The company announced its 2023 interim results announcement. In the first half of the year, it achieved a profit of 350 million yuan, a year-on-year decrease of 41.28%. The company's short-term performance was under pressure, actively deployed overseas production capacity, and maintained an increase in ratings.
Key points to support ratings
2023H1 profit fell 41.28% year on year: the company released its 2023 annual report and achieved revenue of 9.219 billion yuan in the first half of the year, down 19.46% year on year; achieved profit of 350 million yuan, down 41.28% year on year; net profit of 304 million yuan, down 48.69% year on year. According to the company's interim performance estimates, 2023Q2 achieved a profit of 196 million yuan, a year-on-year decrease of 48.68%, and a year-on-year increase of 26.53%; after deducting 162 million yuan in non-profit profit, a year-on-year decrease of 59.60%, and a year-on-year increase of 13.63%.
Profit is under pressure in the short term, and the leading position is stable: The company is a leading enterprise in the lithium-ion battery aluminum foil industry. The first half of the year was affected by the industry's inventory removal, etc., and profits faced great pressure in the short term. The company achieved an overall gross sales margin of 13.30% in the first half of the year, down 1.05 percentage points from the previous year. Of these, 23Q2 achieved a gross sales margin of 12.65%, a year-on-year decline of 3.98 percentage points, and a year-on-year decline of 1.32 percentage points. According to GGII forecasts, global power battery shipments will reach 1,550 GWh by 2025, and are expected to reach 3000 GWh by 2030. The corresponding demand for battery aluminum foil is 542,500 tons and 1.05 million tons of battery foil, respectively. The company's shipments are expected to follow the rapid growth of the industry.
Actively lay out overseas production capacity and develop overseas customers: The company currently has 5 production bases in Zhenjiang, Jiangsu, Hangzhou, Zhejiang, Tongliao, Inner Mongolia, Thailand and Italy. It is the only aluminum processing enterprise in China that has gone global. The company previously acquired Slim Aluminum. The company has two production sites in Cisterne (Italy) and Merseburg (Germany), with a total production capacity of 135,000 tons/year. The company has a complete industrial chain in Europe, which will help the company expand its share in Europe and enhance its competitiveness in the future. Furthermore, the company has signed global strategic cooperation agreements with LG New Energy, CATL Group and SK New Energy, which will help the company open up overseas markets and continue to raise profit levels.
valuations
Based on the company's interim report and recent industry conditions, we adjusted the company's earnings per share forecast for 2023-2025 to 1.05/1.38/1.67 yuan (the original forecast of diluted earnings per share for 2023-2025 was 1.44/1.97/2.37 yuan), corresponding to a price-earnings ratio of 15.1/11.5/9.5 times; maintaining the rating for increasing holdings.
The main risks faced by ratings
Demand in the industrial chain fell short of expectations; raw material prices fluctuated unfavorably; NEV industry policies fell short of expectations; and NEV product strength fell short of expectations.