Key points of investment
In 2023, net profit to mother was 3.351 billion yuan, and 2024Q1 net profit to mother was 522 million yuan, in line with market expectations.
In 2023, the company's revenue was 66.304 billion yuan, up 5.19% year on year; net profit to mother was 3.351 billion yuan, down 14.25% year on year, in line with market expectations. In 2024, Q1's revenue was 14.963 billion yuan, down 21.7% year on year and 1.65% month on month; net profit to mother was 522 million yuan, down 48.99% year on year, up 54.69% month on month, in line with market expectations.
Shipments of precursors bucked the trend and surged in '23, and are expected to grow by more than 30% in '24. 23 years ago, drive shipments were 129,000 tons, an increase of 31%. The market share of the company's precursor business increased significantly. The year-on-year growth rate was better than that of the industry. Among them, we expect export sales of 110,000 tons+, an increase of 30% +, and we expect to ship 17-180,000 tons in 24, an increase of 30% +. In terms of profit, 23 years ago, engine revenue was 10 billion yuan, up 1%, gross profit margin of 18%, unit gross profit of 16,000 yuan/ton+. Huayou New Energy's net profit for 23 years was 120 million yuan, corresponding to a net profit of 0.1 to 20,000 yuan/ton per ton. H2 revenue declined, mainly due to a shift to a processing fee pricing model. H2 losses amounted to 130 million yuan, mainly due to impairment losses. If added back, the precursor business break-even.
Cathode materials increased by 5% in '23, and are expected to increase by more than 25% in '24. Cathode shipments in '23 were about 95,000 tons, an increase of about 5%, of which high-nickel three yuan accounted for about 83%. We expect 24Q1 cathode shipments to be around 20,000 tons, a decrease of about 20% month-on-month, and a target shipment of 120,000 tons in '24, an increase of 25% +. In terms of profit, the company is an OEM for leading car companies, and processing costs are stable. In 23 years, cathode revenue is 18.9 billion yuan, gross profit margin of 7.8%, corresponding to gross profit of 15,000 to 16,000 yuan/ton per ton per ton per ton per ton, and Chengdu Bamo's annual profit is estimated at 560 million yuan/ton, of which 23H2 units have a net profit of about 30,000 yuan/ton.
The contribution of the Huafei project increased significantly in 24 years, and the profit per unit of rising nickel prices recovered. In '23, shipments of nickel products were about 126,000 tons, an increase of 88%. Of these, it is estimated that 80,000 tons+ of nickel sulfate will be shipped (including self-supply), and 40,000 tons+ of electric nickel will be shipped. On the nickel smelting side, we expect the company to ship 140,000 gold tons+ of nickel throughout the year, corresponding to 90,000 tons+. Looking at 24, Huafei is expected to achieve full production, and annual nickel smelting shipments are expected to be around 240,000 gold tons (equity 130,000 tons+). On the profit side, Huayue had revenue of 6.8 billion yuan and net profit of 9.3 billion yuan, corresponding to MHP's net profit of 13,000-14,000 US dollars and a single ton net profit of 0.1-20,000 US dollars; Huayue's net profit for 23 years was 5.3 billion yuan, net profit of 730,000 yuan per tonne, corresponding to 15,000 US dollars per tonne of high-ice nickel and a net profit of 20,000 US dollars per ton. Nickel prices rebounded slightly from 16,000 US dollars to 19,000 US dollars+ in '24, and net profit per ton is expected to reach 0.2 to 0.3 million US dollars. Nickel smelting is expected to contribute 1-2 billion dollars to net profit for the full year of '24.
Copper prices have risen, and the profit elasticity of the copper business is remarkable. In '23, we shipped 88,000 tons of copper products, a decrease of 2%. We expect to contribute 500 million+ net profit for the whole year; in '24, the price of copper rose to nearly 10,000 US dollars, and the company's own copper mine costs 5,000 US dollars+. We expect to contribute about 1 billion dollars in profit in 24 years, and the flexibility is obvious. In '23, 410,000 tons of cobalt products were shipped, an increase of 12% over the same period. Of these, 13,000 tons were self-supplied, which basically achieved break-even. In '23, 8235 tons of lithium products were shipped, an increase of 104%, and stocks were 3,293 tons. The Zimbabwean Arcadia lithium project mined spodumene was shipped back to the country. We expect the full cost to be 100,000 yuan+, maintaining a break-even balance at current prices.
Profit forecast and investment rating: Considering the impact of metal prices, we lowered the company's profit forecast for 2024-2025. We expect the company's net profit to be 35/46/5.7 billion yuan in 2024-2026 (originally expected to be 57/76 billion yuan in 24-25), an increase of 5%/30%/25%, corresponding to PE of 14x/11x/9x. Since the company's precursor shipment growth rate is better than the industry, we maintain the “buy” rating.
Risk warning: Prices of upstream raw materials have fluctuated greatly, and sales of electric vehicles have fallen short of expectations.