Incident: The company's revenue in 2023 was 19.064 billion yuan, down 11.76% year on year; net profit to mother was 535 million yuan, down 61.29% year on year; net profit after deduction was 480 million yuan, down 66.60% year on year. Among them, the company's revenue for the Q4 quarter was 4.826 billion yuan, down 2.69% year on year; net profit to mother was 67 million yuan, down 80.86% year on year; net profit after deduction was 64 million yuan, down 82.36% year on year.
Battery growth has slowed marginally, and industry processing costs have declined, and the company's Q4 performance is under pressure. On the demand side, the load capacity of 2023Q4 power batteries was 132 GWh, an increase of 30.8% over the previous year, and an increase of 30.0pct. On the price side, battery foil production capacity was significantly put into operation in 2023. With limited demand growth, industry processing costs declined under pressure. According to Mysteel data, the processing fee for 15 μm battery foil in 2023 was 14,000 yuan/ton, a decrease of 1,000 yuan/ton. In this context, the company's Q4 revenue performance was under pressure, falling 2.69% and 80.86%, respectively, year on year.
The growth rate of demand for production capacity investment has slowed, and profit margins have declined under pressure. 2023Q4's gross margin was 8.35%, down 9.57pct year on year; net profit margin was 1.37%, down 5.65pct year on year. The decline in profit margin was mainly due to a slowdown in marginal growth in downstream demand, combined with production capacity investment and a year-on-year decline in processing costs. Looking specifically at the cost side, the 2023Q4 company's cost rate during the period was 6.61%, a year-on-year decrease of 1.07pct. Among them, the sales expense ratio was 1.26%, down 0.21pct year on year, the management expense ratio (including R&D) was 6.22%, up 0.61 pct year on year, and the financial expense ratio was -0.87%, down 1.48 pct year on year.
By betting on overseas production capacity, profit advantages are expected to be reflected in the global layout. At present, downstream battery companies have begun to accelerate their deployment in the European market. Ningde Era has production capacity plans of 14 GWh in Germany and 100 GWh in Hungary in Europe. Through overseas layout, the company is expected to take the lead in achieving supply; in addition, the company has close cooperation with leading companies such as BYD and LG, which is expected to fully benefit from the high growth in overseas markets and increase its market share overseas and even the world. At the same time, the competitive pattern for overseas production capacity is better, processing costs are higher than domestic, and profits are higher.
Investment advice: We expect the company to achieve net profit of 5.59/6.09/717 million yuan in 2024-2026, an increase of 4.6%/8.9%/17.7% year-on-year. The PE corresponding to the latest closing price is 16.7x /15.3x /13.0x, maintaining the “increase” rating.
Risk warning: Economic recovery falls short of expectations; production capacity investment falls short of expectations; and the new energy industry has declined beyond expectations.