Description of the event
The company released its 2023 annual report. In 2023, it achieved operating income of 11.446 billion yuan, a year-on-year increase of 4.29%, and attributable net profit of 344 million yuan, an increase of 278.19% year-on-year, after deducting non-net profit of 231 million yuan, an increase of 1170.55% over the previous year. By the fourth quarter, the company achieved operating income of 2,905 billion yuan, up 10.19% year on year, down 5.25% month on month, and net profit of 55 million yuan, up 786.20% year on year, down 63.4% month on month, after deducting non-net profit of 12 million yuan, up 132.26% year on year and 90.33% month on month, at the center of forecasting.
Incident comments
Looking at the Q4 performance breakdown, the company is expected to ship 805-90 million consumer batteries and achieve revenue of about 2.7 billion yuan. There is a slight decline from month to month, but benefiting from the drop in the price of lithium cobalate, gross profit is expected to remain above 30% in the second half of the year. During the downturn in the industry, the company bucked the trend and expanded its market share. In 2023, the laptop market share was 31.10%, which was basically the same as the previous year. The smartphone market share was 8.18%, up 0.75pct year on year. For the first time, mass production of Apple phone batteries was achieved. It is expected to contribute significantly in the future and play an exemplary role in the Android market. Q4 The expansion of losses in the power and energy storage business is mainly due to the fact that the large-scale efficiency of the company's power batteries is still not obvious, the cost is high, and the introduction of low-cost customers has dragged down the profit level. In addition, as the company expanded its R&D team and continued to increase the development of new materials and products, the Q4 R&D and management expenses increased to 12% and 13% respectively, which had a significant impact on net profit. Q4 Accrued asset depreciation of 54 million yuan, mainly losses due to falling prices of power storage stocks.
Looking ahead to 24Q1, in terms of consumer batteries, the first quarter is a traditional low season, and shipments are expected to decline month-on-month, but due to the recovery in consumer terminal demand compared to 2023, shipments are expected to increase year-on-year; the decline in raw material prices continues to be transmitted to terminals, and gross margin is expected to decline somewhat. The power and energy storage business is expected to reduce losses month-on-month, and the company's overall profit in Q1 is still under great pressure.
However, the company's medium- to long-term logic has not changed. First, to maintain its leading position in the consumer battery industry and expand mobile phone battery customers with advanced technologies such as fast charging, high-energy density silicon-carbon solutions and disc technology, which is expected to increase market share; second, to concentrate resources and technical advantages to develop automobile start-stop and drone battery businesses, and carefully grasp power and energy storage business opportunities. The expansion plans for the Chongqing base and Deyang base are expected to slow down. In addition, the company announced plans to increase capital and expand shares in Zhejiang Guanyu and introduce external investors. After completion, the share ratio will drop further from 73.49%, and the ownership loss is expected to shrink further. The net profit for 2024 is expected to be 860 million yuan, corresponding to PE 17 times. We continue to recommend it.
Risk warning
1. Risk of consumer battery sales falling short of expectations;
2. The project progress falls short of the expected risk.