Incident: Xiamen Tungsten New Energy released its 2023 annual report and 2024 quarterly report. In 2023, the company's revenue was 17.311 billion yuan, or -39.79%; net profit to mother was 527 million yuan, or -52.93%; net profit after deducting non-return to mother was 466 million yuan, or -52.44% year over year; it is planned to distribute a cash dividend of 7.00 yuan for every 10 shares, with a dividend rate of 55.72%. In 2024, Q1's revenue was 3.299 billion yuan, -8.02%/-21.24%; net profit to mother was 111 million yuan, -3.71%/-3.28% YoY; net profit after deducting non-return to mother was 103 million yuan, +4.28%/+5.32% YoY.

The leader in the lithium cobalate industry, the second half of the year may usher in a peak demand season: in 2023, the company's lithium cobalate sales volume reached 34,600 tons, +4.15% year-on-year, with a market share of 40%, consolidating its leading position in the industry. Technically, the current voltage rating of the company's lithium cobalate products is 4.5V, and 4.53V lithium cobalate will soon be launched. It has entered the small-batch production stage and has technical barriers. Lithium cobalate may enter a peak demand season in the second half of the year as consumer electronics products shift to lightness and fast charging, and the rapid application of AI technology brings demand for new generations.

Focus on high-pressure ternary materials to enable new fields of hybrid growth and low-altitude economy applications: in 2023, domestic extended-range hybrid passenger car sales reached 2.754 million units, +85.5% year-on-year, accounting for 30.6% of NEV passenger vehicles, and we expect our share to continue to grow. The new Ni6 series 4.4V high-voltage ternary materials developed by the company for the hybrid and range extension fields have begun to be supplied in large quantities, and the prospects are promising. High-power, high-voltage ternary products developed for low-altitude aircraft and drones have been mass-produced, with monthly production and sales of hundreds of tons and will continue to grow. The next-generation products under development have now passed customer sample certification and are expected to be used in next-generation low-altitude flight energy-powered battery terminals.

The French base is progressing smoothly, improving the global production capacity layout: In September 2023, the company announced the construction of a French ternary materials project with an annual output of 40,000 tons. The first phase of the 20,000 ton production capacity is expected to be completed and trial production is expected to be completed in 2025Q4, further improving the global production capacity layout and speeding up overseas.

Investment advice: We expect the company's 2024-2026 net profit to be 5.72/6.9/870 million yuan. The corresponding PE was 26.51/21.98/17.44 times, respectively, maintaining the “gain” rating.

Risk warning: risk of raw material supply and price fluctuations; market competition increases risk; risk of fluctuations in NEV technology changes.