Incident: The company's revenue in 2023 was 4.969 billion yuan, up 7.06% year on year; net profit due to mother was 0.19 million yuan, down 96.34% year on year; net profit not attributable to mother was -0.28 billion yuan, which turned into a year-on-year loss. Among them, 23Q4 revenue was 1,263 billion yuan, down 7.13% year on year and 22.44% month on month; net profit to mother was -12 billion yuan, turning a loss year on month.
24Q1 revenue was 930 million yuan, down 5.48% year on year and 26.35% month on month; net profit to mother was -48 million yuan, which turned into a loss year on year, and the loss increased from month to month.
Comment:
The capacity utilization rate was low, processing costs fell sharply, and the company's performance was under pressure: the company's gross margin in 2023 was 5.83%, down 14.01 pcts from the previous year, and the net interest rate was 0.33%, down 10.87 pcts from the previous year. The company's gross margin for 2024Q1 was 0.09%, down 5.31 pcts from month to month, down 10.66 pcts year on year, net margin was -5.18%, down 4.04 pcts month on month, down 8.91 pcts year on year. Mainly due to the intensification of competition in the industry, the intensive release of large production capacity, there is a phased oversupply of copper foil, and increased competition has led to a decline in lithium battery copper foil processing costs.
Ultra-thin copper foil accounts for a high proportion, leading in production capacity: the company's copper foil production in 2023 was about 58,000 tons, up 9.69% year on year; sales volume was 57,600 tons, up 17.47% year on year. Among them, lithium battery copper foil of 6 μm and below sold about 47,300 tons, accounting for 82.01% of total sales. At the end of 23, the company's copper foil production capacity was 100,000 tons/year, an increase of about 38,000 tons over the previous year. The total production capacity of the company is expected to reach 200,000 tons in 2025. The company's fund-raising projects, the Jiangxi Jiayuan electrolytic copper foil project with an annual output of 20,000 tons and Ningdejiayuan's high-performance copper foil project with an annual output of 15,000 tons, completed trial production and entered the climbing phase. Jiayuan Era cooperated with Ningde Times for the 100,000 tons/year copper foil project. The first phase of the first phase (50,000 tons) production line entered trial production at the end of September 2023.
Ultra-strong and ultra-thin copper foil leads the way to mass production of composite copper foil: the company invested a total of 235 million yuan in R&D in 2023, accounting for 4.74% of revenue. The company has developed microporous copper foil to improve the safety of lithium batteries to promote the development and process optimization of composite copper foil. It has now built a composite copper foil pilot line using the two-step process route. It has mastered composite copper foil production technology, and has sample testing and mass production capacity.
Profit forecast, valuation and rating: Increased competition in the lithium battery copper foil industry led to a decline in processing fees. The net profit forecast for 24-25 was lowered to -0.31/214 million yuan (negative or 37%, respectively), and an additional 26-year net profit forecast of 362 million yuan was added. The corresponding PE was NA/29/17X, and PB was 0.9/0.8/0.8X, respectively.
The company leads the industry in production capacity, leading high-performance copper foil products, and maintains an “gain” rating.
Risk warning: increased competition, fluctuating raw material prices, risk of technology route substitution.