Description of the event

In terms of performance, in 2024H1, the company achieved operating income of 6.3 billion yuan, a year-on-year net profit of 0.239 billion yuan, a year-on-year decrease of -6.12%, and deducted non-net profit of 0.22 billion yuan, a year-on-year decrease of -3.24%. After splitting into Q2, the company achieved net profit of 0.128 billion yuan after deducting non-net profit of 0.117 billion yuan.

Incident comments

The company's cathode materials are rich in new technologies for energy storage, including: 1) Lithium cobalate cathode materials: Currently, 4.53V lithium cobalate has passed multiple terminal project certification and small-batch shipments have begun. The 4.55V lithium cobalate development schedule basically meets customer needs. At the same time, in order to meet the demand for high energy density for AI functions, the company has developed a new generation of high-performance lithium cobalate materials, which have breakthroughs in energy density and voltage platforms, and are expected to be used in terminals in the second half of 24; 2) Ternary materials: The overall performance and quality of the new Ni6 series high-voltage materials are expected to be mass-produced in the second half of the year. Three yuan materials have entered the mass production or certification stage in several overseas customer projects. Newly developed ultra-high power materials have successfully entered mass production and stable supply has begun; 3) hydrogen storage alloys: vehicle alloys are being verified and developed around rare metal removal routes. Currently, the alloy is in the pilot program discussion stage; low-cost alloy development has entered the batch introduction stage; 4) lithium supplement: high-performance lithium supplement materials have been supplied in small batches, and various high-capacity lithium supplement materials are being developed. Furthermore, in product terminal application scenarios, in addition to automotive applications, low-altitude drone fields, robots, and solid-state hydrogen storage are also being developed and promoted.

In terms of performance, the company shipped 0.0448 million tons of cathode materials in 2024H2, of which 0.0263 million tons were shipped for three yuan, an increase of 109% over the previous year, achieving 0.0184 million tons of lithium cobalate shipments, an increase of 30% over the previous year; in terms of profit, the gross profit per ton of 2024H1 cathode materials was 0.0134 million/ton, a year-on-year decrease, mainly due to lower material prices and lower processing costs. Looking at Q2, the company's ternary cathode shipments were around 0.01 million tons, lithium cobalate shipments were about 0.01 million tons, and lithium cobalate shipments increased to 50%, mainly due to the increase in shipment volume brought about by terminal consumer electronics preparation; in terms of profit, Q2 estimated that the gross profit per ton of cathode materials was 0.017 million yuan/ton, mainly benefiting from the increase in the share of high-margin lithium cobalate products.

Looking ahead, the company's demand for ternary and lithium cobalate will continue to rise sequentially, and with the implementation of the company's next-generation material technology, overall unit profit is expected to continue to increase. In terms of production capacity, the company's current production capacity mainly includes the Haijing renovation and expansion and Ningde base. Overseas bases are mainly in France. As demand increases, production capacity is gradually being invested, and support is improving. The company is expected to achieve net profit of 0.5-0.6 billion yuan in 2024, and continues to be recommended.

Risk warning

1. Market competition increases risk;

2. The risk that demand in the power battery industry falls short of expectations.