Incident 1: The company released its 2023 annual report. During the reporting period, the company achieved operating income of 5.635 billion yuan, a year-on-year decrease of 32.24%, and realized net profit to mother of 0.19 billion yuan, a year-on-year decrease of 97.90%. In Q4, the company achieved revenue of 1,235 million yuan, a year-on-year decrease of 33.24% and a year-on-month decrease of 19.83%; realized net profit to mother of -51 million yuan, a year-on-year decrease of 80 million yuan, a year-on-year decrease of 102 million yuan.
Incident 2: The company released its 2024 quarterly report. During the reporting period, the company achieved operating income of 1,221 billion yuan, a year-on-year decrease of 16.43% and a month-on-month decrease of 1.18%; realized net profit to mother of 0.28 million yuan, an increase of 246.44% year-on-year, and an increase of 79 million yuan over the previous year.
Prices of carbonate series products fell under pressure in 23 years, and 24Q1 performance improved month-on-month. In '23, due to factors such as increased market production capacity and weakening customer demand for carbonate series products, a sharp drop in market prices, and a decline in trade business, the company's performance was under pressure. In '23, the company's dimethyl carbonate series, methyl tert-butyl ether series, and gas series products achieved revenue of 24.97, 12.19 million yuan, and 62 million yuan respectively, with year-on-year changes of -36.56%, -2.20%, and -16.15%, respectively. The three achieved sales volume of 67.60, 19.08, and 143,000 tons respectively, with year-on-year changes of +2.26%, +1.06%, and -7.27%, respectively. In terms of gross margin, the company's gross sales margin was 6.51% in '23, a year-on-year decrease of 11.37pct. In Q1 '24, due to the recovery in downstream demand, sales of the company's main products increased year-on-year. Among them, sales of dimethyl carbonate series and methyl tert-butyl ether series products were 10.18 and 53,200 tons, respectively, up 11.9% and 36.4% year-on-year respectively. At the same time, the company vigorously promoted cost reduction and efficiency measures, which effectively supported current results.
Continue to promote the construction of additional production capacity and strengthen the entire industrial chain layout of lithium battery electrolytes and their solvents, solvents and additives.
By the end of '23, the company's dimethyl carbonate plant, Guohong New Materials, methyl ethyl carbonate plant, vinyl carbonate unit, lithium hexafluorophosphate device, mixed carbon four-deep processing device, and additive device had a design capacity of 10, 5, 9, 4.3, 0.2, 20, and 20,000 tons/year respectively. Construction of the company's 10,000 tons/year high-end fluorine materials project (phase II), the 200,000 tons/year electrolyte project at the Wuhan base and the 220,000 tons/year lithium battery material production and R&D integration project, the 30,000 tons/year silicon-based anode material project at the Meishan base, and the 20,000 tons/year battery-grade dimethyl carbonate project at the Jining base progressed smoothly according to plan. The 300,000 ton electrolyte unit at the Dongying base was successfully put into operation and is in the phase of climbing capacity. The 200,000 ton electrolyte project at the Wuhan base is expected to be ready for operation in 2024.
In January '24, the company's 100,000 tons/year liquid lithium salt project installation was completed and entered the trial production stage.
Profit forecast, valuation and rating: The company is a company in the entire industry chain of lithium-ion battery electrolytes and electrolyte solvents, solvents and additives. Affected by falling prices of carbonate series products, the company's performance declined year-on-year in '23. Since the current price of carbonate series products is still low, we have lowered the company's profit forecast for 24-25 and added a profit forecast for 26 years. The company's net profit for 24-26 is 1.46 (down 29.2%) /2.37 (down 30.7%)/356 million yuan, respectively. The company is rapidly expanding its production capacity for products such as electrolytes and actively expanding its range of lithium battery materials. We are optimistic about the growth space and performance increase it will bring to the company after the new production capacity is implemented, and maintain the company's “buy” rating.
Risk warning: Production capacity construction falls short of expectations, downstream demand falls short of expectations, risk of product and raw material price fluctuations