Consumer batteries rebounded steadily in '23, and continued to recover in '24. The company specializes in consumer lithium batteries, accounting for more than 90% of revenue in 2023. Previously, due to adjustments in the consumer electronics industry, the company's revenue growth slowed from 2023Q2 to 2023Q1, but revenue has returned to growth since 2023Q2. 2024Q1 revenue was 2.5 billion yuan, up 7.2% year on year, continuing the recovery trend since 2023Q2.
AIPC is expected to become a new engine for the company's growth. The introduction of AI products is expected to stimulate the consumer electronics market. OEMs such as HP, Dell, Lenovo, Acer, and Asus are all planning to launch AIPC, and the company's laptop consumer battery revenue in 2023 will account for more than 57%. According to Techno Systems Research, laptop and tablet lithium battery companies had a market share of 31.1% in 2023. It is expected that AIPC's product launch will have a positive impact on the company's laptop business. Furthermore, the company's mobile phone consumer battery revenue in 2023 is close to 30%. AI phones are also promoted by many manufacturers such as Samsung, Vivo, and Honor, which is expected to have a positive impact on the company's mobile phone business.
The low-voltage power battery business is expected to expand in 2024. Compared with traditional lead-acid batteries, the company's main low-voltage lithium batteries for automobiles have a stronger ability to continuously discharge at a high rate, have better circulation performance, and higher energy density. At the same time, they have better stability during power loss, and lithium batteries do not contain lead and are relatively more environmentally friendly. Electric vehicle companies and some fuel vehicle companies have successively switched low-voltage batteries from the lead-acid route to the lithium battery route. The company also continues to expand in the field of low pressure automobiles. Currently, it has been recognized by many well-known domestic and foreign car companies such as SAIC, Zhiji, Jaguar Land Rover, and Stellantis, and has successively obtained fixed letters for various model projects. It is expected that it will continue to grow in the power field in 2024.
Investment advice: The company's consumer business continues to recover, and new products such as AIPC are expected to bring significant growth. Previously, the power business dragged down the company's performance, but it is expected to continue to improve this year with the volume of targeted projects. We gave the company net profit of 6.77/966/ 1,428 million yuan respectively for 2024-2026, and the current market value corresponding to PE is 21/15/10 times, respectively. Referring to comparable company valuations, we gave 26xPE in 2024, corresponding to a target price of 15.61 yuan, maintaining the “recommended” rating.
Risk warning: AIPC promotion falls short of expectations, power business progress falls short of expectations, export business is blocked, and patent litigation risks.