Incidents:
The company released its 2024 quarterly report. 2024Q1 achieved operating income of 1,517 billion yuan, -67.67%, and 41.29% month-on-month, and realized net profit of 110 million yuan, -74.36% year-on-year, and -74.60% month-on-month; realized deducted non-net profit of 104 million yuan, -75.49% year-on-year and -69.68% month-on-month.
The proportion of international customers declined, and first-quarter results were under pressure in the short term
24Q1 gross margin was 14.89%, down 1.54 pct year on year and 2.11 pct month on month; net margin was 7.01%, down 2.17 pct year on year and 9.56 pct month on month. The main reason for the decline in the company's profit was the decline in the share of international customers in the first quarter, compounded by a drop in raw material prices and the price of cathode products, and short-term pressure on profitability. As the share of subsequent overseas projects increases, the company's profits are expected to recover.
The company actively lays out next-generation cathode materials and explores new markets such as solid-state batteries 1) The company's ultra-high nickel multi-materials such as Ni90, Ni92, and Ni93 and medium-nickel high-voltage multi-materials have successfully entered the international high-end electric vehicle supply chain and achieved batch supply; 2) lithium iron phosphate (manganese) and sodium electric cathode materials have entered the large-scale release stage, and sodium electric cathode materials have already formed 100 tons of shipments. 3) The dual-phase composite solid-state lithium battery cathode materials and solid state electrolyte products developed by the company have been verified by many leading solid-state battery companies. Customers include Qingtao, Weilan, Ganfeng, etc. Continued research and development promotion in high nickel, sodium electricity, and solid state cathode materials is expected to contribute to new performance increases.
Domestic and international production expansion is smooth. The Finnish project helps the company continue to develop overseas business. The Panzhihua project with an annual output of 300,000 tons of lithium iron phosphate (manganese) iron iron has been implemented in batches. The overall plan for the overseas Finnish project is 500,000 tons, including 200,000 tons of diverse materials and 300,000 tons of lithium iron phosphate (manganese). The first phase of the project is expected to further consolidate the company's leading position in overseas markets and continue to enhance the company's overseas performance.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue for 2024-2026 to be 144.34/194.47/24.745 billion yuan, respectively, with year-on-year growth rates of -4.58%/34.73%/27.25%, and net profit to mother of 10.37/12.15/1,540 billion yuan, respectively, with year-on-year growth rates of -46.11%/17.15%/26.77%, and EPS 2.05/2.40/3.04 yuan/share respectively. Since the company is a leader in cathode materials and has a leading technical layout, we gave the company 25 times PE in 24 years, with a target price of 51.18 yuan, maintaining a “buy” rating.
Risk warning: Competition in the ternary materials market has intensified; overseas business expansion falls short of expectations.