Core views

2024Q1 achieved revenue of 962 million yuan, +29% YoY, +2% month-on-month, net profit to mother of -50 million yuan, YoY -212%, -279% month-on-month, net profit after deducting net profit of 0.61 billion yuan, -250% YoY, -883% month-on-month; the company's gross profit margin was 0.4%, -3.8pct month-on-month, -13.0pct yoy, continued to be under pressure, mainly: 1) The industry released a lot of new production capacity, intense competition, phased imbalance in the relationship between supply and demand, and copper foil processing fees, leading to a sharp drop in gross margin compared to the company's gross margin products Significantly Decrease; 2) Affected by the decline in processing fees and changes in customer account periods, 2024Q1 accrued credit impairment losses of -11 million yuan, affecting profits.

occurrences

The company released its 2024 quarterly report.

2024Q1 achieved revenue of 962 million yuan, +29% year-on-month, +2% month-on-month, net profit of -50 million yuan, -212% year-on-year, -279% month-on-month, net profit of -61 million yuan after deducting net profit not returned to mother, -250% year-on-year, and -883% month-on-month.

reviews

In terms of products, the product structure of the company's lithium battery copper foil is mainly 6 μm and below. At the same time, 5 μm and 4.5 μm ultra-thin lithium copper foil have been mass-produced and sold. The development of 6 μm medium and high elongation copper foil has been completed and shipped in batches; standard copper foil product specifications are relatively complete, covering 10 μm to 140 μm, and gradually extended to the high-end standard copper foil field.

In terms of production capacity, the company currently has two major electrolytic copper foil production bases, Yunmeng and Anlu. The 13,000-ton high-performance copper foil construction project was put into operation in batches in the second half of 2023. By the end of 2023, the company's nominal production capacity had increased from 42,500 tons to 55,500 tons. Another 80,000-ton advanced electronic materials industrial base project in Jintai District of Baoji City will be implemented at any opportunity.

In terms of production and sales, in 2023, the company achieved 47,000 tons of copper foil output, +34%, sales volume +38% year over year, with an overall capacity utilization rate of 102.6%, including 32,300 tons of lithium copper foil, accounting for 73%, and 12,000 tons of standard copper foil, accounting for 27%. It is estimated that in 2024Q1, the share of lithium copper foil will remain stable at 13,000 tons.

On the customer side, the company's lithium battery copper foil customers include battery manufacturers for power, energy storage, etc., and standard copper foil customers include copper clad boards, printed circuit boards and other consumer electronics manufacturers.

While continuing to cultivate high-end applications in industrial chain segments such as new energy vehicles, energy storage, and electronics, the company will also actively grasp the demand for high-end products in servers and data centers brought about by the rapid iteration of intelligent electric vehicles and artificial intelligence.

In terms of profitability, 2024Q1's gross profit margin was 0.4%, -3.8 pct month-on-month, -13.0 pct. Based on the net profit scale, it is expected to lose 0.39 million yuan per ton and continue to be under pressure, mainly due to: 1) The industry releases a lot of new production capacity, intense competition, phased imbalance between supply and demand, and a sharp drop in copper foil sales and processing costs, which has led to a sharp drop in the gross margin of the company's products. According to Baichuan Yingfu data, the current market price of 6 μm lithium copper foil processing fee is 14,000-18,000 yuan/ton, down 0.6 million yuan/ton year on year; 2) Affected by falling processing fees and changes in customer accounts, 2024Q1 accrued credit impairment losses of -11 million yuan, affecting profits.

Profit forecast: The price war in the copper foil industry has been going on for more than a year. Due to the continuous decline in processing fees, some end companies have already cut production or stopped production. The industry has accelerated its exit, and the pattern is expected to close. The company's net profit for 2024-25 is expected to be 0.36 million yuan or 147 million yuan, corresponding to PE 98.7, 24.0 times.