Key points of investment:
Negative electrode sales increased 31% in 2023, and the cost reduction was greater than the price drop. Revenue of 4.39 billion yuan was achieved in 2023, -8% year over year, realized net profit of 720 million yuan, -44% year over year, and realized net profit of 710 million yuan without return to mother, or -44% year over year. The gross profit margin was 28%, the net profit margin was 16%, and asset impairment losses amounted to 110 million yuan. The annual sales volume of anode in '23 was 1.41 million tons (up 31% year on year), the price dropped to 26,500 yuan/ton (down 12,700 yuan/ton year on year), net profit per ton (down 0.69 million yuan/ton year on year). The decline in net profit was less than the price drop. The company's degree of integration was high, showing the ability to control costs.
23Q4 achieved revenue of 1.22 billion yuan, the same -2%, net profit to mother of 155 million yuan, -5% of the year, and a gross profit margin of 29% (+6.14pct). Shipments are expected to be 45,000 tons (ring +5%), corresponding to an estimated unit price of 22,900 yuan/ton (ring -0.08 million yuan/ton), net profit per ton of 0.34 million yuan/ton (ring -0.04 million yuan/ton), plus reduced value of 0.49 million yuan/ton (ring +0.09 million yuan/ton), showing impressive performance under the trend of continuous price reduction.
2024Q1 shipments grew at a high year-on-year rate, and profit per ton exceeded expectations
2024Q1 achieved revenue of 860 million yuan, -29%, and -10%, net profit to mother of 149 million yuan, -4%, and gross profit margin of 27% (-2.12pct). Shipment is expected to be 33,000 tons (-27%, +43%), corresponding to the estimated unit price of 22,200 yuan/ton (ring -0.07 million yuan/ton), net profit per ton of 0.45 million yuan/ton (ring +0.11 million yuan/ton). If 23Q4 is returned, the projected impairment value of 0.25 million yuan/ton (ring -0.07 million yuan/ton) is expected, and the performance still exceeds expectations.
Binding leading high-quality customers, striving for the full line of new products, striving to be the company's largest customer in 2023 is Ningde Times (accounting for 61.12% of revenue). It is also a supplier to well-known manufacturers such as Ningde New Energy, Guoxuan Hi-Tech, Honeycomb Energy, Xiongtao Co., Ltd., Wanxiang 123, Sunwoda, Envision Dynamics, Ruipu Lanjun, and ZTE Pineapple. Deeply binding leading customers is expected to help the company reduce repayment risk and consolidate market share. According to research statistics from various industries such as Gaogong Lithium Battery and EVTank, the company's anode production and sales scale ranked among the top five in the industry for the first time in 2023. A variety of next-generation anode materials with high capacity, high ratio, long cycle life, and high safety developed by the company have been sold in batches, significantly improving the fast charging performance of power batteries and the energy density of energy storage batteries. The company continues to increase investment in R&D, and an in-situ low-cost polysilicon-carbon anode composite material has entered a small trial stage.
Profit forecasting and investment advice
We expect the operating rate to increase during the peak season. After the high-priced inventory in the early stages is further digested, the company's profitability is expected to bottom out. Recently, petroleum coke prices have fluctuated, and the customization of anode products is relatively strong, and the project is accurately locked in the early stages. Net profit due to 2024-2026 is expected to reach 607/7.7/984 million yuan (the previous forecast was 13.3/17.1/-, mainly due to intense industry competition and rapid price drop). The current PE 13.7/10.8/8.4x is 20 times PE in 2024, corresponding to a target price of 46.59 yuan/share (previously 69.07 yuan/share), maintaining the “buy” rating.
Risk warning: Risk of fluctuations in the NEV-related industry; risk of changes in technology and process routes; continued deterioration of the pattern due to insufficient production capacity as expected, etc.