in 2023, an increase of 19.84% to 42.04% over the previous year. The company's performance was in line with expectations.
Cost reduction and efficiency continued to advance, and profitability remained steady: the company's gross sales margin for the full year of 2023 was 23.58%, down 0.28 percentage points year on year; net sales margin was 11.59%, up 1.04 percentage points year on year, and overall profitability remained steady. In the future, the company will continue to maintain the company's profit level by reducing internal costs and expanding overseas customers; guarantee profit margins through technological innovation, automated production, and improving management standards.
Accelerate production capacity construction and promote production capacity release: The company has laid out 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. In 2023, the company increased its capital to Kodali in Germany by 30 million euros and to Kodali in Hungary by 32 million euros, respectively, to further expand the production capacity of overseas production sites. According to the company's investor relations activity records, the German and Swedish production bases are currently in the trial production stage for supporting customers. The first phase of production at the Hungarian production base has reached full production, and the second phase of equipment continues to be put in place. As the company's new production base is gradually completed and put into operation, it will further increase the production scale of the company's precision structural parts for power batteries, improve production efficiency, and reduce production costs.
Deeply cultivate customer service and continue market development: The company's customers include world-renowned power battery and automobile manufacturers, such as CATL, China Airlines, Tesla, Panasonic, etc., and has established long-term and stable cooperative relationships with customers. In 2023, the company signed a material sales contract with a well-known European lithium battery manufacturer, agreeing to supply the covers required for approximately 350 million sets of square lithium-ion batteries during the validity period of the contract. The signing of this contract shows that the company has made positive progress in developing overseas markets, which will help further enhance the company's profitability.
valuations
Under current share capital, considering the slowdown in downstream demand growth, we adjusted the company's 2024-2026 earnings per share to 5.20/6.35/7.88 yuan (the original forecast was 5.50/7.31/-yuan), corresponding to a price-earnings ratio of 16.8/13.7/11.1 times; maintaining an increase rating.
The main risks faced by ratings
NEV industry policy falls short of expectations; downstream demand for NEV falls short of expectations; price competition exceeds expectations; risk of declining market share; risk of customer concentration.