Core views
In the first quarter of 2024, the company achieved revenue/return/deduction of 2,463/1,14/101 million yuan, 43%/-84%/-85%, and -25%/-18%/-12% month-on-month. Under widespread pressure on the industry, the company maintained good product competitiveness and profitability through self-supply of raw materials, separate sales of Li salt, and deep binding to major customer strategies. The first quarter was affected by the Spring Festival and the industry's off-season, and the bottom of the industry's capacity utilization rate was already formed. Combined with the company's production line shutdown and maintenance in March, costs and amortization were relatively high. Starting in Q2, the company's profitability is expected to gradually increase along with the recovery in downstream demand, the volume of major customers, and the acceleration of lithium salt shipments.
occurrences
In the first quarter of 2024, the company achieved revenue/return/deduction of 2,463/1,14/101 million yuan, or -43%/-84%/-85%, and -25%/-18%/-12% month-on-month.
Brief review
Electrolytes: Solvents have been shipped separately, and industry profits have bottomed out 1) In terms of shipment volume, we expect Q1 to ship nearly 90,000 tons of electrolyte, with a year-on-year growth rate of about 10%. Among them, the 6F self-supply ratio will continue to increase from 93% in 2023; thanks to new customer expansion and climbing, 6F and LIFSI will achieve sales of more than 1,000 tons in total, if converted to over 100,000 tons.
2) In terms of profit, the profit per ton of 24Q1 electrolyte was about 1,000 yuan. The significant month-on-month decline was mainly due to ① the seasonal month-on-month decline in downstream demand, which intensified competition and sales prices declined; ② the Q1 Spring Festival holiday operating rate was about 50%, compounded by the company's production line discontinuation and maintenance in March, and the cost and amortization were relatively high. Through the integrated advantage of self-supply of Li salt, the company still maintains good product competitiveness under widespread pressure on the industry.
3) Looking forward to the future, the company's shipment growth rate in 2024 is expected to be comparable to that of the industry, and is expected to ship 500,000 tons of electrolyte. At the same time, Q2 is expected to gradually increase with the recovery in downstream demand, the volume of large customers, and the acceleration of lithium salt shipments.
Iron phosphate: unit prices declined in the off-season, and the company's losses narrowed
It is expected that 12,000 tons of iron phosphate will be shipped in Q1, with a year-on-year growth rate of over 100%, but due to the decline in the price of iron phosphate, the company's capacity utilization rate of 150,000 tons in the first phase is still low, and the business is in a state of loss; the company's iron phosphate recycling business is already in a pilot phase. With the strengthening of scale effects and the contribution of raw material recycling, losses are expected to narrow starting in Q2.
Daily chemical materials and specialty chemicals: Deeply tied to major customers, stable performance, and business operations. Daily chemical materials companies implemented deep binding to major domestic and foreign customers, and continued to expand their market share in international MNCs such as L'Oréal, P&G, and Unilever. The profit in the first quarter exceeded 50 million, and the revenue contribution was stable throughout the year.
Investment advice: The company is expected to achieve net profit of 11.2/23.2/3.04 billion yuan in 24/25/26, and PE corresponding to the current stock price is 38.2/18.4/14.0 times. Given that the company's current electrolyte profit is at a historically low level, the company's leading position is stable, giving it an additional rating.
Risk analysis
1) Downstream NEV production and sales fall short of expectations: The sales side may fall short of expectations due to export restrictions and weak demand; the production side may fall short of expectations due to large fluctuations in upstream raw material prices, electricity restrictions, etc., which in turn affects the company's related business shipments and profitability.
2) The decline in raw material prices has exceeded expectations: Raw material prices have continued to fall since 2023. At the same time, raw material prices have fluctuated greatly in stages. Price instability has caused a sense of whether to buy or fall downstream, which has had a certain impact on terminal demand, and at the same time disrupted the company's short-term performance.
3) The company's key projects fall short of expectations: As a participant in the new energy circuit, the promotion of key projects is the key to supporting revenue and profit, and is also a reflection of the company's growth. Failure to advance key projects as expected will affect current and long-term performance.