Incidents. On April 18, 2024, the company released its annual report for the year of 2023. In '23, the company achieved revenue of 48.784 billion yuan, a year-on-year change of +34.38%, and realized net profit of 4,050 billion yuan, a year-on-year change of +15.42%, after deducting net profit of 2,755 billion yuan, a year-on-year change of +2.23%.
23Q4 performance. Revenue and net profit: The company's 2023Q4 revenue was 13.255 billion yuan, +10.27% month-on-month, and net profit to mother was 626 million yuan, -25.80% year-on-year, -50.86% month-on-month, net profit after deduction of 600 million yuan, +15.73% year-on-year and -33.26% month-on-month. Gross profit margin: 2023Q4 gross margin was 17.72%, +0.14pct year over year, and -0.62pct month-on-month. Net interest rate: 2023Q4 net interest rate was 4.83%, -3.60pcts year-on-year, and -5.92pcts month-on-month. Expense rate: The company's expense ratio for the 2023Q4 period was 14.46%, year-on-year -1.80pcts. Among them, sales, management, R&D, and finance expenses were 1.31%, 6.46%, 5.96%, and 0.73%, respectively.
Shipments of mobile storage increased, and new products were launched at an accelerated pace. 1) Power sector: In '23, the company's power battery shipments reached 28.08 GWh, up 64.22% year on year, and the domestic power battery market share reached 4.45%, up 2.01 pcts year on year, ranking fourth in the country. The company's 46 series large cylindrical batteries have gone offline, the first phase of the Jingmen 20 GWh large cylindrical battery factory has been put into operation, and the first batch of equipment in the second phase has entered the market one after another. 2) Energy storage sector: In '23, the company's energy storage battery shipments reached 26.29 GWh, an increase of 121.14% over the previous year, ranking third in the world. During the reporting period, the company released new Mr series energy storage products. Among them, Mr. Big batteries use innovative current collection technology and 3T technology to achieve 96% high energy efficiency. Mr. Giant's energy reached 5 MWh, and the system energy efficiency reached 95%. Mass production is expected in 24Q4.
We have received orders from several overseas manufacturers, and production capacity projects are being followed up one after another. 1) Order side: In June '23, the company successively signed lithium battery purchase agreements with US energy storage manufacturers Powin and ABS to supply them with 10 and 13 GWH square lithium iron phosphate batteries respectively. In September '23, the company signed a memorandum of understanding with Rimac to supply electric vehicle batteries. In the same month, the company's subsidiary Everweft Power received a fixed notice from GM to supply 12V lithium battery systems for automobiles; 2) In terms of production capacity: In May '23, the company successively signed local agreements and memorandums of understanding with the Hungarian government subsidiary Debrecen and PKL to build lithium battery production bases in Malaysia and Hungary, respectively. In July '23, the company signed a memorandum of understanding with EA to jointly establish a joint venture in Thailand and build a battery production base of at least 6 GWh. In September '23, the company's grandson, Everweft America, plans to cooperate with Daimler Truck, PACCAR, and Electrified Power through the model of collecting license fees to build power battery production capacity in the US in a joint venture to serve the local heavy truck market.
Investment advice: We expect the company to achieve revenue of 604.03, 832.74, and 104.779 billion yuan in 2024-2026, with year-on-year growth rates of 23.8%, 37.9%, and 25.8% respectively, and net profit to mother of 42.47, 55.60, and 7.274 billion yuan. The year-on-year growth rates are 4.9%, 30.9%, and 30.8%, respectively. Corresponding PE is 17, 13, and 10 times. Considering the company's leading technical advantages, overseas layout will be implemented at an accelerated pace to maintain the “recommended” rating.
Risk warning: Raw material prices fluctuated beyond expectations, sales of new energy vehicles fell short of expectations, and industrialization of large cylindrical batteries fell short of expectations.