In 2023, the company achieved revenue of 4.39 billion yuan, a decrease of 8.2%; net profit to mother of 720 million yuan, a decrease of 44%; net profit after deducting non-return to mother was 710 million yuan, a decrease of 44%; and cash flow from operating activities - 420 million yuan, a year-on-year increase of 48%. In 2023, the company's comprehensive gross profit margin was 27.7%, down 14pct; net profit margin was 16.5%, down 10.5pct.
2023Q4 achieved revenue of 1.22 billion yuan, a decrease of 2.1% and a 1.3% increase; net profit to mother of 155 million yuan, a decrease of 36% and a decrease of 5.2%; net profit of 160 million yuan after deducting non-return to mother, a decrease of 33%, an increase of 0.9%; and cash flow from operating activities of 520 million yuan, an increase of 267% and a 412% increase. The overall gross profit margin was 28.8%, down 8.7pct, and the circular increase was 6.1pct. Net profit margin was 12.7%, down 6.8pct, and the circular decline was 0.88pct.
The company's main business: 1) The operating revenue of anode materials was 3.74 billion yuan, a decrease of 11.0%; gross profit margin was 27.2%, a decrease of 16.4 pct; sales volume was 1.41 million tons, an increase of 31.5%. For the first time, the production and sales scale of anode materials ranked among the top five in the industry. 2) Graphitized coke revenue was 430 million yuan, an increase of 7.9% over the same period. The company optimizes the transmission curve in the graphite process, reduces electricity consumption and increases the service life of graphite crucibles, further reducing production costs. However, due to the expansion of production capacity in the industry, the price level of anode material products has dropped sharply, far exceeding the company's cost decline. The company continues to improve the level of equipment automation and intelligence, and the scale effect is prominent.
The company continues to deepen cooperation with important customers such as Ningde Times, Guoxuan Hi-Tech, and Honeycomb Energy to develop new products. The company further increases R&D investment and enhances R&D capabilities. In '23, the company's R&D expenditure rate was 2.84%, an increase of 0.62 pct.
2024Q1 achieved revenue of 860 million yuan, a decrease of 9.6% and a decrease of 29.4%; net profit to mother of 150 million yuan, a decrease of 35.5%, a decrease of 4.0%; net profit of non-return to mother of 140 million yuan, a decrease of 35.2% and a decrease of 11.8%; and cash flow from operating activities - 260 million yuan, an increase of 59% and a decrease of 150.3%. The comprehensive gross profit margin was 26.6%, down 8.4 pct, and the circular decrease was 2.1 pct. Net profit margin was 17.3%, down 6.9pct, and 4.6pct.
Considering that the decline in the price of anode materials exceeded expectations and demand for anodes fell short of expectations, we lowered the company's net profit to the mother in 24 to 700 million yuan (previously forecast 2 billion yuan), and is expected to achieve a net profit of 9/11 billion yuan in 25/26. Considering the company's cost advantage (the apparent reflection is the negative gross profit margin) and the current valuation level, we maintain a “buy” rating.
Risk warning: The release of production capacity fell short of expectations, the decline in negative prices exceeded expectations, and increased competition in the industry led to a decline in profitability.