performance
The company publishes its 2023 annual report and 2024 quarterly report. The company achieved operating income of 15.340 billion yuan for the full year of '23, a decrease of 0.80%. Net profit attributable to mother was 1,912 billion yuan, a decrease of 38.42%, and realized net profit without deduction of 1,721 billion yuan, a decrease of 39.82%. 24Q1 achieved operating income of 3,034 billion yuan, a decrease of 17.97%, achieved net profit of 445 million yuan, a decrease of 36.64%, and realized net profit without deduction of 419 million yuan, a decrease of 38.25%.
The short-term profitability of the anode business declined, and the company's profitability declined in 2023 when adjusting the schedule of new production capacity. The company's net profit margin in '23 was 13.93%, down 7.57pct year-on-year. Among them, 155,300 tons of anode products were shipped, achieving revenue of 6.611 billion yuan, a year-on-year decrease of 16.01%; gross margin was 14.79%, a year-on-year decrease of 11.1 pct. The main reasons are: 1) the price of anode products continues to decline due to the double impact of oversupply of production capacity in the industry and inventory removal by downstream battery customers; 2) changes in customer product structure and raw material properties affected the cost and yield of the company's original production process; 3) the consumption of high-priced inventory in the early stages was slow, causing the company to continue to prepare for inventory price drops. By the end of 2023, the company had an effective production capacity of 150,000 tons of anode materials per year, including 110,000 tons of graphitized processing and 100,000 tons of supporting production capacity for carbonization processing. The company will continue to promote the construction of an integrated project with an annual output of 280,000 tons of high-performance lithium-ion battery anode materials in Sichuan. The production capacity of the first phase is affected by supporting circuit construction, self-inventory consumption, and the demonstration of new production process equipment. Progress has been delayed, and it is expected to be gradually completed and put into operation in 2024; the second phase of 100,000 tons of production capacity will advance steadily, and construction is scheduled to be completed in the second half of 2024; and the third phase is expected to gradually be completed and put into operation in 2025.
The diaphragm coating business is growing steadily, and integrated construction is being accelerated
In 2023, the company sold 5.271 billion square meters of diaphragm coating products, an increase of 21.50% over the previous year. By the end of 2023, the company had an annual production capacity of 700 million square meters of base film, 20,000 tons of nano alumina and bohmite, 15,000 tons of PVDF, and 6 billion square meters of coated diaphragm processing. In 2023, the company's coating processing market share exceeded 40%, and business synergy has accelerated customer certification and progress of self-produced base film products.
Investment advice
We expect the company's net profit from 2024-2026 to be 26.65/32.10/3.809 billion yuan, respectively, corresponding to 13, 11, and 9 times PE. Considering that the company is a negative electrode leader, the diaphragm profit is stable, and covered for the first time, 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.