Affected by industry inventory pressure and increased competition, Penghui Energy released its 2023 annual report. In 2023, the company achieved operating revenue of 6.93 billion yuan, YOY -23.5%.
Achieved net profit of 43 million yuan, yoy -93.1%, realized net profit deducted from non-mother of 58 million yuan, yoy -89.8%.
Gross margin and net profit margin in 2023 were 16.5%/1.0%, respectively, -2.2/-6.2 pct. Asset impairment losses amounted to RMB 207 million and credit impairment losses amounted to RMB 32 million. Of these, 2023Q4 achieved revenue of 1,193 billion yuan, QoQ -12.6%, and YOY -53.5%. Net profit to mother - 232 million yuan, yoy -225.0%. Non-net profit deducted - 186 million yuan, yoy -237.4%. 2024Q1 achieved revenue of 1,597 billion yuan, QoQ +33.9%, yoy -36.0%. Net profit to mother was 0.16 million yuan, YOY -91.0%. After deducting non-net profit of 0.04 billion yuan, yoy -97.5%. The gross margin and net margin for a single Q1 were 11.8% respectively, +5.3 pct compared to the previous month. Affected by European household storage, intensification of domestic storage price deflation, and a sharp drop in raw material prices, we lowered the company's profit forecast for 2024-2025. The net profit for 2024-2025 is estimated to be 4.02/599 billion yuan (originally 4.20/6.08), adding the 2026 profit forecast to 779 million yuan, EPS is 0.80/1.19/1.55 yuan. The current stock price corresponds to PE 30.7, 20.6, and 15.8 times, respectively. Due to its position and large production storage capacity and investment in industrial and commercial energy storage capacity, its shipment volume is expected to continue to grow at a high rate and maintain a “buy” rating.
The combined impact of industry dewarehousing competition increased. The company's main revenue and profitability declined. In 2023, the company's lithium battery business achieved revenue of 6.40 billion yuan, yoy -24.5%, gross margin of 15.8%, yoy-2.3 pct. The company's lithium batteries include energy storage batteries, power batteries, and consumer batteries. Among them, energy storage batteries are the company's key areas of activity. They are deployed in household storage, industrial and commercial energy storage, and centralized large storage. In 2023, the combined inventory removal of the household storage industry had an increased impact on competition in the storage industry, and its revenue and gross margin both declined year on year.
However, the company refined its internal skills and actively expanded high-quality customers during the downturn in the industry. In terms of household storage, we continue to deepen cooperative relationships with leading customers such as Deye Co., Ltd., Sanjing Electric, Gurivat, and Maitian Energy. In terms of industrial and commercial energy storage, the company is actively developing various user-side energy storage customers such as CRRC, Yuntian Lifei, and Xianhe Co., Ltd. In terms of large-scale energy storage, the company continues to secure cooperative relationships with customers such as Sunshine Power, China Southern Power Grid, and Three Gorges Electric Energy. As the industry recovers and raw material prices stop falling and stabilizing, the company's revenue and profitability are expected to gradually rebound steadily.
Risk warning: Prices of raw materials continue to fall, and corresponding impairment is calculated; industry demand falls short of expectations.