Net profit to mother decreased by 27.89% year on year in '23, maintaining the shareholding increase rating to achieve revenue of 30.529 billion yuan (yoy +3.87%), net profit to mother of 934 million yuan (yoy -27.89%), deducting non-net profit of 241 million yuan (yoy -119.91%). Of these, 23Q4 achieved revenue of 10.30 billion yuan (yoy +28.48%, qoq +41.32%) and net profit of 387 million yuan (yoy +33.39%, qoq +188.16%). In addition, the company achieved operating income of 8.354 billion yuan in 24Q1 (yoy +36.31%, qoq -18.89%) and net profit of 456 million yuan (yoy +164.48%, qoq +17.89%). The company's net profit for 24-26 is estimated to be 1,075/17.46/2,684 billion yuan, respectively (the previous value was 15.00/1,930 billion yuan in 24-25, respectively). Comparable company Wind consistently expected an average PB (24E) of 1.70 in 24, giving the company PB (24E) 1.70. The company's target price was estimated at 6.56 yuan, giving it an “increase in wealth” rating.
The company's gross margin rebounded month-on-month in the first quarter
The company's consolidated gross margin in '23 was 12.24%, and the net profit margin was 3.87%, down 2.30% and 6.66%, respectively. 24Q1's comprehensive gross margin and net margin were 13.29%/5.60% (yoy+0.42pct/1.92pct, qoq+3.81pct/1.59pct), respectively. By product, the gross margin of ternary precursors, nickel resources, and cathode materials was 14.61%/32.85%/7.11%, respectively. In terms of rate, the cost rate for the total period of 23 years was 8.92%, yoy+0.90pct, with sales/management/R&D/finance rates of 0.33%/2.84%/3.94%/1.81%, yoy+0.01pct/+0.44pct/+0.07pct/+0.38pct, respectively.
The company's precursors focus on high value-added products. The nickel resource project overproduced and continued to expand production of the company's core products, tertiary precursor materials and cobalt tetroxide, became one of the few companies in the world that can produce high-nickel NCM and NCA series products, and is the first to mass-produce a full range of next-generation materials such as 9 series high nickel, high nickel in core shell, high voltage ternary, quaternary high nickel, and cobalt-free. In 2023, the company shipped 137,000 tons of high-end products such as 8 series and 9 series ultra-high nickel (Ni90 and above) precursors, accounting for more than 76% of total shipments, ranking first in the world. In 2023, the first phase of the company's Indonesian Qingmeibang nickel resources project successfully completed the four stages of commissioning, climbing, production stabilization, and overproduction. It shipped 27,050 tons of metal throughout the year, exceeding the production rate by more than 30%; it has also fully started construction of the second phase of the Indonesian nickel resources project.
The company clarifies various business goals for 2030
The production capacity of ternary precursors reached 500,000 tons/year; the production capacity of cobalt products (tricobalt tetroxide, ultrafine cobalt powder, cobalt flakes, etc.) reached 40,000 tons/year; production capacity of sodium electric materials reached more than 50,000 tons/year; and lithium manganese phosphate materials reached more than 100,000 tons/year. The target of the Indonesian nickel resource project is 200,000 gold tons of nickel/year (18,000 gold tons of cobalt/year). The scale of power battery recycling (including battery waste) reached more than 500,000 tons; the sales scale of the power battery recycling business reached more than 10 billion yuan. The total amount of metal and plastic recycled reached 10 million tons/year. The wet chemical capacity of nickel-cobalt-manganese reached more than 350,000 tons/year.
Risk warning: Downstream demand in the industry fell short of expectations, production capacity investment fell short of expectations, and nickel prices fell.