The company released the 2024 annual report and the 2024 quarterly report: in 2023, it achieved revenue of 3,013 billion yuan, a year-on-year increase of 4.62%, achieved net profit of 576 million yuan, and realized net profit of 545 million yuan, or -20.20% year-on-year; 2024Q1 achieved revenue of 715 million yuan, an increase of 7.51% year-on-year, and realized net profit of 107 million yuan, -41.45% year-on-year, and realized net profit without deduction of 907 million yuan, or -39.66% year-on-year.
Earnings were under pressure in the short term, and gross margin declined slightly. 2024Q1's gross margin was 35.99%, net sales margin was 14.83%, and gross margin decreased 2.31pct from 2023Q4. In terms of cost ratio, 2024Q1 sales expense rate/management expense rate/R&D cost ratio were 0.96%, 9.75%, and 7.76%, respectively, down from 2023Q4. In terms of diaphragm sales, the company maintained a high growth trend of 2.5 billion square meters in 2023, 48.49% year-on-year.
Actively expand the scale of production capacity and further expand overseas markets. The company has always adhered to an international development strategy, actively promoted project construction at the Nantong base, Foshan base and European base, further expanded the company's wet diaphragm production capacity and high-performance coated lithium battery separator production capacity to better meet the needs of the company's products in the middle and high-end markets for lithium-ion battery separators. The company supplies products in batches to first-tier manufacturers such as LG Chemical, Samsung SDI, Envision AESC, NORTHVOLT, Murata, and SAFT, and has established business partnerships with many large lithium-ion battery manufacturers, and overseas markets are expected to be further developed.
Profit forecast and investment rating: We expect the company's 2024-2026 net profit to be $6.1, 8.9, and 1.25 billion yuan, respectively, up 6%, 45%, and 40% year-on-year. The market value as of April 19 corresponds to a 24-25 PE of 22 or 15 times, maintaining a “buy” rating.
Risk factors: risk of industry demand falling short of expectations; risk of fluctuating raw material prices; risk of new technology development.