Description of the event
The company released its 2023 annual report. The company achieved annual revenue of 41,358 billion yuan, a year-on-year decrease of 3.35%, and realized net profit of 1,581 billion yuan, a year-on-year decrease of 47.44%, and realized deducted non-net profit of 1,518 billion yuan, a year-on-year decrease of 49.9%; after splitting up to the fourth quarter, the company achieved net profit of 39 million yuan, and realized deducted non-net profit of 0.24 million yuan.
Incident comments
Looking at the whole year, the company achieved 506,800 tons of lithium iron cathode shipments, an increase of 56.49% over the previous year, and maintained the first market share for four consecutive years, with lithium iron products accounting for about 28% in energy storage scenarios; in terms of production capacity, the company's design capacity reached 700,000 tons at the end of 23, and production capacity at the Yunnan base in Guizhou progressed steadily. Furthermore, the company actively promoted the vertical industrial chain layout. At the end of 2023, the company obtained prospecting rights for Dashichang phosphate ore and Huangjiapo phosphate ore in Fuquan City, Guizhou Province. Go in. In terms of customer structure, the first and second largest customers account for 40.98% and 37.84%. The total share of the top two major customers continues to decline, and the share of new customers is gradually increasing. Currently, the company's customers cover the top ten companies with the installed capacity of lithium iron phosphate power batteries, and the customer structure continues to be optimized. On the product side, the company has made significant progress in developing many new products, such as lithium manganese iron phosphate products and ultra-long cycle lithium iron phosphate products. In terms of profitability, the company's gross profit per ton of products and net profit per ton declined compared to 22 years. On the one hand, it was due to large fluctuations in the price of resource products. The M-month pricing model reduced profits, and on the other hand, it was also due to a decline in processing costs after excess supply and demand.
Looking at the fourth quarter alone, shipments of the company's lithium iron phosphate cathode products declined slightly compared to Q3, mainly due to a decline in terminal demand; in terms of profit, Q4's gross profit per ton is estimated to have declined month-on-month compared to Q3, mainly due to the decline in the price of resources such as lithium carbonate in Q4, which disrupted profits. The net profit of a single ton is estimated to be near break-even (considering that most lithium iron companies lost a lot of Q4 lithium carbonate). In addition, the company's Q4 VAT credit revenue was 41 million yuan, and asset impairment losses amounted to 16 million yuan.
Looking forward to the future, the overall profit of the lithium iron industry is currently low. Cash flow pressure is compounded by tightening financing. As demand recovers and the desire to stabilize lithium iron prices increases, production capacity expansion is slowing down. The company's current production capacity has maintained a steady pace of expansion. At the end of '23, it had 700,000 tons of production capacity to ensure steady growth in subsequent shipments; the company's top two customers are still deeply cooperating, while shipments from other battery manufacturers are steadily increasing, and the market share level is expected to remain stable. In terms of profit, the overall profit level of the lithium iron industry is currently low. In the future, as production capacity expansion slows down and demand grows, the recovery in production capacity utilization is expected to drive the industry's profit back to a reasonable ROE level. The company is expected to use its scale advantage and subsequent phosphate ore layout to achieve a certain level of excess profit, and continue to recommend.
Risk warning
1. Market competition increases risk;
2. The risk that demand in the power battery industry falls short of expectations.