Incident: The company released its semi-annual report, and 2024H1 achieved revenue of 10.782 billion yuan, YOY -53.48%; net profit to mother of 0.389 billion yuan, YOY -68.57%. Among them, in 2024Q2, the company achieved revenue of 6.262 billion yuan, YOY -37.40%, +38.53% month-on-month; realized net profit of 0.231 billion yuan, YOY -75.92%, +45.30% month-on-month, after deducting non-return net profit of 0.228 billion yuan, +50.26% month-on-month. Lithium iron phosphate shipped 0.3094 million tons in the first half of the year, corresponding to a net profit of 0.0013 million/ton per ton.

Comment:

The share of the industry has further increased, and unit profit continues to improve. The company shipped 2024H1 phosphate cathode materials at 0.3094 million yuan, YOY +43.3%. According to Gaogong lithium battery data, 2024H1 China shipped 0.93 million tons of lithium iron phosphate, and the company's share reached 33.3%, continuing to increase. Among them, 2024Q2 shipped 0.1,734 million tons, YOY +43.3%, +27.5%; net profit per ton was 0.0012 million yuan/ton, up 0.0001 million/ton; net profit per ton was 0.0015 million/ton after asset impairment and credit impairment, up 0.0005 million/ton from month to month. The company's profit level continues to improve, mainly due to the company's product structure optimization, improved operating rate, and excellent refined management capabilities.

The product structure has been optimized, and the amount of new products released is obvious. Currently, the company's products used in the energy storage field account for 33% of sales. The CN-5 series and YN-9 series of new 2024H1 products sell about 0.0479 million tons, accounting for 15% of the company's sales volume, and sales have achieved rapid growth. CN-5 products are mainly aimed at energy storage scenarios, and have both long cycle life and excellent low temperature performance. YN-9 series products are mainly aimed at power battery application scenarios. Through improved particle size grading technology, material compaction density is increased, and material capacity utilization and ratio performance are guaranteed.

Industrial integration is accelerating, and overseas production capacity is being deployed. The company implements an integrated “resource-precursor-cathode material-recycling” industrial layout around cathode materials. Currently, the company's Huangjiapo phosphate mine has obtained a mining license. The company plans to invest in the construction of a 0.5 million tons/year copper smelting project and add 0.3 million tons/year iron phosphate phosphate, 0.3 million tons/year ultra-long cycle and ultra-high energy density phosphate cathode material production project in Guizhou, making comprehensive use of by-products such as steam and sulfuric acid generated during the copper smelting process. The company established Yuneng (Singapore) to promote a lithium battery cathode material project with an annual output of 0.05 million tons in Spain.

Investment advice: As a leader in the lithium iron phosphate materials industry, the company has excellent refined management capabilities, accelerates the layout of an integrated industrial chain, and continues to reduce costs and increase efficiency. We expect the company's net profit to be 0.947/1.839/2.787 billion yuan in 2024-2026, up -40.11%/94.28%/51.55% year-on-year, EPS is 1.25/2.43/3.68 yuan, corresponding PE is 20/10/7 times, maintaining the “buy” rating.

Risk warning: Industry competition increases risk, and performance forecasts and valuation judgments fall short of expectations.