The company released the 2023 annual report and the 2024 quarterly report, and achieved net profit of 535 million yuan for the full year of 2023; the company's profitability was under pressure in the short term, the customer structure was high-quality and stable, the global layout was continuously improved, and the long-term space was broad; and the rating for increasing holdings was maintained.

Key points to support ratings

Net profit of 535 million yuan in 2023: The company released its 2023 annual report, achieving full year operating income of 19.064 billion yuan, a year-on-year decrease of 11.76%; realized net profit of 535 million yuan, a year-on-year decrease of 61.29%; realized deducted non-net profit of 480 million yuan, a year-on-year decrease of 66.6%. According to the annual report calculation, 2023Q4 achieved net profit of 67 million yuan, a year-on-year decrease of 80.86% and a month-on-month decrease of 43.34%.

Net profit for the first quarter of 2024 was 30.46 million yuan: The company released the 2024 quarterly report. In 2024Q1, the company achieved net profit of 30.4633 million yuan, down 80.31% year on year; net profit after deducting non-return to mother of 27.0,187 million yuan, down 80.99% year on year; gross sales margin fell 4.24 percentage points year on year to 9.72%; net sales margin fell 2.83 percentage points year on year to 0.60% year on year.

High quality and stable customer structure: The company's battery foil customers cover major domestic energy storage and power battery manufacturers, including BYD, CATL, LG New Energy, Guoxuan Hi-Tech, Honeycomb Energy, China Airlines, etc.; the company leads the world in air conditioning foil production and sales, and customers cover domestic and foreign customers include Midea Group, Gree Group, Haier Group, etc., and foreign customers include Japan's Daikin Group and LG Group.

It was the first to complete an overseas layout, and there is plenty of room for growth: The company is the first domestic aluminum foil company to complete an overseas layout. Among them, the subsidiary European Light Alloy is located in Italy and focuses on the European packaging foil and battery foil markets.

The company has aluminum foil plants in Italy and Thailand. According to the company's annual report, Ningde Times has production capacity plans of 14 GWh in Germany and 100 GWh in Hungary in Europe. Through overseas layout, the company is expected to take the lead in supplying 114 GWh production capacity in Europe. Furthermore, the company has close cooperation with leading companies such as BYD and LG, which is expected to fully benefit from the high growth of overseas markets and increase its market share overseas and even the world.

valuations

Combined with the company's annual report and quarterly report, considering the intensification of market competition, we adjusted the company's predicted earnings per share for 2024-2026 to 0.49/0.69/0.88 yuan (the original forecast diluted earnings per share was 1.38/1.67/-yuan), corresponding to a price-earnings ratio of 23.1/16.3/12.8 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.