The main business is under pressure, and the new battery business is expected to contribute to the performance increment.

Tianneng shares released three quarterly reports, the first three quarters of 23 achieved revenue of 35.064 billion yuan, year-on-year + 16.7%, return to the mother net profit of 1.712 billion yuan, year-on-year + 20.1%, return to the net interest rate of 4.9%, year-on-year + 0.1pct.

Taking into account the negative impact of the slowdown in the downstream electric two-wheeler market, we downgrade the revenue growth and gross profit margin assumptions, corresponding to the company's 23-25 EPS of 2.35company2.63lap3.39 yuan (the previous value is 2.69company3.19cusp3.90 yuan). With reference to the average PE15.41 of comparable company Wind in 23 years, considering the company's solid lead-acid battery position and strong customer channel advantage, along with the increment of new business contribution performance, the company is given a 5% valuation premium, corresponding to 16.18x2023PE, corresponding to the target price of 38.03 yuan (the previous value is 41.69 yuan), maintaining the "buy" rating.

Q3 revenue growth slows, gross profit margin declines year on year

23Q3 realized revenue of 13.506 billion yuan compared with the previous month + 5.4% 1.9pct/2.6pct 25.0%, gross profit 16.2%, homing net profit 619 million yuan, homing net profit-7.9% Universe 30.3%, homing net profit 4.6%, homing net profit-0.7pct/+0.2pct. Q3 R & D / sales / management / financial expenses 5.02 RMB2.92, 2.77, 000, 200, 000, 200, 000, Q3 profitability decline, we believe that due to the slowdown in the downstream electric two-wheeler market, the more profitable lead-acid battery industry is under pressure, considering that new businesses such as lithium and sodium batteries are accelerating and the revenue side is still growing. However, the early profitability of the new business has not yet improved, resulting in a decline in overall profit margins.

Lead-acid battery has a solid leading position, and the lead-carbon battery or the new energy storage lead-carbon business is expected to open the second growth curve. The company is the leader of lead storage battery for electric two-wheeler, working closely with downstream electric two-wheeler head enterprises, customers including Yadi, Emma, Tailing, Luyuan, Xinri and so on. In terms of lead-carbon business, the Huzhou Comprehensive Intelligence Zero carbon Power Plant project was officially put into operation in March, which is currently the largest lead-carbon energy storage power station in the world. It has continuously accumulated operation experience since it was put into operation, laying a good foundation for follow-up development. According to the company announcement, the planned production capacity of lead-carbon batteries in 25 years is expected to reach 30GWh. We believe that, driven by the energy storage demand superposition policy, the lead-carbon battery business may bring a new growth curve for the company.

Actively lay out the lithium electric energy storage business to promote the landing of sodium products

The company actively layout new products, expand the subdivision of the track to promote diversified development. The capacity expansion of lithium energy storage battery will accelerate the landing of research and development of sodium electric products. Since the beginning of this year, the company has continuously increased the planning and layout of lithium energy storage, successfully launched 100Ah-305Ah and other lithium energy storage cells, and released air-cooled, liquid-cooled and other energy storage boxes; at the same time, steadily promote the capacity construction projects of Huzhou lithium power and South Taihu lithium power projects. According to the company announcement, by the end of this year, the planned production capacity of lithium energy storage battery will reach 15G who will reach 30GWh in 25 years. The company's new generation of sodium ion battery Tian Na T1 has completed the delivery of samples to a number of two-wheel car companies and is carrying out verification work.

Risk hints: the progress of capacity expansion is not as expected; the risk of intensified market competition; the risk that the progress of industrialization of new technology is not as expected; the risk of a sharp rise in raw materials.