Event: The company released its 2023 three-quarter report:
1) 23Q1-3: Revenue of 34.319 billion yuan, yoy -6.19%; 804 million yuan, yoy +16.89%; deduction of 609 million yuan, yoy +26.01%.
2) 23Q3: Revenue of 120,083 billion yuan, yoy -18.72%, qoq +2.76%; net of 365 million yuan, yoy +15.74%, q-39.47%; deduction of 240 million yuan, yoy +1.33%, q-61.10%. Gross profit margin 14.36%, yoy+1.91pct, q-0.8pct; net profit margin 0.68%, yoy-0.90pct, q-3.83pct.
The decline in the unit price of Q3 products lowered revenue performance, and profit increased year-on-year: with the end of downstream dewarehousing of consumer electronics and the release of new products, demand for Q3 consumer products increased markedly year over year, but due to falling prices of battery raw materials such as lithium cobalate, the overall revenue performance declined. Looking at the profit side, with the increase in the self-supply ratio of 3C batteries and the continuous release of customer demand for power and energy storage battery products, gross margin increased year-on-year, and cost-side control remained stable, driving the company's overall profit to increase year-on-year.
The bottom of consumer electronics is gradually recovering, and the self-supply ratio of 3C batteries continues to rise: Currently, the overall inventory of mobile phones and laptops is low. As the release of new flagship devices such as Huawei and Xiaomi catalyzes, and the installation of innovative features such as AIGC, demand for consumer electronics products is gradually recovering. Furthermore, at present, downstream customers are more and more accepting of the pack+ battery plan, and the self-supply rate of mobile phone and laptop batteries is expected to continue to increase. In addition, subsequent shipments of power batteries are expected to continue to increase, leading to an increase in the operating rate, and the company's profitability is expected to continue to increase.
Investment advice: Considering the updated data in the three-quarter report, the profit forecast has been slightly adjusted. We expect the company's net profit for 2023-25 to be 11/24/3.1 billion yuan (previously 11/24/3.2 billion yuan), with a corresponding PE of 26/12/9 times, maintaining the “buy” rating.
Risk warning: Market competition intensifies, downstream demand recovery falls short of expectations, energy storage business development falls short of expectations, and research reports risks of not being updated in a timely manner using information data.