incident. On April 24, 2024, the company released its 2023 annual report and 2024 quarterly report. In '23, the company achieved annual revenue of 4.391 billion yuan, a year-on-year change of -8.18%, achieving net profit attributable to mother of 723 million yuan, a year-on-year change of -43.94%, after deducting net profit of 713 million yuan, a year-on-year change of -44.34%.
24Q1 performance split. Revenue and net profit: The company's 2024Q1 revenue was 881 million yuan, -9.58%, -29.40% month-on-month, net profit to mother was 149 million yuan, -35.48% year-on-year, -3.95% month-on-month, net profit after deduction of 143 million yuan, -35.16% year-on-year and -11.75% month-on-month. Gross profit margin: 2024Q1 gross margin was 26.64%, -8.35pct yoy, -2.12pct month-on-month. Net interest rate: 2024Q1 net margin was 17.27%, -6.93pcts yoy, +4.58pcts month-on-month. Expense rate: The company's expense ratio for the 2024Q1 period was 6.85%, +1.08pcts year-on-year. Among them, sales, management, R&D, and finance expenses were 0.35%, 1.86%, 3.25%, and 1.39%, respectively.
The profit level per ton of anodes exceeded expectations. In '23, the company's anode materials business achieved revenue of 3,726 billion yuan, a year-on-year decrease of 11.01%, and achieved shipments of 140,900 tons, with a net profit of about 0.51 million yuan per ton. In 24Q1, the company expected to ship 33,000 tons, a net profit of about 0.45 million yuan per ton, and the profit level per ton exceeded expectations. Looking forward to the future, on the one hand, the company announced in September 23 that it plans to invest 4 billion yuan to build an integrated lithium battery anode material integration project with an annual output of 100,000 tons in the Hebei Wuji Economic Development Zone. The project began in February '24. On the other hand, we expect the industry's high-cost, low-quality production capacity will gradually clear up. Therefore, as the company's production capacity is gradually released as needed and the market pattern improves, the anode materials business is expected to reach an inflection point.
Focus on technological innovation and accelerate product iteration. The company attaches importance to R&D. In '23, the company invested 125 million yuan in R&D, an increase of 17.48% over the previous year. During the reporting period, the company completed batch sales of a variety of next-generation anode materials with high capacity, high ratio, long cycle life, and high safety, developed independently, and iterated on past products. In terms of energy storage batteries, energy storage battery anode material products suitable for 330 mAh/g and 350 mAh/g with excellent low temperature performance and excellent cycle performance have all been mass-produced, reducing costs while satisfying low capacity and long cycles. In terms of power batteries, the company develops products with high energy density and high fast charging performance in response to the “mileage anxiety” industry pain points of new energy vehicles. The R&D project “Development and Process Upgrading of a High Rate Lithium Ion Battery Anode Material” has been mass-produced. With the gradual implementation of the company's new products and processes, the company is expected to consolidate its profit advantage.
Investment advice: We expect the company to achieve revenue of 49.91, 70.96, and 9.369 billion yuan in 2024-2026, with year-on-year growth rates of 13.7%, 42.2%, and 32.0%, net profit to mother of 7.32, 10.71, and 1.46 billion yuan, respectively. The year-on-year growth rates are 1.2%, 46.4%, and 36.3%, corresponding PE is 12, 9, and 6 times. Considering the constant growth trend of the company's negative shipments, product prices will gradually stabilize and maintain the “recommended” rating.
Risk warning: The recovery in downstream demand falls short of expectations, fluctuations in upstream raw material prices have exceeded expectations, and market competition has further intensified.