Event: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 6.923 billion yuan, -24% year on year, realized net profit of 43 million yuan, -93% year on year, and realized net profit without deduction of 58 million yuan, or -90% year on year. 2023 gross profit margin of 16.51%, YoY -2.2pct, net sales margin 0.96%, YoY -6.2pct. 2024Q1 achieved revenue of 1,597 billion yuan, -36%/+34%; realized net profit to mother of 0.16 million yuan, -91% YoY; realized non-net profit of 0.04 billion yuan, -97% YoY, turning loss into profit; 24Q1 gross sales margin of 11.84%, -8.1/+5.3pct YoY; net sales margin of 0.60%, -7.9/+18.9pct month-on-month.
The decline in raw material prices compounded market competition to put pressure on performance, and deepening cooperation with high-quality customers is aimed at the long term.
Prices of raw materials such as lithium carbonate continued to decline in '23, driving cell prices in the industry to almost drop, industry competition intensified, and the company's performance was under pressure in the short term. According to SNE data, the company ranked among the top six Chinese companies for global energy storage battery shipments in '23. According to GGII data, the company ranked in the top three for industrial and commercial energy storage system shipments in '23. In terms of large-scale energy storage, the company continues to establish deep cooperative relationships with high-quality customers in industries such as Sunshine Power, China Southern Power Grid, and Three Gorges Electric Energy, while also developing strategic cooperation with central state-owned enterprises such as CNPC Jichai Power. In terms of industrial and commercial energy storage, the company actively explores various user-side energy storage customers such as CRRC and Xiaoju Charging. In terms of household storage, it continues to deepen cooperative relationships with leading customers such as Sunshine Power and Deye Co., Ltd. In the field of power batteries, the company supplies various models such as SAIC-GM-Wuling and BAIC, and is also developing and focusing on segments such as forklifts and ships. In the consumer sector, the company continues to cooperate deeply with Company No. 9 in the field of two-wheelers. The power tool sector has already entered the power tool giant TTI supply chain, and long-term growth can be expected.
Sodium-electric products are mass-produced and shipped, and the performance of lithium battery energy storage batteries continues to break through. The company insisted on technological innovation, and sodium batteries signed a demonstration project for sodium-ion energy storage power plants; in terms of lithium battery technology, the company introduced S24 technology and gel flame retardant electrolyte technology to achieve high safety of energy storage batteries to meet downstream needs.
Investment advice: Considering the company's continued expansion of overseas and commercial markets, we expect the company to achieve net profit of 4.01/5.77/769 million yuan in 2024-2026, +830.5%/+43.8%/+33.4% over the same period, corresponding to EPS of 0.80/1.15/1.53 yuan, maintaining the “buy” rating.
Risk warning: demand for energy storage falls short of expectations; demand in the European market falls short of expectations; industry competition intensifies.