Incident: The company released its 2023 annual report. In 23, it achieved revenue of 34.273 billion yuan, a year-on-year increase of 12.95%, and realized net profit to mother of 1.947 billion yuan, an increase of 26.15% over the previous year, and realized deducted non-net profit of 1,587 billion yuan, an increase of 43.13% over the previous year. 24Q1 achieved net profit of 379 million yuan, up 11.2% year on year and down 32.3% month on month; net profit without return to mother was 340 million yuan, up 34.6% year on year and down 25.4% month on month. The results are in line with market expectations.

The market share remains number one, and profit per ton continues to grow. The total sales volume of the company's current battery material system (nickel, cobalt, phosphorus, sodium) products in '23 exceeded 270,000 tons, an increase of 26% over the previous year. According to Xinyi information data, the company's three-phase precursor market share was 27% in 2023, continuing to rank first in the industry. Among them, high-grade products (8 series and above) shipped more than 130,000 tons, and the high-end product structure continued to be optimized. We expect the company's non-net profit per ton to be about 0.66 million yuan/ton in 23, an increase of more than 10% over the previous year. In 2014, Q1 achieved shipments of more than 60,000 tons of battery material systems (nickel, cobalt, phosphorus, sodium) products and continued to lead the industry. The net profit of a single ton withheld fell to 0.57 million yuan/ton due to minority shareholding and an increase in domestic shipments. Growth is expected to resume with the release of nickel production capacity in Indonesia.

Indonesia's nickel project continued to be released in 24 years, and the self-supply ratio increased dramatically. At the end of 2023, the company built nearly 400,000 tons/year of triple precursor production capacity, 25,000 tons/year of cobalt tetroxide production capacity, and 200,000 tons/year of iron phosphate production capacity. The company's nickel resources under construction and refining terminal construction capacity reached 195,000 metal tons. Among them, the company's 55,000-ton nickel-iron project in Feicui Bay, Indonesia was in full operation at 24Q1, and the oxygen-rich side blowing project progressed smoothly. It is expected that the self-supply ratio of high ice nickel will increase to about 30% in 24 years, and all will achieve a 100% self-supply rate after delivery. Meanwhile, overseas bases in South Korea and Morocco are progressing smoothly, and they have maintained their lead in going overseas.

Investment advice: Considering the slowdown in overseas three-yuan demand, we lowered the company's 24-25 performance forecast. The company's net profit for 24-26 is 22.5/25.1/2.92 billion yuan (the original forecast for 24-25 was 24.2/3.06 billion yuan), an increase of 15.3%/11.8%/16.4% year-on-year, corresponding PE is 15.2x/13.6x/11.7x. The company is the leader of the three precursors, and overseas customers account for a high proportion of overseas customers, maintaining a “buy” rating.

Risk warning: raw material prices fluctuate, downstream demand falls short of expectations, overseas project progress falls short of expectations