Incident: The company released its 2023 annual report. In 2023, the company achieved revenue of 409 billion yuan, a net profit of 44.1 billion yuan, a net profit of 44.1 billion yuan, an increase of 44%, after deducting non-net profit of 401 billion yuan, an increase of 42%. Among them, Q4 achieved revenue of 106.2 billion yuan, -10% year-on-year, +1% month-on-month, net profit of 13 billion yuan, -1% year-on-year, +24% month-on-month, after deducting non-net profit of 13.1 billion yuan, +8% year-on-year and +39% month-on-month. The company and shareholders plan to pay cash dividends of RMB 50.28 for every 10 shares, for a total of RMB 22.1 billion in cash dividends.
The company's global market share of power and storage batteries continues to increase, and continues to expand overseas markets. According to SNereSearch statistics, the company's global power battery usage market share in 2023 was 36.8%, up 0.6 percentage points from last year, ranking first in the world for 7 consecutive years; in 2023, the company's global energy storage battery shipment market share was 40%, ranking first in the world for 3 consecutive years. In the domestic market, the company's power battery usage was 171.9 GWH, +28.7%, ranking first for 7 consecutive years with a market share of 44.5%; in the overseas market, the company's overseas power battery usage market share was 27.5%, +4.7pct year on year, and the company received new targets from mainstream overseas car companies such as BMW, Daimler, Stellantis, VW, Hyundai, Honda, etc.; signed a strategic memorandum of understanding with Stellantis to supply them with lithium iron phosphate batteries in the European market With Europe's electrification transformation, the company's overseas market share is expected to increase further.
Profitability remains strong, and the company is expected to maintain a high level of profitability with new technology and overseas advantages. We estimate that the company's annual profit per watt battery was about 0.09 yuan, an increase of 0.02 yuan over the previous year, of which the Q4 single Wh profit was 0.1 yuan, or about +0.03 yuan month-on-month. The company's Q4 gross profit margin was 26%, +3pct. The reason for the sharp month-on-month increase was: 1) The company's Q4 sales rebate was 120-13 billion yuan, affecting the price of a single Wh unit about 0.1 yuan; 2) Q4 operating costs declined further. Considering that the company has new technology and overseas advantages, we believe that the company's profit level is expected to remain high in 2024:1) In terms of new technology, Shenxing Battery, Kirin Battery, and M3P have been mass-produced and are being implemented by customers; 2) In terms of overseas sales, the technical licensing model of cooperation between the company and Ford is very popular, and production capacity is climbing. Currently, most products sold to Europe are domestically produced, mainly exported in the short term. It is expected that in the future, when the European factory is built and put into operation, local supply will increase.
Investment advice: Considering the company's product competitiveness in the world, we raised our expectations. We expect the company's revenue to be 4039/4811/720 billion yuan in 2024/2025/2026, up 0.75%/19.11%/49.66% year on year; net profit to mother will be 463/538/699 billion yuan (originally forecast 440.01/527.13/68.585 billion yuan), respectively, up 5.01%/16.20%/29.86% year on year. Compatible with EPS 10.53/12.24/15.89 yuan. The current stock price corresponds to PE 18.13/15.60/12.02. Maintain a “buy” rating.
Risk warning: industry competition intensifies, downstream demand falls short of expectations, new technology development falls short of expectations