Description of the event

Dangsheng Technology released its 2024 quarterly report. The company achieved operating income of 1,517 billion yuan, a year-on-year decrease of 68%, realized net profit of 110 million yuan, a year-on-year decrease of 74%, and realized deducted non-net profit of 104 million yuan, a year-on-year decrease of 75%.

Incident comments

Looking at the 2024Q1 split, shipments of the company's cathode products are expected to decline month-on-month. Among them, ternary cathodes still account for most shipments. Lithium cobalt oxide and lithium iron also contribute to certain shipments, mainly affected by seasonal fluctuations in downstream demand.

In terms of profit, the price of the company's 2024Q1 product declined. On the one hand, it was due to a drop in the price of resource products and annual price adjustments, and on the other hand, due to the restructuring of the company's end customers; it is estimated that net profit per ton of ternary cathodes declined month-on-month in Q4, which is expected to be related to the decline in the share of overseas customers, while the profitability of domestic customer Sanyuan products is relatively low. Furthermore, due to seasonal effects, the low utilization rate of 2024Q1 also affected the overall profit of the product; lithium iron is affected by industry prices, and it is expected that there will be an overall loss in 2024Q1.

Looking ahead to 2024, the company previously accounted for more than 70% of international customers, covering major global lithium battery manufacturers such as LG New Energy, SK ON, Murata, AESC, and European and American lithium battery giants. At the same time, it is actively developing the domestic market, maintaining long-term and stable deep strategic partnerships with key domestic customers through differentiated sales strategies, upgrading products and customer choices; in terms of production capacity, the construction of the European base is currently being actively promoted, and the first phase of the 60,000-ton Finnish base has entered the formal implementation stage; in terms of profit, the company has implemented an integrated strategy to “open up resources at the top and increase customer binding” The competitive advantage of the industrial chain enhances the company's profit level. Continue to recommend in line with the company's new customers at home and abroad and changes in industrial chain integration.

Risk warning

1. Demand for new energy vehicles and energy storage terminals falls short of expectations;

2. Increased competition in the industrial chain