The company released its 2023 annual report and 2024 quarterly report, and achieved net profit of 42 million yuan for the full year of 2023; the company's negative electrode sales continued to grow year-on-year in 2023, overseas market development accelerated; and maintained a purchase rating.
Key points to support ratings
Net profit for 2023: The company released its 2023 annual report, achieving full year revenue of 4.908 billion yuan, a year-on-year decrease of 6.64%; realized net profit of 0.42 million yuan, a year-on-year decrease of 88.55%; and realized deduction of non-net profit of 93 million yuan, a year-on-year decrease of 79.67%. According to the annual report calculation, the 2023Q4 company achieved net profit of 98 million yuan, turning a year-on-year loss into a profit, with a year-on-month increase of 42.70%.
Net profit to mother for the first quarter of 2024 turned a year-on-year loss into a profit: The company released the 2024 quarterly report. The net profit from 2024Q1 was 23.775 million yuan, turning a loss into a profit year on year. After deducting net profit from non-return to mother of 32.622 million yuan, the year-on-year loss turned into a profit. 2024Q1's gross sales margin increased 9.55 percentage points year over year to 17.40%; net sales margin increased 17.63 percentage points year over year to 3.84% year over year.
Negative electrode profits are under pressure, and the product and customer structure continues to be optimized: in 2023, the company shipped 145,000 tons of lithium battery anode materials, up 20.11% year on year; achieved revenue of 4.415 billion yuan, down 8.54% year on year; gross margin decreased 5.20 percentage points year on year to 12.84% year on year. The company is steadily advancing the first phase of an integrated anode material project with an annual output of 100,000 tons in Qujing, Yunnan and the construction of an overseas anode material production base. Overseas customer development is progressing actively according to plan, and future anode material sales volume and overseas sales share are expected to increase.
In addition, the company's high-pressure fast charging and ultra-fast charging anode materials have been successfully applied in batches on clients. The company has a development layout for new anode materials such as silicon-based, new carbon materials, and lithium metal anodes, and the product structure is expected to be further optimized in the future.
It is proposed to change the use of repurchased shares to cancellation, demonstrating the company's confidence in development: as of April 25, 2024, the company had invested 352 million yuan (not including transaction fees) to repurchase approximately 37.8841 million shares, accounting for 5.24% of the total share capital. After deliberation by the board of directors, the company plans to change the use of repurchasing shares to “use to cancel and reduce registered capital accordingly”, which reflects the company's confidence in future development and recognition of long-term value, and helps enhance investor confidence.
valuations
Combined with the company's annual report and quarterly report, considering that competition in the anode materials market is still fierce, we adjusted the company's predicted earnings per share for 2024-2026 to 0.46/0.77/0.97 yuan (the original forecast diluted earnings per share was 0.59/0.93/- yuan), corresponding to a price-earnings ratio of 22.0/13.3/10.5 times; maintaining the purchase rating.
The main risks faced by ratings
Prices of raw materials fluctuated unfavourably, NEV industry policies fell short of expectations, NEV products did not meet expectations, demand in the industrial chain fell short of expectations, and price competition exceeded expectations.