Company announcement: In 2023, the company achieved revenue of 48.784 billion yuan, 4.05 billion yuan, and 2,755 billion yuan in revenue, respectively, with year-on-year increases of 34.38%, 15.42%, and 2.23% respectively. In 2024, Q1 achieved revenue, return to mother, and deducted non-net profit of 9.317 billion yuan, 1,066 billion yuan, and 701 million yuan respectively, a year-on-year decline of 16.7%, a decrease of 6.49%, and an increase of 14.63%, respectively. The company has generally been in a period of rapid development in recent years, maintaining a “Highly Recommended” rating.
The 2023 Q4 results are in line with expectations. In 2023, SMORE contributed about 512 million yuan in investment income, a year-on-year decline of 35%, affecting the apparent growth rate of the company's profit to mother. After exclusion, the company's net profit from the division in 2023 was about 3,537 billion yuan, an increase of 30% over the previous year. Among them, Q4's net profit was about 489 million yuan, down 56% from the previous month. The main reason was that Q4 calculated equity incentives and bonus expenses according to company practices. The estimates were about 450 million and 200 million yuan, respectively. This is reflected in management expenses. If Q4's net profit is added back, it is about 1,139 million yuan, which is a slight increase over the previous month, which is in line with expectations. Furthermore, in 2023Q4, there was a sharp month-on-month decline of about 26 million, probably mainly due to changes in accounting standards. Some government subsidies were included in recurring profit and loss, and were traced back to the previous three quarters.
The 2024 Q1 results were in line with expectations. 2024Q1 SMOORE contributed about 100 million yuan in investment income, a slight increase over the previous year. After exclusion, the company withheld non-net profit of about 604 million yuan in Q1 in 2024, an increase of 16% over the previous year, in line with expectations. The division's investment income contribution is estimated at 0.2 to 0.3 billion yuan. The main reason is that Defang Yiwei still has a certain loss. In addition, preferential value-added tax policies contributed about 90 million yuan in other income. The company's Q1 gross margin fell slightly month-on-month. Considering battery price cuts, unit profitability declined somewhat.
Power business. In 2023, the company's power business revenue was about 23.9 billion yuan, up 31% year on year, shipped about 28 GWh, up 64% year on year, and gross margin was about 14.37%, down year on year. Shipments of 2024Q1 power batteries were about 6.45 GWh, an increase of 5.98% year over year. At present, lithium iron phosphate batteries have been supplied to many car companies such as GAC, Xiaopeng, and Nezha. The company's market share continued to increase in 2023. The global power battery installed capacity reached 16.2 GWh, an increase of 129.8% over the previous year, and the market share reached 2.3%. It is expected that it will continue to increase in the future. Shipments of square three yuan to domestic customers will begin, and large cylinders will continue to advance. In summary, we expect the company's power battery market share to continue to rise.
Energy storage business. In 2023, the company's energy storage business revenue was about 16.3 billion yuan, up 73% year on year, shipped about 26 GWh, up 121% year on year, gross margin was about 17%, up 8 percentage points year on year. 2024q1 energy storage battery shipments were 7.02 GWh, an increase of 113.11% over the previous year. In 2023, the company's energy storage cell shipments ranked third in the world for two consecutive years, and its profitability was superior compared to power lithium iron. Taken together, the gross profit of 2023H2 power and energy storage units declined by 0.023 and 0.027 yuan/wh, respectively, compared to the first half of the year. Due to the decline in operating rates and prices, the gross profit of 2024Q1 power and energy storage units narrowed again, with estimates of around 0.08 yuan/wh. It is estimated that the unit price of energy storage on the 2024Q1 statement end is about 0.4+ yuan/wh. It is already at a low level, and there is little room for a sharp decline. As expenses are gradually amortized after the utilization rate recovers in the future, the unit gross profit is expected to begin to stabilize.
Consumer battery business. Consumer batteries achieved revenue of 8.3 billion yuan in 2023, down 1.78% year over year. The estimated revenue for 2024Q1 is about 2 billion yuan, of which consumer cylinder shipments have recovered significantly. It is estimated that the downstream power tools and other markets have gone to storage. It is estimated that shipments of more than 200 million cylindrical batteries have been shipped. The output of more than 100 million units was achieved in a single month in March, and the profitability of individual batteries also picked up after the recovery of operating rates.
Profit forecasting and investment suggestions: The company has reached a certain level in terms of customers and products, and management has also supported the parallel development of the two major differentiated businesses of small lithium batteries and large lithium batteries for power and energy storage. It has now successfully developed into a medium-sized enterprise, and is still in a period of rapid development. The adjustment of the company's 2024 net profit forecast to 4.6 billion yuan is mainly due to the fact that some of the company's investment income fell short of expectations and maintained a “highly recommended” rating.
Risk warning: Power customer development falls short of expectations, and the profitability of energy storage batteries falls short of expectations; new tobacco competition and policy changes have led to worsening investment returns.