Downstream lithium batteries are under pressure, and the 3C business is expected to become a new growth point Lianying Laser released its quarterly report. Q1 in 2024 achieved revenue of 728 million yuan (yoy -5.01%, qoq -23.98%), net profit of 284.52 million yuan (yoy -67.72%, qoq -16.16%), deducting non-net profit of 237.26% (yoy -66.26%). We expect the company's 2024-2026 EPS to be 1.06, 1.33, and 1.65 yuan respectively (previous value 2024-2026 1.12, 1.41, 1.77 yuan). Comparatively, the company Wind unanimously expected an average PE value of 13.9 times. Considering the company's technological leadership in the field of laser welding and multi-industry platform layout, the performance growth rate was high. The company was given 15.1 times PE in 24 years, with a target price of 16.00 yuan (previous value of 20.16 yuan), maintaining a “buy” rating.
Affected by the decline in the lithium battery boom, the profitability of the company's power and energy storage battery business declined in 2024Q1 to 29.23% /yoy-6.79pct/qoq-1.34pct, and the net margin was 3.79% /yoy-7.7pct/qoq+0.28pct. Affected by the declining boom in the lithium battery industry, the profitability of the company's power and energy storage battery business declined, and gross margin was under pressure; we expect the company's gross margin to rise as the share of business revenue in the non-lithium battery industry with high gross margin increases. The company's expense ratio remained stable during 2024Q1, with a management expense ratio of 14.97% /yoy-1.06pct, R&D expenses ratio 7.4% /yoy+0.28pct, and sales expenses ratio of 4.38% /yoy+0.69pct.
The company's on-hand orders are still at a high level. The share of the non-lithium battery business is expected to continue to increase. The company's on-hand orders (tax included) will reach 4,048 billion by the end of 2023, and new production capacity will be put into operation one after another, providing strong support for the sustainability of the company's performance. The company grasped industry trends and increased its market development efforts for non-lithium battery businesses such as the consumer electronics industry, fuel cell, and sensor industries. New orders for the non-lithium battery business showed a rapid growth trend. At the same time, it is actively laying out semiconductors, photovoltaics and other fields to cultivate new business growth points, and plans to increase the share of the non-lithium battery business to more than 25% when signing new orders in 2024.
The company's platform-based technology has significant advantages. Multiple downstream fields are expected to work together to expand new application scenarios The company's downstream fields mainly include: 1) 3C industry: on the one hand, the company focuses on button battery assembly line layout, and on the other hand benefits from the European trend of prohibiting the use of glue to bond batteries in electronic products. Welding technology for small steel case batteries arranged in advance is expected to lead to revenue growth; 2) 4680 batteries and solid state batteries bring horizontal expansion of the power battery industry; 3) Hardware auto parts industry: localization brings increased application penetration; 4) Actively exploring fuel cell, medical equipment and photovoltaic industries Application scenarios; 5) Semiconductor and photovoltaic industry: In recent years, the company has established Jiangsu Lianying Semiconductor Technology Co., Ltd. and Jiangsu Chuangying Solar Energy Technology Co., Ltd., respectively, to engage in R&D and production of laser equipment in the semiconductor and photovoltaic industries. It is expected that products will be launched on the market in 2024.
Risk warning: The rapid rise in upstream costs affects demand, which in turn affects the progress of battery production expansion; the risk of rising raw material costs; the risk of single customer dependency.