The company released its 2023 annual report, and achieved net profit of 1.924 billion yuan for the whole year, a year-on-year decrease of 14.80%, in line with expectations; the company's new cathode materials are expected to accelerate release and maintain an increase in holdings rating.
Key points to support ratings
Net profit attributable to mother in 2023 decreased by 14.80% year on year: the company released the 2023 annual report, achieving full year revenue of 15.127 billion yuan, a year-on-year decrease of 28.86%; realized profit of 1.924 billion yuan, a year-on-year decrease of 14.80%; deducted non-profit of 1,980 billion yuan, a year-on-year decrease of 14.86%. According to the company's performance calculation, 2023Q4 achieved profit of 433 million yuan, a year-on-year decrease of 44.56% and a year-on-month decrease of 23.56%; after deducting non-profit, 343 million yuan, a year-on-year decrease of 49.38% and a decrease of 40.02% month-on-month. The company previously released a performance forecast. It is expected to achieve profit of 1,850 to 200 billion yuan in 2023, and the company's performance is in line with expectations.
Shipments have remained flat, and profits have remained stable: As a leading global lithium battery cathode material company, the company has a diversified product layout, and production and sales are basically flat against the backdrop of increased competition in the industry. In 2023, the company achieved production of lithium battery materials of 60,800 tons, a year-on-year decrease of 6.08%, and sales volume of 62,700 tons, a year-on-year decrease of 1.19%; the lithium battery materials business achieved revenue of 14.99 billion yuan, a year-on-year decrease of 28.94%, and a gross profit margin of 17.89%, an increase of 0.67 percentage points over the previous year. In addition, the company's profit remained stable, with diversified materials achieving revenue of 13.847 billion yuan, a year-on-year decrease of 27.34% and a gross profit margin of 19.08%, an increase of 0.81 percentage points; lithium cobalate achieved revenue of 632 million yuan, a year-on-year decrease of 16.55%, gross profit margin of 2.71%, a year-on-year decrease of 6.42 percentage points; and lithium iron phosphate (manganese) and sodium cathode materials achieved revenue of 126 million yuan and a gross profit margin of 1.05%.
New products are expected to be released: The company continues to launch a variety of new cathode materials with advanced technology and excellent performance; launched a variety of lithium phosphate (manganese) iron materials for the electric vehicle and energy storage market, successfully introduced key customers to achieve mass sales; independently developed various advanced cathode materials such as solid lithium batteries, ultra-high nickel polymorphic, cobalt-free, and novel lithium-rich manganese-based materials. The company continues to accelerate technological iteration and transformation of results for new products, and is expected to expand in the future, forming new business growth points.
valuations
In line with the company's announcement and increasingly fierce industry competition, we adjusted the company's 2024-2026 earnings forecast to 2.50/2.77/2.97 yuan (the original forecast for 2024-2026 was 4.43/5.13/- yuan), corresponding to a price-earnings ratio of 16.9/15.2/14.2 times; maintaining an increase in holdings rating.
The main risks faced by ratings
Demand in the industrial chain fell short of expectations; raw material prices fluctuated unfavourably; NEV industry policies fell short of expectations; NEV products fell short of expectations.