A description of the event. The company released its semi-annual report for 2023: achieved operating income of 3.26 billion yuan, -40.11% year-on-year; net profit of -36 million yuan, -105.37% of the same period; deducted non-net profit of -35 million yuan, -105.39% of the same period.
Short-term performance is under pressure, and technology and customers support long-term development. In terms of shipment volume, 2023Q2 is expected to ship 6,000 tons of cathode materials, a slight decrease over the previous month. This is mainly due to low downstream demand, industry prices are generally under pressure, and the company screens and schedules current orders according to its own circumstances. In terms of profit, losses experienced by 2023Q2 are mainly due to inventory losses caused by large fluctuations in lithium salt prices and amortization of fixed assets due to insufficient operating rates. Looking forward to the future, as industry demand gradually picks up, the price of lithium salt is relatively stable, and the company is expected to achieve great development through years of technology accumulation and customer resources. In terms of products, at present, the company already has mass production capacity for medium nickel, medium nickel, high nickel, and ultra-high nickel primary single crystal ternary cathode materials. 23H1's high-nickel products account for more than 40% of sales revenue, an increase of 5 pcts over the previous year. On the customer side, the company has become an important supplier of cathode materials for domestic battery manufacturers such as Ningde Times, Funeng Technology, New Energy Technology, Polyfluoride, Tianjin Lishen, Zhuhai Guanyu, and Weihong Power.
Shipments of sodium electric cathode have achieved a breakthrough, and production capacity construction is progressing steadily. 1) Sodium cathode: significant technical advantages:
It has mastered many core technologies such as multi-element collaborative doping and crystal structure control, and has submitted 17 related patent applications, forming a preliminary patent layout. Technical strength strengthens product capabilities. The company has completed product finalization of third-generation sodium-ion battery cathode materials, and its comprehensive performance is at the leading level in the industry. Smooth industrialization: Market applications are progressing smoothly, and A00 class models have been installed. Up to now, it has achieved 100-ton sales, with the largest customer accounting for over 70%. With excellent product cost performance and high-quality customer resources, the company's sodium-electric cathode materials began continuous mass production in August this year, and large-scale mass production is expected to be achieved in the third quarter of this year. 2) Steady construction of production capacity:
The Yilong base currently has a production capacity of 40,000 tons/year; the Guiyang company has built a production capacity of 26,000 tons/year, with a production capacity of 16,000 tons/year under construction. It is expected to form a total production capacity of 42,000 tons/year by the end of the year. 3) Recycling enhances resource integration capabilities: Plan to set up a new company to carry out recycling business. It mainly uses waste lithium-ion batteries and secondary biomass to extract and recycle valuable materials such as lithium elements and cobalt elements, and convert their production into raw materials used by companies such as ternary precursors and lithium carbonate.
Investment suggestions: Considering that the company has been deeply involved in the industry for many years and its overall steady operation, we expect the company to achieve revenue of 92.04/88.45/947 billion yuan in 2023-2025, with a year-on-year ratio of -34.0%/-3.9%/+7.1%; net profit to return to the mother is 1.71/4.15/570 million yuan, respectively, -86.5%/+142.5%/+37.2%. The PE corresponding to the closing price on September 4 was 62x/26x/19x, maintaining the “recommended” rating.
Risk warning: Sales of new energy vehicles fell short of expectations, industry competition intensified, fluctuations in raw materials exceeded expectations, and the pace of production capacity release fell short of expectations.