Core views
The company's anode sales volume in 2023 was 264,400 tons, up 43.22% year on year. The increase in shipment growth above the industry average was mainly due to domestic and foreign customer expansion and share growth. The negative business revenue was 7.267 billion yuan, -9.8% year-on-year, mainly due to the average anode price of 27,500 yuan/ton in 2023, down 38% from 441,000 yuan/ton in 2022. In terms of overseas layout, the company plans to build 100,000 tons of anode production capacity in Finland, and is currently in the early stages of processing.
In terms of silicon-carbon anodes, the first phase of the Ningbo 40,000-ton integrated silicon-based anode production capacity base is under construction, and trial production is expected in mid-2024. New products and overseas expansion are expected to increase the company's profit margin.
occurrences
The company achieved revenue/net profit after deduction of 190.7/77/220 million yuan in 2023, -12%/-72%/-91% YoY, and 24Q1 achieved revenue/net profit to mother/ net profit of 37.5/-0.7/-0.7 billion yuan, -16%/-113%/-144% YoY.
Brief review
Negative electrode: Shipments have increased dramatically, and the price side is under pressure
Production capacity side: In 2023, anode sales volume was 264,400 tons, an increase of 43.22% over the previous year. Yunnan's first phase of integrated production capacity of 100,000 tons is expected to be gradually put into operation in 2024; in terms of overseas layout, the company's 100,000 ton anode production capacity in Finland is currently in the preliminary stages; silicon-carbon anodes are under construction of the first phase of production capacity at the 40,000 ton integrated silicon-based anode production capacity base in Ningbo, and trial production is expected in mid-2024.
Sales side: In 2023, anode sales were 264,000 tons, up 44.55% year on year. The growth rate was higher than the growth rate of downstream demand, mainly due to the company's domestic and foreign customer expansion and share increase. It is estimated that 23Q4/24Q1 anode products will be shipped in 95,000 tons/48,000 tons. The Q1 month-on-month decline is mainly due to a seasonal decline in downstream demand.
Profit side: Negative electrode business revenue in '23 was 7.267 billion yuan, year-on-year, -9.8%, gross profit margin -10.4pct. The decline in revenue and profit side was mainly due to a year-on-year decline in anode material prices. The average price of anodes sold by the company in 2023 was 27,500 yuan/ton, down 38% from 441,000 yuan/ton in 2022. The net operating profit per ton of 23Q4 and 24Q1 anode products is expected to be near the break-even line, and the net profit per ton in 24Q1 will decline due to falling operating rates and prices.
Polarizer: In 2023, the transfer of panel production capacity led domestic polarizer shipments to increase by 140 million square meters, +44.6% year-on-year, mainly due to the transfer of panel production capacity leading to an increase in supporting demand in China, corresponding revenue of 10.297 billion yuan, -0.3% year over year, gross profit margin 19.5%, and -7.2 pct year on year. It is mainly due to intense market competition that puts pressure on the price side. It is expected that the price of a single flat polarizer will drop from 81 yuan/flat in '22 to 74 yuan/ping.
Impairment: In 2023, the company calculated a total of 387 million yuan in asset impairment due to impairment of goodwill and negative inventory price losses, an increase of 249 million yuan over the previous year. At the same time, it accrued bad debt losses of 55 million yuan in accounts receivable due to increased accounts receivable from Eureka and the polarizer business, which greatly disrupted the company's 23-year performance.
Investment advice: Net profit due to mother is expected to be 8.32, 9.84, and 1,106 billion yuan in 2024, 2025, and 2026, corresponding to PE 29, 24, and 22 times, giving it an “increase in wealth” rating.
Risk analysis
1) Downstream NEV and panel production and sales fall short of expectations: the sales side may fall short of expectations due to export restrictions and weak demand; the production side may fall short of expectations due to large fluctuations in upstream raw material prices, power restrictions, etc., which in turn affects the company's related business shipments and profitability.
2) The decline in raw material prices exceeded expectations: On the one hand, the instability of raw material prices led to a sense of whether to buy or fall downstream, which had a certain impact on terminal demand. At the same time, price fluctuations disrupted the company's short-term performance.
3) The company's key projects fall short of expectations: As a participant in the new energy circuit, the promotion of key projects is the key to supporting revenue and profit, and is also a reflection of the company's growth. Failure to advance key projects as expected will affect current and long-term performance.