Incident: The company's 2023Q1-3 revenue was 14.238 billion yuan, down 14.46% year on year; net profit to mother was 468 million yuan, down 54.69% year on year; net profit after deduction was 416 million yuan, down 61.28% year on year. Among them, the company's revenue for the Q3 quarter was 5,019 billion yuan, down 3.48% year on year; net profit to mother was 118 million yuan, down 73.02% year on year; net profit after deduction was 112 million yuan, down 76.73% year on year.
Industry sentiment declined, and Q3 company performance was under pressure. Downstream battery factories' production schedule gradually picked up in the third quarter. From July to September 2023, China's power battery production was 61.00/73.35/77.40 GW respectively. The average monthly production schedule for Q3 increased 29.40% compared to Q2. Although the battery foil business is picking up on the demand side, the supply-side industry has put more production into operation, and product processing costs are under pressure, 2
023Q3's revenue and net profit to mother declined by 3.48% and 73.02%, respectively, year over year.
The economic downturn weighed on processing costs, and Q3 profit margins declined year over year. 2023Q3's gross margin was 9.62%, down 8.94 pct year on year; net interest rate was 2.32%, down 6.08pct year on year. The decline in net interest rate was mainly due to a slowdown in marginal growth of downstream demand, a year-on-year decline in processing fees and weakening cost amortization. Looking specifically at the cost side, the company's expense ratio for the 2023 Q3 period was 6.42%, a year-on-year decrease of 0.37pct. Among them, the sales expense ratio was 0.48%, down 0.68 pct year on year, the management expense ratio (including R&D) was 6.16%, up 0.04 pct year on year, and the financial expense ratio was -0.22%, up 0.26 pct year on year.
Abundant cash flow supports overseas production capacity construction, and the global layout of production capacity enjoys regional dividends. As of the 2023Q3 quarter, the company's monetary assets exceeded 8.126 billion yuan, and the company's own cash flow exceeded 677 million yuan. Meanwhile, since this year, the company's net cash flow from operating activities has been 836 million yuan, and the company's sufficient capital supports the continuous expansion of the company's overseas production capacity. Looking at the scale of overseas production capacity, since the company completed the acquisition of Slim Aluminum and related subsidiaries in July this year, the company's production capacity in the European region has further increased by 135,000 tons/year, forming a complete industrial chain from aluminum foil blanks to aluminum sheet and foil products.
Investment advice: We expect the company to achieve net profit of 635/8.27/951 million yuan respectively in 2023-2025, up -54.0%/30.3%/14.9% year-on-year. The PE corresponding to the latest closing price is 20.1x/15.4x/13.4x, maintaining the “increase” rating.
Risk warning: Economic recovery falls short of expectations; production capacity investment falls short of expectations; the industry has declined beyond expectations.