Incident: The company released its 2023 annual report. Net profit from 2023 was 15.127 billion yuan, down 28.86% year on year; net profit to mother was 1.92 billion yuan, down 14.80% year on year; after deducting non-net profit of 1,980 billion yuan, down 14.86% year on year. Looking at a single quarter, 23Q4 achieved revenue of 2,584 billion yuan, down 64.00% year on year, down 37.62% month on month; net profit to mother of 433 million yuan, down 23.56% year on year, net profit without return to mother 100 million yuan, down 49.38% year on year and 40.02% month on month. The results were in the median forecast and were in line with market expectations.
Profitability is industry-leading, and shipments remain stable. The company shipped about 62,700 tons of lithium battery cathodes in 23 years, with a net profit of about 310,000 yuan/ton per ton. It continues to lead the industry. The company has significant advantages in overseas customers, continues to further expand the business of North American car companies and major European cell customers, and continuously enhances its position in its supply chain. High nickel and ultra-high nickel products such as NCM811 continue to be rapidly released overseas, and are widely used in various power batteries, including 4680 large cylindrical batteries and square batteries. The company is expected to ship more than 70,000 tons of 3,000 yuan and lithium cobalate in 24 years, with an average net profit of about 17,000 yuan/ton per ton, and about 30,000 tons of lithium iron phosphate.
The industrialization of solid-state batteries accelerated, and the company shipped hundreds of tons. The industrialization of solid state batteries at home and abroad has accelerated. The company is at the forefront of the industry in commercializing solid state lithium battery cathode materials. Sales of ultra-high nickel products increased several times over the year, with cumulative shipments of hundreds of tons during the year, continuing to increase the supply share of solid state battery customers such as Huineng, Qingtao, Weilan New Energy, Ganfeng Lithium Battery, etc., and successfully used in solid state models of global first-tier car companies such as SAIC Motor Group and Vietnam VinFast. In terms of other cathodes, the company continues to maintain its lead. The sodium-electric cathode has been able to supply hundreds of tons to many customers at home and abroad, and high-capacity high-density lithium-manganese-based materials have been introduced and developed by high-end customers and continuously released, and 100 kg shipments have been achieved.
Investment advice: Considering the decline in the company's overseas market share, the company's net profit for 24-26 is expected to be 12.0/12.6/1.29 billion yuan (the original forecast for 24-25 was 24.0/2.85 billion yuan), up -37.8%/5.6%/2.1% year on year, corresponding PE is 17.8x/16.9x/16.5x. Considering that the company's profit level and solid state lithium battery cathode shipments are leading peers, maintaining a “buy” rating.
Risk warning: Overseas sales of new energy vehicles fell short of expectations, and raw material prices fluctuated greatly