Description of the event
The company released the 2023 annual report and the 2024 quarterly report. In 2023, the company achieved revenue of 6.932 billion yuan, a year-on-year decrease of 23.54%, a year-on-year decrease of 93.14%, and non-attributable net profit of 58 million yuan, a year-on-year decrease of 89.77%; after splitting into the fourth quarter of 2023, the company achieved revenue of 1,193 million yuan, a year-on-year decrease of 53.49%, and attributable net profit of 232 million yuan, a year-on-year decrease of 224.99%. Decreased by 237.43%. In the first quarter of 2024, the company achieved revenue of 1,597 billion yuan, a year-on-year decrease of 36.00%, a year-on-year decrease of 91.04%, a year-on-year decrease of 91.04%, and net profit after deduction of 204 million yuan, a year-on-year decrease of 97.46%
Incident comments
In the fourth quarter of 2023, the company's revenue was 1,193 billion yuan, down 12.59% from the previous month, and the gross margin was 6.58%, down 11.15 pcts from month to month. It was determined that it was mainly due to overseas households storing inventory. At the same time, domestic raw material prices dropped sharply, and the competitive pattern of large storage deteriorated. However, it accumulated more expensive raw materials in the early stages, leading to a sharp decline in gross margin. Due to cost rigidity, the 2023Q4 fee rate is 17.17%, which has a significant impact on net profit. In addition, 2023Q4 accrued asset impairment of 105 million yuan, mainly inventory depreciation.
In the first quarter of 2024, the company's revenue was 1,597 billion yuan, up 33.86% month-on-month, and the gross margin was 11.84%, and the month-on-month repair was 5.26pct. It was determined that it was mainly due to the month-on-month restoration of overseas household storage and large domestic storage shipments, while demand for consumer batteries with strong profit resilience picked up. Furthermore, raw material prices stopped falling and stabilized, and high-cost raw materials continued to be removed from storage, and gross margin recovered.
The 2024Q1 fee rate was 11.60%, which improved month-on-month, and asset impairment losses narrowed significantly.
Looking ahead to 2024, considering the recovery in consumer electronics demand, the company's consumer battery profits are resilient, and it is expected that the industry will achieve a steady growth rate of 10-15%. In terms of energy storage and small power business, the company continues to develop customers in the fields of large storage, industrial and commercial storage, and deepens cooperation with leading customers such as Sunshine Power and Deye Co., Ltd. in the household storage sector. As raw material prices stabilize and shipments are gradually restored, gross profit is expected to improve. Furthermore, in 2024, the company's overseas business is expected to contribute to growth and profit flexibility. Progress includes the completion of a Vietnamese factory and climbing a slope, setting up offices in North America, Europe, Japan, and Indonesia, and signing a strategic cooperation agreement and 1 GWh order with GenaspiEnergy in Australia. The company's net profit is estimated at 420 million yuan in 2024, which is 29 times PE.
Risk warning
1. Downstream demand falls short of expectations;
2. Market competition risk.