Key points of investment
24Q1 performance slightly exceeded expectations, and profitability increased month-on-month. Q1 revenue in '24 was 4.5 billion yuan, -66%/-36%, net profit to mother was 160 million yuan, -44%/+308% year-on-month, net profit not attributable to mother was 150 million yuan, or -43%/+521% year-on-month. Gross profit margin of 7.5%, +2/4pct month-on-month, net interest rate 3.5% month-on-month, +1.4/3pct month-on-month, deducted non-net interest rate of 3.4%, and +1.3/3pct month-on-month, slightly exceeding market expectations.
Q1 Shipments have increased, and new products with high prices for energy storage have been launched. The company sold 136,000 tons in Q1, +33%/-3% year-on-month, of which energy storage products accounted for 21%, sold 29,000 tons, and sold 80,000 tons of expensive new energy storage products CN-5 and YN-9. In March, the company shipped 59,000 tons, with a capacity utilization rate of 98%. It is already at full production. We expect 180,000 tons of shipping in Q2, which is expected to increase 30% +. Shipments of 700,000 tons for the whole year will increase by 38%. The share will continue to be maintained. The company will further expand production in Yunnan and overseas in the future.
The bottom was established, and Q1 profits rebounded month-on-month, and they are still leading the industry. Q1 The average price of lithium iron was 38,000/ton, down 34%. The gross profit per ton was 0.25 million yuan, and the net profit per ton was 0.12 million yuan. If depreciation was deducted, the net profit per ton was about 10,000 yuan, which clearly rebounded. This means that lithium prices stabilized, and the company's processing cost advantage was highlighted. We judge that 24Q1 processing costs have bottomed out, the industry's production capacity has been cleared in 25 years, and the company's net profit is expected to recover to nearly 30,000 yuan/ton.
Phosphate mining rights were obtained, and the integrated layout progressed smoothly. The company has obtained two prospecting rights, with reserves of 100 million tons. It has now obtained a mining license from Huangjiapo, with a production capacity of 1.2 million tons/year. The price of phosphate ore is high at 1,000 yuan/ton, and the production cost is about 300 yuan/ton (including resource tax). We estimate that if the self-supply ratio reaches 20%, the corresponding profit per ton of cathode thickening will be 600 yuan/ton, which will gradually increase profits starting in 25 years.
Q1 The cost per ton has declined significantly, and inventory has increased since the beginning of the year but is still at a reasonable level. The cost for the 24Q1 period was 160 million yuan, -17/ -20% compared to the previous month, the cost rate was 3.6%, +2/+0.7pct compared to the same period, and the cost per ton was 0.12,000 yuan, -39%/-17%. 24Q1 net operating cash flow of 100 million yuan; capital expenditure of 400 million yuan, -39%. 24Q1 inventory was 2 billion yuan, up 51% from the beginning of the year; at the end of Q1, the company's contract liabilities were 450 million yuan, down 0.2% from the beginning of the year.
Profit forecast and investment rating: Considering the company's deepening integrated layout and consolidating cost advantage, we basically maintain the company's 2024-2026 net profit forecast at 10/25/3.4 billion yuan, -35%/+147%/+35%, corresponding PE is 25/10/7 times. Considering that the company is the leading lithium iron cathode, the cost advantage is remarkable. The cost advantage is remarkable. The cost advantage is significant. The cost advantage is 15x for 25 years, and the target price is 50.1 yuan, maintaining a “buy” rating.
Risk warning: Raw material prices fluctuated beyond market expectations, and electric vehicle sales fell short of market expectations.