Key points of investment
AI applications are driving demand for 3C lithium batteries to pick up, and an inflection point has been established in the industry. The company's share of 3C lithium batteries is nearly 10%, second only to ATL, with 31% for laptop computers and 8% for mobile phones. Demand in the consumer electronics industry has been declining for 2 consecutive years since its 21-year high. With the launch of AIPC and AI phones in '24, it is expected to bring about a wave of switching, sales will resume growth of 5-15%, and AI models will generally increase their battery capacity by 10%. In terms of price, raw material prices stabilized at the bottom in 24, but the average price is expected to rise in 25 as silicon-based, steel case, capacity increase, and self-supply of packs is expected to rise, corresponding to 10% + of the market space to 82 billion yuan, which will exceed 100 billion yuan in 2030.
The company's mobile phone business expanded to help the consumer business reach the next level, increasing profits by increasing production capacity utilization rate+pack self-supply ratio. The company's 23 year consumer revenue was 10.5 billion yuan, including 6.6 billion yuan for laptop computers and 3.4 billion yuan for mobile phones. In the future, there will be a steady and slight increase in laptop computers, while there is plenty of room for growth in mobile phones. In '23, the company's mobile phone battery market share was 8%, new customer sales and high-end model breakthroughs. It is expected that mobile phone revenue will grow 20% to 4.1 billion yuan in '24, and accelerate again in 25-26. The long-term mobile phone share target is 20-30%, and the revenue space exceeds 10 billion yuan. Among them, the major customer Apple started in 23, shipped 10 million units in that year, doubled to 20-25 million units in 24, and partially doubled in 25 years. It is expected to account for 20% of Apple demand. There is still room for improvement in '26, and it is expected to break through Samsung in the future. Therefore, we expect the company's consumer business revenue to increase 8% to 11.3 billion yuan in 24 years, to 20% + in 25-26, and on the profit side, the company's current production capacity is 700 million units, the nominal capacity utilization rate is 50-60%, pack self-supply ratio is 40% +, utilization rate and integration increase in 25-26, and there is room for improvement in consumer gross margin. It is estimated that 24-26 consumer products will contribute 10/13.16 billion yuan in profit, an increase of 7%/27%/27% year-on-year.
Vehicle start-stop batteries have been designated by major domestic and foreign car companies, and can contribute to the second growth curve. The company successively laid out the mobile battery business in 2019, with losses expanding to 460 million yuan (equity) in 23 years, focusing on high-quality businesses such as start-stop and drones. Among them, the start-stop business shipped 100,000 units in 23 years. Currently, it has received fixed targets from major US customers, European Jaguar Land Rover, Stellantis, Mercedes-Benz, etc., and the company is an ideal supplier, and is expected to reach 800,000 to 1 million units in 24, with revenue contributions of over 600 million yuan, further doubling in 25-26. The market space is expected to increase by 50 billion yuan in the long term. Get 20% share. In terms of profit, the company reduced its loss-making business in 24 and actively introduced external shareholders. We expect a loss of 420 million yuan (equity) in 24, a loss reduction in 25 years, and a break-even balance in '26.
Profit forecast and investment rating: The company's net profit for 2024-2026 is expected to be 6.0/10.2/1.64 billion yuan, up 75%/68%/61% year on year, corresponding PE is 28/17/10 times. From a distribution valuation perspective, due to the estimated 24-year profit of the consumer business of 10-1.1 billion yuan, we expect to grow 25% + in 25-26, adding forward space for the moving storage business, covering for the first time, giving a “buy” rating.
Risk warning: 1) Industry demand is slowing beyond expectations; 2) Raw material prices fluctuate; 3) Technological innovation progress falls short of expectations.