The company released the 2023 annual report and the 2024 quarterly report, and achieved net profit of 19 million yuan for the full year of 2023; sales of the company's main products continued to grow year-on-year, production capacity and technology remained leading; and maintained an increase in holdings rating.
Key points to support ratings
Revenue in 2023 increased 7% year on year: the company released its 2023 annual report and achieved annual revenue of 4.969 billion yuan, up 7.06% year on year; realized net profit to mother of 0.19 million yuan, a decrease of 96.34% year on year; net profit loss after deducting non-return to mother was 0.28 million yuan, a decrease of 105.4% year on year. According to the annual report calculation, the 2023Q4 net profit loss to mother was 12 million yuan, which turned into a year-on-year loss.
Net profit loss of 48 million yuan for the first quarter of 2024: The company released the 2024 quarterly report. 2024Q1's net profit loss to mother was 47.7953 million yuan, a year-on-year loss, after deducting a loss of 51.3821 million yuan in non-return net profit. 2024Q1's gross sales margin fell 10.66 percentage points year on year to 0.09%; net sales margin fell 8.91 percentage points year on year to -5.18%.
Copper foil production and sales continued to grow, and competition increased profit pressure: in 2023, the company's copper foil production was about 58,000 tons, up 9.69% year on year; copper foil sales were 57,600 tons, up 17.47% year on year. Among them, sales of copper foil of 6 microns and below were 47,300 tons, up 18.19% year on year; sales of 6 microns and above were 104,000 tons year on year, up 14.30% year on year. Lithium battery copper foil achieved revenue of 4.509 billion yuan, an increase of 0.95% year over year; gross margin decreased 13.92 percentage points year over year to 6.49%.
The production expansion project has entered the climbing phase, and production capacity and technology remain ahead: by the end of 2023, the company had built six production bases with an annual production capacity of 100,000 tons. Production capacity and market share are in the first tier of the domestic lithium battery copper foil industry. 6 micron ultra-thin lithium battery copper foil has become the company's mainstream product. 5 micron and 4.5 micron ultra-thin lithium battery copper foil have achieved mass production and sales. The company has mastered the core process technology of 3.5 micron ultra-thin electrolytic copper foil and has mass production capacity. The proportion of high-value-added products shipped is expected to increase in the future.
valuations
Considering the increase in new entrants to the copper foil industry, market competition is still fierce, but the company's copper foil production and sales continue to grow, and production capacity and technology remain ahead. Combined with the company's annual report and quarterly report, we adjusted the company's 2024-2026 earnings per share to -0.05/0.49/0.86 yuan (the original forecast diluted earnings per share was 1.96/2.51/- yuan), corresponding to a price-earnings ratio of -/30.3/17.2 times; maintaining an increase in holdings rating.
The main risks faced by ratings
Demand in the industrial chain fell short of expectations; raw material prices fluctuated unfavourably; NEV industry policies fell short of expectations; NEV products fell short of expectations, and price competition exceeded expectations.