Description of the event

The company released its 2024 semi-annual report, achieving operating income of 3.54 billion yuan, a year-on-year net profit of 0.287 billion yuan, a year-on-year net profit of -69.01%, and a net profit of 0.217 billion yuan, or -79.66% year-on-year; after breaking down to Q2, the company achieved net profit of 0.177 billion yuan to mother, an increase of 59.87% month-on-month, and achieved net profit of 0.112 billion yuan, an increase of 7.77% month-on-month.

Incident comments

2024H1, the company's total output of ternary yuan and lithium cobalate was 0.0227 million tons, which was mainly affected by the decline in demand for ternary terminals. On the one hand, domestic power supply did not improve significantly; on the other hand, the growth rate of overseas demand in Europe and the US declined; lithium iron production was 0.0133 million tons; solid state battery cathode materials were shipped in batches. In terms of profit, the company's net profit of three yuan and one ton of lithium iron declined year-on-year, due to the decline in processing fees of three yuan for domestic and foreign customers and the decline in the share of the company's overseas customers. At the same time, the operating rate increased, fixed expenses and depreciation and amortization also increased the cost per ton to a certain extent; lithium iron products are still losing a single ton. In other financial terms, 2024H1's other income was 0.064 billion yuan (including 0.03 billion yuan in subsidies and 0.016 billion yuan in tax credits), asset impairment gains and losses - 0.019 billion yuan, and credit impairment was transferred back to 0.026 billion yuan.

Split to Q2, the company's shipments of ternary and lithium cobalate are expected to remain flat month-on-month; lithium iron and solid state battery cathode materials are all shipped in batches. In terms of profit, the company's profit per ton of three yuan and lithium cobalate declined slightly month-on-month, mainly due to a decline in the company's share of overseas customers, while the increase in depreciation amounts also lowered the company's overall profit per ton; the operating rate of lithium iron products increased markedly from month to month, but due to price factors, Q2 single ton is expected to remain in a loss state. Q2 Other earnings of 0.052 billion yuan.

Looking forward to the future, the company's multi-category cathode material development ideas are progressing steadily. The production capacity side company currently has a three-yuan production capacity of 0.053 million tons. Changzhou Phase II, Haimen Phase IV, and Panzhihua Phase I are gradually being put into operation, and the overseas plan is progressing steadily with 0.5 million tons (0.2 million tons of three yuan plus 0.3 million tons of lithium iron (manganese)). On the customer side, the company's first-mover advantage for overseas customers is still obvious. Domestic customers are actively introducing it. With the gradual investment of overseas production capacity, the company's customer structure is expected to continue to be optimized in the future. In terms of products, high-nickel ternary cathodes continue to iterate technology, while forward-looking cathode material products such as ultra-high nickel polyvalent, cobalt-free, solid-state lithium batteries, sodium electricity, and novel lithium-rich manganese-based materials accelerate conversion, which is optimistic about the company's future growth. The company is expected to achieve net profit of 0.7-0.8 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.