Introduction to this report:

As a leader in the anode coating materials industry, the company is expected to accelerate the application and promotion of silicon-based materials in the context of terminal customers such as Huawei exploring silicon-based anode technology, increasing the company's demand for coating materials.

Key points of investment:

Investment advice: Maintain the company's 2024-2026 EPS at 0.01 yuan, 0.72 yuan, and 1.16 yuan.

As the leading and only listed company in the anode coating materials industry, considering current losses, the company was given 1.72 XPB in 2024 with reference to PB, which is the bottom profit (including loss) leading company in the lithium battery industry. The revised target price is 46.58 yuan, maintaining an increase rating.

Huawei publishes patents and actively explores silicon-based anodes. On November 15, the State Intellectual Property Office revealed that Huawei disclosed a silicon-based anode material patent entitled “Silicon-based anode materials and their preparation methods, batteries and terminals”. The patent allows silicon-based anode materials to have both higher capacity and lower expansion performance, and improve the cyclic stability of the anode.

Carbon-coated silicon-based materials can solve the problem of volume expansion, and the company actively lays out silicon-based anode coating technology. Covering the surface of the silicon material with a carbon coating material can not only provide the anode with a high specific capacity, improve the conductivity of the electrode, but also cushion drastic changes in the volume of the silicon material during charging and discharging, so that the silicon material structure is not easily damaged and the integrity of the electrode structure is maintained. As one of the current popular research directions for next-generation anode materials, the company disclosed in its listing prospectus that it was focusing on research and development of “development of AS-G lithium battery silicon-carbon anode particle surface binding materials and process equipment”, and “development of AS-G lithium battery silicon-carbon anode particle surface binding materials and process equipment” to meet possible future silicon-carbon anode particle support requirements and provide a good guarantee for stable future business performance. XD-260

Performance is gradually bottoming out, and demand is gradually improving. The company achieved a gross profit margin of 8.23% in 24Q3, an increase of 0.79pct over the previous month. Compared with the improvement in Q2, the company's operations gradually bottomed out. Currently, prices in the anode coating materials industry are relatively low. The company's gross margin has dropped to the lowest level ever, and it is expected that there is limited room for downward adjustment. At the same time, on the cost side, the company is further extending the upstream raw materials from coumarone resin to ethylene tar, continuously optimizing the production process and increasing the integrated production capacity ratio, which is expected to further optimize product quality and production costs. On the demand side, in the first three quarters of 2024, thanks to the company's continued deepening expansion with brand customers and new customers, as the penetration rate of high-rate next-generation power batteries represented by “fast charging” and “overcharging” performance and new products in other fields increased, the company's major downstream customer shipments continued to increase, and the company's negative coating material shipments increased significantly year-on-year.

Risk warning: NEV sales fall short of expectations, risk of fluctuations in raw material prices