The 2024 Q1 results were in line with expectations: the company achieved revenue of RMB 79.77 billion, down 10.41% year on year; net profit to mother of RMB 10.51 billion, up 7% year on year; gross margin in Q1 24 reached 26.42%, up 0.75 pcts month on month, up 5.15 pcts year on year; net interest rate reached 14.03%, up 0.63 pcts month on month, up 2.71 pcts year on year. The company has bargaining power in the industrial chain and has sufficient cash flow. At the end of the first quarter, the company held about 288.6 billion yuan in monetary capital; net operating cash flow reached 28.4 billion yuan, an increase of 35% over the previous year.
Battery market share remains leading: According to SNE data, in January-January '24, the company's battery loading volume reached 35.5 GWh, up 44.9% year on year, and the market share reached 38.4%. Overseas market companies' battery product loading volume was 12.1 GWh, up 25.8% year on year, and the market share reached 26.3%. In the 2024 Q1 Ningde era, the battery sales volume was about 95 GWh, an increase of 35% year on year. The sales volume of the power battery system is about 76 GWh, and the sales volume of the energy storage battery system is 19 GWh. The company has a clear competitive advantage in the context of fierce competition in the industry. Recently, many popular models are equipped with the company's battery products, and its leading position is stable.
The industry is progressing steadily: The company uses a technology licensing model to start initial cooperation with major manufacturers such as Ford Motor Company, Tesla, and GM, which mainly includes cooperation in the construction of battery factories, participation in preparation and operation of battery technology, and licensing of battery patents. Production capacity at the German plant is climbing rapidly, and it is expected to achieve breakeven in 24 years. The company is optimistic about the global electrification trend. With the release of next-generation electric models, product competitiveness will increase, and demand in the overseas NEV market will further increase.
Improved energy storage product matrix: The company launched the Tianheng Energy Storage System on April 9. The product achieved zero power and capacity attenuation for 5 years, and the lithium battery life achieved 15,000 laboratory cycles. At the same time, the floor area was reduced, energy density per unit area was increased, safety and efficiency were taken into account, and ultimately increased the operating income of energy storage. The company empowers electrochemical energy storage with leading R&D technology and extreme manufacturing capabilities, and continues to expand the scale of the industry.
The target price is 233.59 yuan, maintaining the purchase rating: We forecast that the company's revenue for 2024-2026 will be 389.389 billion yuan/469.14 billion yuan/526.127 billion yuan, respectively; net profit to mother will be 49.758 billion yuan, 58.588 billion yuan, and 65.304 billion yuan, respectively. We used free cash flow discounting to value the company, taking WACC = 14.5%, with a sustainable growth rate of 2%, to obtain the company's target price of 233.59 yuan for the next 12 months, corresponding to 20.7/17.5/15.7 times PE in 2024/2025/2026, respectively. There is 22.99% room for increase compared to the current price, maintaining the purchase rating.