The company released its 2024 mid-year report, and achieved profit of 0.01 billion yuan in the first half of the year, a year-on-year decrease of 97.29%, with significant improvements in 2024Q2. The company's leading position in high-nickel ternary materials is stable, overseas production capacity is progressing smoothly, and the degree of globalization is gradually increasing. Maintain an increase in holdings rating.

Key points to support ratings

Profit for the first half of 2024 fell 97.29% year on year, and there was a significant improvement in 24Q2: the company released the 2024 semi-annual report and achieved profit of 0.01 billion yuan in the first half of the year, a year-on-year decrease of 97.29%; deducted non-profit -0.004 billion yuan, a year-on-year decrease of 101.17%. According to the company's performance calculation, the company achieved profit of 0.048 billion yuan in 2024Q2, a year-on-year decrease of 30.49%, and a sharp increase of 227.60% month-on-month; realized deduction of 0.035 billion yuan for non-profit, an increase of 25.57% year-on-year and 190.06% month-on-month.

Shipments continued to grow, and the leading position of high nickel was stable: the company benefited from increased demand in the NEV market, and shipments continued to rise. In the first half of 2024, the company sold 0.053 million tons of ternary materials, up nearly 17% year on year. Among them, 2024Q2 sales reached 0.0265 million tons, up 37.4% year on year, far exceeding the industry growth rate. The company's leading position in high-nickel materials is stable. The domestic market share of high-nickel ternary cathode materials is nearly 40%, an increase of 5 percentage points over the previous year.

Gradual release of lithium manganese and delivery of sodium cathodes in small batches: The company actively promotes the industrialization of new cathode materials such as lithium manganese and sodium electricity. In terms of lithium manganese, shipments in the first half of the year reached total shipments for the full year of 2023, with a year-on-year increase of 166%, maintaining the first market share; in terms of sodium electric materials, the company's polyanionic materials reached the leading level in the industry in terms of compaction, capacity, and processability, and were verified and recognized by leading domestic and foreign customers, and layered oxides were delivered to well-known customers in small batches.

The degree of globalization continues to deepen: the company continues to promote a global strategy. In terms of customer structure, in the first half of 2024, overseas customers accounted for 17% of sales, a sharp increase of 16 percentage points over the same period last year; in terms of production capacity, the Korean cathode factory has passed many international customer reviews, completed the acquisition of the British JM factory in Poland, and began construction demonstration of the first 0.02 million-ton project.

valuations

Based on the company's performance and changes in the price of cathode materials, we adjusted the company's 2024-2026 earnings forecast to 0.43/0.95/1.30 yuan (the original forecast 2024-2026 diluted earnings per share was 2.83/3.36/- yuan), corresponding to a price-earnings ratio of 51.6/23.1/16.9 times; maintaining an increase rating.

The main risks faced by ratings

Demand in the industrial chain fell short of expectations; raw material prices fluctuated unfavourably; NEV industry policies fell short of expectations; NEV products fell short of expectations.