Incident: The company released its 2022 annual report and the first quarter report of 2023. In 2022, the company achieved operating income of 29.39 billion yuan, +52.3% year on year, net profit of 1,296 billion yuan, +40.4% year on year, after deducting net profit of 1,209 million yuan from non-return mother, +67.4% year on year. In the first quarter of 2023, the company achieved operating income of 6.13 billion yuan, -12% year on year, -23.6% month on month, achieving net profit of 172 million yuan, -48.0% year on year, -40.5% month on month, net profit of 87 million yuan after deduction of non-return mother net profit of 87 million yuan, -72.5% year on year, -69.4% month on month.
In '22, precursor shipments were in the top two in the market, and the share of high-nickel increased dramatically. In '22, the company shipped 152,300 tons of ternary carbide, an increase of 67.3% over the previous year, ranking in the top two in the global market. Among them, high-nickel 8 series and above was 115,000 tons, +109% year on year, accounting for more than 75%, an increase of 15pct, 9 series ultra-high nickel (Ni90 and above) of 910,000 tons, accounting for 60%. High nickel accounted for 60%. In '22, the company's net profit per ton of ternary carbide was about 7,000 yuan/ton, ranking at the forefront of the industry.
The performance of 23Q1 was pressured by subsidiary accidents and industrial chain remodeling, and Q2 began to recover rapidly. The 23Q1 company shipped 23,900 tons of precursors, or -22% compared to the previous year. It was mainly affected by the decline in downstream demand and the removal of stocks from the industry. Q2 recovered rapidly, with planned sales of more than 45,000 tons, with a target of 200,000 tons of precursors shipped throughout the year. In 23Q1, the company shipped 1,541 tons of cobalt tetroxide, -70% compared to the previous year. It was mainly affected by the subsidiary accident, and normal production resumed in March.
The Qingmeibang project was gradually launched, and the battery recycling business developed rapidly. The company's Qingmeibang project completed a rise in production capacity and began to gradually increase volume. Q1 shipped more than 4,500 tons, achieved sales revenue of 83.35 million US dollars, gross margin of more than 30%, and is expected to ship more than 26,300 tons of nickel and 2,200 tons of cobalt throughout the year. The company's battery recycling business is developing rapidly. It plans to recycle 35,000 tons of batteries throughout the year to achieve sales revenue of more than 2 billion yuan.
Investment advice: Considering the impact of the subsidiary accident in the first quarter and the continuous decline of the industrial chain, the company's performance expectations were lowered. The company's net profit returned to the mother in 23-25 is estimated to be 18.4/30.2/3.48 billion yuan (the original forecast for 23-24 was 2,78/3.86 billion yuan), an increase of 42.3%/63.9%/15.3% over the previous year. The corresponding PE was 18.7x/11.4x/9.9x, maintaining the “buy” rating.
Risk warning: downstream demand fell short of expectations, nickel and cobalt prices fluctuated greatly, and project progress was lower than expected