On April 18, 2024, the company released its 2023 annual report. The full year of 2023 achieved operating income of 14.079 billion yuan, +4.87% year over year; realized net profit of 572 million yuan, +21.79% year over year; realized net profit without return to mother of 535 million yuan, +4.43% year over year, and operating profit continued to grow.
Revenue and profit continued to grow in the full year of 2023, and Q4 net profit increased year over year. Revenue of 14.079 billion yuan was achieved for the full year of 2023, +4.87% year-on-year. Among them, lead-acid battery revenue was 10.880 billion yuan, +7.83% year over year; lithium battery revenue was 85 million yuan, +37.95% year over year; and recycled lead revenue was 2,874 billion yuan, -7.58% year over year, mainly due to excess production capacity in the recycled lead industry and rising procurement prices for used batteries. Achieved net profit of 572 million yuan to mother, +21.79% year-on-year. Looking at the fourth quarter of a year, the company achieved operating income of 3,767 billion yuan, -2.18% year-on-year; realized net profit of 172 million yuan, +0.59% year-on-year; and realized net profit without deduction of 151 million yuan, or -20.33% year-on-year.
Profitability improved year over year, and costs were properly controlled. The company's gross margin in 2023 was 15.05%, +0.81 pct year on year. Among them, the gross profit margin for lead-acid batteries was 20.34% (+0.80pct year over year), recycled lead -3.99% (-1.98pct year on year), and lithium batteries -7.91% (year-on-year -5.42pct), mainly due to the company's lithium battery business in the construction period and high upfront costs. On the cost side, the 2023 sales expense ratio is 4.99% (year-on-year +0.19pct), and the management expense ratio is 2.
94% (+0.20pct), R&D cost rate 1.87% (+0.48pct), financial cost ratio 0.34% (YoY +0.13%), with proper cost control during the period.
Low-voltage lead-acid batteries are in a stable position and continue to develop new businesses such as lithium batteries and energy storage. As a leading domestic low-voltage lead-acid battery, the company's automotive low-voltage lead-acid battery production and sales volume continued to grow in 2023. It produced 35.23 million KVAH over the year, +10.98% year over year, and accumulated sales of 34.6 million KVAH throughout the year, +7.45% year over year. Both domestic and foreign markets grew, and its market share increased steadily. At the same time, the company has completed 35 targeted projects in the 12V/24V/48V low-voltage lithium battery business, which is expected to contribute revenue in the future. In terms of energy storage, the company has successfully completed the main experience acceptance of 3 projects and product delivery for 2 projects in industrial and commercial energy storage, and is expected to further expand the energy storage business through overseas online and offline channels in the future.
Investment advice: The company is a leading enterprise in the domestic lead-acid battery industry, and its business is gradually expanding to lithium batteries and energy storage. With the development of maintenance markets and overseas markets, the company's share is expected to increase further. Considering the company's long construction cycle of stabilizing sales channels and expanding external markets, we adjusted the company's revenue for 2024-2026 to 15.995 billion yuan (original value of 21,592 billion yuan), 17.626 billion yuan (original value of 25.423 billion yuan), and 19.426 billion yuan, respectively. Net profit to mother was 743 million yuan (original value of 1,150 billion yuan), 9.22 billion yuan (original value of 1,415 billion yuan), and 1,074 billion yuan, respectively.
Based on the closing price on April 18, 2024, the company's current market value is 9.327 billion yuan, corresponding to 2024-2026 PE 12.55X, 10.11X, and 8.68X respectively, maintaining the “buy” recommendation.
Risk warning: Risk that the automobile industry is sluggish, overseas business expansion falls short of expectations, lithium battery penetration rate does not meet expectations, and the information and data used in research reports are not updated in a timely manner.