occurrences
On April 18, the company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 39.398 billion yuan, a year-on-year decrease of 18.30%; realized net profit of 1,602 billion yuan, an increase of 10.75% over the previous year. In 2024, Q1 achieved revenue of 8.270 billion yuan, a year-on-year decrease of 3.41%; net profit to mother was 427 million yuan, a year-on-year decrease of 2.95%.
reviews
The new energy materials and rare earth sectors are under significant pressure, and the tungsten and molybdenum business is relatively stable. 1) Tungsten-molybdenum sector: It is estimated that the total revenue and profit for 2023Q4 were 4,085 billion yuan and 678 million yuan respectively, -8.5%/+19.37% month-on-month; thanks to rising tungsten concentrate prices, the tungsten and molybdenum sector's profit increased month-on-month. The total revenue and profit of 2024Q1 was 4,047 million yuan and 540 million yuan, respectively, +9.81%/-4.59% year-on-year, respectively; the reason for the year-on-year decline in profit was a certain year-on-year decline in production, sales and prices of the by-product molybdenum trioxide. 2) New energy materials sector: The estimated total revenue and profit for 2023Q4 was 4.189 billion yuan and 111 million yuan respectively, -16.24%/-36.21% month-on-month; the reason for the decline was due to slowing demand combined with falling prices of raw materials and finished products; we estimate that the average price of lithium cobalate and ternary materials was -41%/-30% year-on-year in 2023.
The total revenue and profit of 2024Q1 was 3.299 billion yuan and 114 million yuan, respectively, down 8.02% and 5.31% year-on-year, respectively. 3) Rare earth business: Total revenue and profit for 2023Q4 were estimated at 1,572 billion yuan and 0.3 billion yuan respectively, reversing losses of 20.74% month-on-month, respectively. Total revenue and profit for 2024Q1 were 912 million yuan and 40 million yuan, respectively, -26.66%/-64.79%, respectively. The reason for the decline was due to integration with the China Rare Earth Group, the atomic company Longyan Rare Earth Company and the former Jinlong rare earth smelting and separation business were no longer included in the scope of the consolidated statement, so there was a significant decline.
The real estate divestment business has made substantial progress, and it has gone into battle lightly. In 2023, the company successively completed the transfer of 47.5% of Chengdu Tongji's shares, 100% of Chengdu Tengwangge's shares, and 100% of Chengteng Property's shares; in 2023, it achieved a year-on-year loss reduction of 303 million yuan.
Focus on the positive cyclical upward trend in the tungsten and molybdenum sector, and photovoltaic tungsten wire continues to advance. The supply of tungsten and molybdenum is expected to continue to be tight, and the price center is expected to rise; as superimposed companies continue to expand production, the upstream and downstream of the company's tungsten and molybdenum industry chain is expected to fully benefit. The company achieved sales volume of fine tungsten wire of 34.1 billion meters in 2024Q1, an increase of 141% over the previous year. Currently, the company has an annual production capacity of 100 billion meters of tungsten wire for photovoltaics, and is also planning a new 100 billion meter photovoltaic tungsten wire production line construction project.
Profit Forecasts, Valuations, and Ratings
The company's 24-26 revenue is estimated to be 417.61/466.29/53.307 billion yuan respectively, net profit to mother is 18.61/23.08/2,643 billion yuan, EPS is 1.31/1.63/1.86 yuan, respectively, and the corresponding PE is 16.07/12.96/11.32 times, respectively. Maintain a “buy” rating.
Risk warning
Raw material prices fluctuated beyond expectations; progress of new projects fell short of expectations; demand fell short of expectations.