Incidents. On April 26, 2024, the company released its 2023 annual report and 2024 quarterly report. In '23, the company achieved annual revenue of 4.908 billion yuan, a year-on-year change of -6.64%. On the profit side, net profit attributable to mother was achieved in '23, net profit after deducting net profit of 0.42 billion yuan and net profit not attributable to mother, respectively. Overall performance was in line with expectations.
24Q1 performance split. Revenue and net profit: The company's 2024Q1 revenue was 1,066 billion yuan, +2.38%, -23.07% month-on-month, net profit to mother of 0.24 million yuan, +117.57% year-on-year, -75.74% month-on-month, net profit after deduction of 33 million yuan, +124.31% year-on-year and -73.01% month-on-month. Gross profit margin: 2024Q1 gross margin was 17.40%, +9.55pct year over year, and -4.69pct month-on-month. Net interest rate: 2024Q1 net margin was 3.84%, +17.63pcts yoy, -3.59pcts month-on-month. Expense ratio: The company's expense ratio for the 2024Q1 period was 12.20%, -2.89pcts year on year. Among them, sales, management, R&D, and finance expenses were 1.78%, 3.56%, 3.47%, and 3.38%, respectively.
Negative electrode shipments also increased, and lower prices affected profits. In '23, the company shipped 145,000 tons of anode materials, up 20.11% year on year, corresponding revenue of 4.415 billion yuan, down 8.54% year on year, gross profit margin of 12.84%, year-on-year change of -5.20pcts. The main reason was that on the one hand, downstream companies removed inventory and the growth rate of anode material market demand slowed down, and on the other hand, companies in the anode industry expanded production capacity one after another, and increased market competition caused product prices to drop.
Focus on forward-looking technology research and development, and lay out strategic new products for fast charging and energy storage. The company actively promotes forward-looking product development. 1) In terms of fast charging: Fast charging high energy density battery anodes have been successfully mass-produced, and the charging ratio exceeds 3C. The gram capacity of the new silicon-based anode has exceeded 1200 mAh/g, and the initial efficiency is over 85%, which can meet the needs of the new lithium-ion battery represented by 4,680 large cylindrical batteries; 2) In terms of energy storage: The hard carbon anodes for the company's sodium-ion batteries have entered the trial stage, mainly using the starch precursor route, and the gram capacity is expected to reach 300 mAh/g.
Investment in the construction of an integrated anode base in Morocco, and overseas layout is being accelerated. In '23, the company's overseas revenue reached 359 million yuan, up 434.83% year on year, accounting for 7.31%, up 6.03 pcts year on year. On April 27, '24, the company announced that it plans to invest no more than 5 billion yuan to build an integrated lithium-ion anode material base project with an annual output of 100,000 tons in Morocco. The construction will be built in two phases. The first phase and the second phase are planned to have a production capacity of 50,000 tons each. The construction period is expected to be 24 months. With the gradual implementation of the company's integrated production capacity, the graphitization self-sufficiency rate will gradually increase, which is expected to further reduce costs and increase efficiency. In addition, the company is actively developing overseas customers, achieving batch supply to SK On and LGES in Korea, and developing other overseas customers is progressing according to plan.
Investment advice: We expect the company to achieve revenue of 64.68, 86.61, and 10.883 billion yuan in 2024-2026, with year-on-year growth rates of 31.8%, 33.9%, and 25.5%, and net profit to mother of 3.20, 5.91, and 853 million yuan, respectively. The year-on-year growth rates are 667.6%, 84.6%, and 44.3%, corresponding PE is 21, 12, and 8 times, taking into account the company's active construction of an integrated industrial chain, leading the overseas market process, and maintaining the “recommended” rating.
Risk warning: the release of integrated production capacity falls short of expectations, competition in the anode materials industry intensifies, and upstream raw material prices fluctuate beyond expectations