Investment events

In the first half of 2024, the company achieved operating income of 6.888 billion yuan, a year-on-year decrease of 46.58%; net profit to mother was 10.2779 million yuan, a year-on-year decrease of 97.29%. Among them, in the second quarter, the company achieved operating income of 3.196 billion yuan, a year-on-year decrease of 29.39%; net profit to mother was 47.5195 million yuan, turning a month-on-month loss into a profit.

Key points of investment

The global market share of ternary cathode remains number one. The 24Q3 production schedule is expected to continue to increase in the first half of 2024. The company sold 0.053 million tons of ternary cathode materials, up nearly 17% year on year, and the global market share reached 11%, maintaining the number one position in the world. In the second quarter, the company sold 0.0265 million tons of ternary cathode materials, up 37.4% year on year, far exceeding the industry's growth rate. In the first half of 2024, the company's domestic market share of high-nickel ternary cathode materials was nearly 40%, an increase of 5 percentage points over the previous year, further consolidating its leading position. In terms of production schedule for the third quarter, sales volume was above 0.01 million tons in July, and the company expects orders in August and September to remain above 0.01 million tons.

The share of overseas customers has increased dramatically, and the Korean base is progressing steadily

In terms of shipping, in the first half of 2024, the company's overseas customer sales accounted for 17%, an increase of 16 percentage points over the previous year. In terms of production capacity, JS Co., Ltd., a wholly-owned subsidiary in South Korea, has completed technical transformation and passed factory approval from many major Japanese and Korean customers, successfully entering the supply whitelist. Large-scale batch supply is expected to gradually begin in the third quarter; the second phase of 0.04 million tons/year material production capacity construction is progressing rapidly, all construction capital has been exported from ODI, and overseas potential customer development is progressing steadily.

New products such as ultra-high nickel, lithium manganese, and sodium battery cathodes have made progress Ultra high nickel: 9 series ultra-high nickel products have achieved large-scale mass production and stable supply, with sales volume of 0.012 million tons in the first half of 2024, accounting for nearly 25%. Lithium manganese: In the first half of 2024, lithium manganese shipments increased 166% year on year, and the market share continued to be number one; the blended ternary solution for first-generation EV products locked specifications on the client side and achieved initial mass production, while the pure lithium manganese phosphate solution completed targeted leading customers. Sodium battery cathode: Polyanionic materials have been verified and approved by leading domestic and foreign customers, and layered oxide materials are delivered to well-known customers in small batches.

Profit forecasting and valuation

The profit forecast was lowered and the “buy” rating was maintained. The company is a global leader in high-nickel ternary cathodes, and the multi-product layout is gradually entering the harvest period. Considering factors such as increased market competition and low capacity utilization, we lowered the company's net profit due to mother in 2024-2026 to 0.251 billion, 0.401 billion, and 557 million yuan, respectively (0.573 billion, 840 million, and 1,114 million yuan, respectively before the reduction. The corresponding EPS was 0.52, 0.83, 1.15 yuan/share, respectively, and the corresponding PE was 42, 26, and 19 times, respectively. Maintain a “buy” rating.

Risk warning

Risk of large fluctuations in material prices, low capacity utilization, changes in overseas policies, etc.