Net profit from 24Q1 reversed year-on-year losses, with significant month-on-month improvements, and gradual restoration of profitability: according to the company's 2024 first quarter report, the company achieved revenue of 1,430 billion yuan in the first quarter of 2024, +46.77% year-on-month, and -6.35% month-on-month; net profit to mother was 706.651 million yuan, reversing losses year-on-year, and +87.68% month-on-month. By industry, the three main business units of lithium batteries, LED, and metal logistics all achieved year-on-year growth in revenue and net profit.
The gross margin for the first quarter of 2024 was 14.27%, +5.10pct year on year, +0.92pct month on month. In particular, the gross margin of lithium batteries was further recovered from 2023; the net profit margin to mother was 4.94%, +6.23pct year on year, and +2.48pct month on month.
Shipments of 24Q1 lithium batteries exceeded the target, and the expected volume increased sharply throughout the year. 24Q1 lithium batteries were shipped about 75 million units, exceeding the quarterly target, and gross margin was further repaired. As major overseas customers recover, shipments and individual profits will be repaired, and the increase in utilization rates will lead to a decrease in the cost of each unit. We expect shipments of lithium batteries to exceed 400 million units in '24.
Lithium battery inventory levels tend to be reasonable, and multiple application scenarios are expected to bring new volume. At the end of 24Q1, judging from the finished product inventory, the company still had about a month's inventory of lithium batteries in terms of sales. The company's lithium battery products are small power lithium batteries, which are mainly used in downstream power tools, etc. The company actively explores downstream application scenarios, such as two-wheelers (E-B, high-speed electric motorcycles), BBU module batteries, eVTOL, AI robots, etc. In the 24-year shipping structure, power equal-ratio batteries account for 80%, capacity two-wheelers account for 10% (24Q1 two-wheeler shipments account for 16%), and other scenarios 10%.
The metal logistics business is stable, and the LED business is expected to improve significantly. The company's metal logistics business is relatively stable and has maintained a slight profit growth rate in recent years. We expect the company's metal logistics business to maintain a 10% growth rate in 24 years. The company's LED business reversed losses in 2023. As downstream demand picked up, MiniLED series products were gradually released, and the share of overseas shipments increased. We expect the company's LED business profit to increase significantly in 24.
Profit forecasting and valuation. We expect the company's net profit to be 464 million yuan, 568 million yuan, and 629 million yuan respectively in 2024-2026. As downstream stocks begin to be replenished, we expect the company's demand for lithium batteries to gradually recover. Referring to the valuation situation of comparable companies, we gave the company 23 to 25 times PE in 2024, with a corresponding reasonable value range of 9.26-10.06 yuan, giving it a “superior to the market” rating.
Risk warning. Global macroeconomic uncertainty, downstream customer order demand falls short of expectations, production capacity investment falls short of expectations, market competition intensifies, and raw material prices fluctuate.