The company released the 2023 annual performance report

In '23, the company achieved revenue of 15.405 billion yuan, a decrease of 31%; net profit to mother was 1,891 billion yuan, a decrease of 67%; net profit after deducting net profit not returned to mother was 1,824 billion yuan, a decrease of 67%. The 23Q4 company achieved revenue of 3.281 billion yuan, a decrease of 44%, net profit to mother of 139 million yuan, a decrease of 90%, and net profit of 114 million yuan after deducting net income from the mother, a decrease of 91%. The price of lithium carbonate fluctuated greatly in the second half of '23. The company's large inventory depreciated by 181 million yuan, and the profit margin for electrolytes was reduced, putting pressure on the company.

Electrolyte sales are growing steadily, and the bottom is expected to pick up in 24

In '23, the company's lithium-ion battery materials business achieved revenue of 14.104 billion yuan and a gross profit margin of 25.26%. The combination of leading positions and integrated layout guarantees the company's profitability. In 2023, the company sold a total of 396,000 tons of electrolytes, up 24% year on year. Of these, Q4 shipped about 110,000 tons, and the net profit per ton was about 0.25 million yuan/ton.

We believe that the electrolyte sector will still bottom out in the first half of '24, and is expected to gradually pick up in the second half of the year. The company is expected to ship 500,000 tons of electrolyte in '24, with a net profit of 0.27 million yuan/ton per ton.

Daily chemical materials are growing steadily, and adhesive structural adhesives are expected to become Xinyingli's daily chemical materials sales volume for the full year of 2023, an increase of 12%; the full year of '23 achieved revenue of 1,017 billion yuan, a decrease of 10.43%; in the second half of '22, the company officially entered the lithium battery positive and negative electrode adhesives and battery adhesives business. Currently, mass sales have been formed and are beginning to gain market size. The structural adhesive part is mainly being rapidly increased by the product system of Dongguan Tenwei. In addition, the company plans to upgrade production capacity in Qingyuan and Jiujiang. While electrolyte profits are under pressure, the company is developing new profit advantages, and the ability to back up the cycle is expected to increase.

Investment advice

As the leader, the company still has a comparative profit advantage in the downward cycle. The company is expected to ship 47/53 million tons of electrolytes in 24/25, with a net profit of 0.27/0.3 million yuan/ton per ton. The company's overall net profit to mother is 1,319 billion yuan, respectively, corresponding to PE30X/20X. First coverage, giving a “buy” rating.

Risk warning

Raw material prices fluctuate; capacity expansion falls short of expectations; energy storage development falls short of expectations