The company's 2024Q1 net profit was 456 million yuan, +164% year-on-year. The company achieved revenue of 30.529 billion yuan in 2023, +4% year on year; realized net profit of 935 million yuan, -28% year over year; gross margin was 12.24%, -2.3 pct year on year. The company achieved revenue of 8.354 billion yuan in 2024Q1, +36% year over month; realized net profit of 456 million yuan, +164% year on year and +18% month on month; gross margin was 13.29%, +0.4 pct year on year and +3.8 pct month on month. The company's income from fair value changes in 2023 was 1,265 million yuan, or was mainly affected by changes in the share price of participating company Ecopro Materials; in 2023, due to falling prices of upstream raw materials and products, it accrued asset impairment losses of 829 million yuan.
The company's shipments of tertiary precursors are growing rapidly, and its leading position in the world is stable. In 2023, the company's third-generation precursor sales volume was 180,300 tons, +18% year on year; gross margin was 14.61%, -3.44pct year on year. In 2023, the company shipped 137,000 tons of high-end products such as 8 series and above high-nickel precursors, accounting for more than 76% of total shipments, ranking first in the world in shipments of high-nickel products. 2024Q1's shipments of tertiary precursors reached 510,000 tons, +114% year over year, maintaining a rapid development trend.
The company's nickel projects will be put into operation one after another in 2023, which is expected to contribute to continued profits. In 2023, the company shipped 271,000 tons of metallic nickel, with an excess yield of more than 30% and a nickel-cobalt-manganese recovery rate of more than 95%. 2024Q1's Indonesian nickel project shipped 10,500 tons of metal, exceeding production by 30%. Driven by the steady production of the first phase of the Qingmeibang project and the successive implementation of the second phase of the project, the company is expected to ship more than 60,000 tons of metallic nickel in 2024.
The introduction of the “trade-in” policy is expected to promote the rapid development of the company's comprehensive utilization business of waste resources. On April 26, 7 departments including the Ministry of Commerce jointly issued the “Implementation Rules on Vehicle Trade-In Subsidies”. The rules are clear. Individual consumers who wish to apply for subsidies are required to provide materials such as personal identification information, “Waste Motor Vehicle Recycling Certificate”, and “Unified Motor Vehicle Sales Invoice”. Among them, the “End-of-Life Motor Vehicle Recycling Certificate” shall be issued by a qualified scrapped motor vehicle recycling and dismantling enterprise. The “trade-in” policy is expected to drive the rapid development of the waste car recycling industry, promote the flow of used vehicles into compliant scrapping channels, and promote the development of industry health standards. The company has set up 16 green recycling and waste recycling treatment bases in 11 provinces and cities including Hubei, Hunan, and Guangdong, covering more than 40% of China's land area, mainly electronic waste, end-of-life vehicles, and decommissioned power batteries. At the same time, the company also has several national public technology research platforms such as the National Electronic Waste Recycling Engineering Technology Center and the National Energy Metals Key Laboratory. It is industry-leading in comprehensive resource utilization capabilities, and is expected to fully benefit from the rapid development of policies.
Risk warning: Metal prices fluctuate greatly; industry competition increases risk; electric vehicle sales fall short of expectations.
Investment advice: Maintain profit forecasts and maintain an “gain” rating. We expect the company's net profit to be 1,25/16.35/2.003 billion yuan in 2024-2026, +31%/34%/23% year over year, EPS 0.24/0.32/0.39 yuan respectively. The current PE is 26/20/16 times, maintaining the “increase” rating.