The world's leading power battery company will welcome Davis's double click. The company has been deeply involved in the field of lithium batteries for more than ten years. In 2023, the domestic power battery installed share reached 4.1%, ranking fifth, expanding the growth curve in the horizontal layout of the energy storage sector. In 2023, the company achieved net profit of 939 million yuan, +201.28% year-on-year, battery shipments exceeded 40 GWh, and the year-on-year growth rate exceeded 40%. Along with structural optimization of domestic customers and 0-1 sales volume overseas, the scale effect catalyzed a double increase in volume and profit in 2024.
Overseas breakthroughs seize the second round of global power battery restructuring opportunities. ① The main supporting models of Chinese market companies have expanded from A00 class to B-C class cars (such as Zero Run C01 and C11), and the customer structure upgrade has driven both cell volume and price increases. ② Overseas Vinfast, Tata, and Rivian are gradually being rolled out, with locations in Slovakia, Gottingen (Pack), Germany, Illinois (cell) plants, and Michigan (materials) plants in the US. In 2025, the launch of a European platform model with lithium iron phosphate batteries will begin a new overseas affordability cycle. The company will take the lead in receiving Volkswagen's domestic and overseas UC cell dual targets, and overseas business will enter a harvest period. According to estimates, in 2024-2026, Volkswagen is expected to contribute 4.2%, 14.1%, and 16% of the company's total revenue in 2024-2026, respectively.
Diversified technical layout and integrated resource layout to build core competitiveness. The company independently developed the LMFP system L600 Qichen battery, and the cell/system energy density reached 240/190 Wh/kg respectively; the 24Q3 Gen3 L300 lithium iron battery+CTP/CTC is expected to be released on a large scale. The layout of upstream mining, beneficiation, and smelting resources was formed. According to estimates, in the medium term, lithium carbonate self-supply smelting capacity corresponds to a battery production guarantee scale of 24 GWh; the company covers a wide range of core midstream links (positive and negative electrode materials, diaphragms, electrolytes), and the self-supply rate of midstream raw materials has increased, and the results of increasing efficiency have been shown.
Profit forecasting and investment advice. The company's 2024-2026 EPS is expected to be 0.59, 0.94, and 1.22 yuan/share. Considering that the company's overseas production capacity will be released on a large scale from 2025-2026, the company is given a PE valuation of 34 times in 2024, corresponding to a reasonable value of 20.17 yuan/share, giving it a “buy” rating.
Risk warning. Automobile sales fell short of expectations; technological upgrades fell short of expectations; raw material prices fluctuated.