Key points of investment
The company's net profit for 24Q1 was 110 million yuan, a year-on-month decrease of 74%, in line with market expectations. Q1 revenue in '24 was 1.5 billion yuan, down 68%, 41%, net profit to mother of 110 million yuan, down 74%, reduced 74%, deducted from non-net profit of 100 million yuan, reduced 75%, 70%; gross profit margin of 15%, 1.6 pct, 2.1 pct, net profit margin of 7%, 1.9 pct, 9.5pct, in line with market expectations.
In 24Q1, ternary shipments remained flat month-on-month, and lithium iron began to be released. On the shipping side, the company shipped 10,000 tons+ of ternary cathodes and lithium cobalate in 24Q1, which was basically the same; the company built 110,000 tons of production capacity at the end of '23, maintained its overseas advantage for 24 years, and will actively expand the domestic market. We expect shipments to increase by 10-20% in 24 years. In addition, the first phase of the Panzhihua lithium iron project, 40,000 tons, was put into operation in March '24. We expect to ship 2000-3,000 tons of lithium iron in 24Q1, and the monthly shipment in April will reach 2,000 tons+. We expect to ship about 30,000 tons of lithium iron in '24, an increase of about 30,000 tons.
Profit declined due to an increase in domestic share, and is still far ahead of the industry average, and single-ton profit is expected to remain stable throughout the year. On the profit side, 24Q1 deducted about 10,000 yuan of non-profit per ton, down 60% + from month to month. The share of overseas customers decreased mainly due to the shift of international customer projects, but the profit level was still far ahead of the industry average; the share of overseas customers fell to 30-40% in 24Q1, and some new projects were gradually released in the second half of the year. The share of overseas customers is expected to increase slightly compared to Q1, and the profit level is expected to remain around 10,000 yuan/ton throughout the year 24. Furthermore, the 24Q1 lithium iron and sodium electricity business still had some losses. It is expected that the increase in the scale of lithium iron shipments starting in Q2 may reduce losses.
Inventory at the end of Q1 increased by 200 million yuan compared to the beginning of the year, and operating cash flow improved. The cost rate for the 24Q1 period was 7.2%, with an increase of 2.7 pct and an increase of 4.7 pct. Among them, the financial cost ratio was -2.2%, the same decrease of 2.2 pct, the ring reduction was 1.9 pct, the R&D cost rate was 6.1%, the same increase of 2.5 pct, and the ring increase was 7 pct, mainly due to the transfer of R&D materials sold to inventory at the end of 23. Inventory at the end of Q1 was 930 million yuan, an increase of 230 million yuan over the beginning of the year. This was mainly due to an increase in turnover due to the commissioning of new production capacity. Q1 net cash flow from operating activities was 150 million yuan, down 72% from the same period, up 75%; Q1 capital expenditure was 350 million yuan, up 29% from the same period, and a decrease of 24%.
Profit forecast and investment rating: We maintain the company's profit forecast for 2024-2026. We expect the company's net profit to be 8.5/10.9/1.57 billion yuan in 2024-2026, -56%/+28%/+44%, corresponding to 29x/22x/16xPE in 24-26. Considering that the company's profit is still better than the market average, we maintain a “buy” rating.
Risk warning: Production capacity release falls short of expectations, demand falls short of expectations.