performance

The company publishes its 2023 annual report and 2024 quarterly report. The company achieved operating income of 41,358 billion yuan for the full year of '23, a year-on-year decrease of 3.35%, mainly due to a drop in product sales prices; realized net profit of 1,581 billion yuan, a year-on-year decrease of 47.44%, mainly due to increased industry competition and a sharp drop in lithium carbonate prices, which led to a decline in gross margin; and realized net profit withheld from mother 1,518 billion yuan, a decrease of 49.90% year-on-year. In 2023, the company plans to distribute a cash dividend of 4.18 yuan (tax included) to all shareholders for every 10 shares, for a total of 317 million yuan in cash dividends. In Q1 2024, we achieved total operating income of 4.520 billion yuan, a year-on-year decrease of 65.69%, a year-on-month decrease of 35.70%, and a net profit of 159 million yuan, a year-on-year decrease of 43.56%, and an increase of 307.75% month-on-month.

Lithium iron products have excellent performance and rank first in the industry in terms of shipment volume

The company's lithium iron phosphate products have characteristics such as high energy density, long cycle life, and excellent low temperature performance. At the same time, the product quality is stable and reliable, and has high stability. The company's downstream customers cover a wide range, and the top ten companies with installed lithium iron phosphate power batteries in 2023 covered nine. In 2023, the company produced a total of 504,400 tons of lithium iron phosphate, an increase of 49.6% over the previous year, and sold 506,800 tons of lithium iron phosphate, an increase of 56.49% over the previous year. Among them, the proportion of products used in the energy storage sector has increased to about 28%. The market share of the company's lithium iron phosphate products exceeds 30%, and it has been at the top of the industry for four consecutive years.

Comprehensively promote integrated development and continue to expand production capacity

The company adheres to the integrated development idea of “resources - precursors - cathode materials - recycling”. 1) In terms of upstream resources, the subsidiary Guizhou Yuneng Mining successfully competed for the Dashichang Phosphate Mine and Huangjiapo Phosphate Mine in Fuquan City, Guizhou Province, and is currently accelerating the progress of phosphate ore exploration, exploration and mining. 2) In terms of iron phosphate, the company has achieved full self-supply, and the cost is controllable. 3) In terms of cathode materials, the company is steadily advancing the construction of production capacity such as the Yunnan base and the Guizhou base. By the end of 2023, the company had a production capacity of about 700,000 tons of lithium iron phosphate, further highlighting the advantages of scale. 4) In terms of waste battery recycling, the company has set up a subsidiary, Hunan Yuneng Recycling Technology Co., Ltd., to explore battery recycling technology, promote the formation of a closed loop in the industrial chain, and strengthen control over key raw materials. At the same time, the company's innovative new products such as ultra-long-cycle lithium iron phosphate, higher energy density lithium iron phosphate, and lithium manganese iron phosphate are progressing smoothly, meeting the differentiated needs of customers for different application scenarios and continuously increasing customer stickiness.

Investment advice

We expect the company's net profit to be 980/18.71.344 billion yuan in 2024-2026, corresponding to 30, 16, and 12 times PE. The company is a leading company in the lithium iron industry, and the integrated layout continues to advance, giving it a “buy” rating.

Risk warning

Demand for new energy vehicles fell short of expectations; downstream market growth fell short of expectations; raw material prices rose sharply; industry competition intensified; customer expansion fell short of expectations, etc.