Hot market profits are under pressure, waiting for new business to expand
The company achieved revenue of 1,072 billion yuan in '23, a year-on-year decrease of 26.11%; realized net profit to mother of 202 million yuan, a year-on-year decrease of 63.27%. 1Q24 achieved revenue of 202 million yuan, a year-on-year decline of 33.09; a month-on-month increase of 4.12%; net profit loss to mother was 55 million yuan, narrowing the month-on-month loss margin. Due to intense competition in hot field prices, the company's performance was under year-on-year pressure. We lowered the company's 24-26 EPS to 1.73/2.69/3.28 (24-25 years ago value: 5.95/7.67), which is comparable to the company's 24-year Wind consensus PE of 23.86 times. Considering the company's leading position in the photovoltaic thermal field and the company's lithium-ion anode thermal field and carbon ceramic brake discs are expected to begin to penetrate faster, the company was given 25 times PE in 24 years, corresponding to a target price of 43.25 yuan, maintaining a “buy” rating.
Hot market price competition is fierce, and profitability is under pressure
The company achieved hot market sales volume of 3371.68 tons in '23, up 35.91% year on year; the unit price for hot market was 294,000 yuan/ton, down 49.57% year on year; judging from gross sales margin, the company's gross sales margin for Q1-Q4 in '23 was 36.01%/26.77%/-0.35%, respectively, with a gross sales margin of 27.39% (year-on-year decline -20.41pct), and profitability was clearly under pressure. At the current price, most hot market companies are in a state of loss. We judge that the hot market price has reached the bottom range. The company reduced costs through various means such as shortening deposition time and reducing electricity consumption per ton of carbon fiber, and the overall gross margin picked up. 1Q24's gross sales margin was 5.56%, an increase of 5.91 pcts over the previous month.
Lithium battery business products have been mass-produced. The supply chain company, which has entered the leading manufacturer, has successfully developed and mass-produced components such as carbon/carbon boxes, crucibles, boxes, columns, etc., mainly used in the preparation process of lithium positive/negative electrode materials, and has also been used in the company's first phase 50,000 ton lithium battery anode integrated demonstration line project. The project has been put into operation, and its foundry lithium battery anode material toner has been successfully introduced to leading downstream anode material manufacturers. Since the carbon/carbon heat field developed by the company helps improve capacity utilization and yield, while improving equipment service life and power consumption, which helps reduce costs and efficiency, we expect lithium batteries to replicate the photovoltaic thermal field material replacement path in the future.
The brake disc and hydrogen energy business are waiting to be released
In addition to the fields of photovoltaics and lithium batteries, the company has achieved batch production of high-performance carbon/ceramic-coated brake discs. At present, the company has an annual production capacity of 400,000 carbon/ceramic brake discs, and has also carried out cooperative R&D and trial production with many car companies. Among them, long-fiber carbon/ceramic brake disc series products have been supplied in batches. In the field of hydrogen energy: 1) The company's 100,000 square sheet carbon paper production line has been completed and has been manufactured in batches, and has been introduced to leading domestic electric stack companies; 2) the 300,000 flat roll-to-roll carbon paper production line has entered the equipment installation and commissioning stage; 3) the hydrogen production project has entered the final stage of construction.
Risk warning: Risk of rising raw material prices, risk of falling product prices due to increased industry competition, and risk of new business development falling short of expectations.