Incident: Camel shares released its 2024 quarterly report. The 24Q1 company achieved revenue of 3.45 billion yuan, +5% year-on-year; net profit after deducting non-attributable net profit of 168 million yuan, +35% year-on-year. Previously, in 2023, the company achieved revenue of 14.1 billion yuan, +5% year-on-year, net profit of 535 million yuan after deducting non-attributable net profit of 535 million yuan, or +4% year-on-year. Camel's 24Q1 gross profit margin was 17.28%, net profit margin after deduction was 4.86%, and ROE after deduction was 1.67%. Previously, for the full year of 2023, the company's gross profit margin was 15.05%, net profit margin after deduction was 3.8%, and ROE after deduction was 6.28%. Judging from gross margin and net profit margin, the company's 24Q1 profitability increased compared to the full year of 2023.
Camel Co., Ltd. is a leading company for low-voltage lead-acid batteries. In 2023, the company achieved continued growth in sales of automotive low-voltage lead-acid batteries, and its market share increased steadily. Low-voltage lead-acid batteries sold a total of 34.6 million KVAH in 2023, up 7.45% year on year. Among them, sales of auxiliary batteries for new energy vehicles increased by nearly 45% year on year.
We believe that the low-voltage lead-acid battery market has entered a stage of value growth, the market space is steadily increasing, and there are few new entrants. In terms of the maintenance and replacement market, with the continuous increase in the number of cars owned in China and the degree of vehicle electronization, the market places higher demands on product quality and service response. At the same time, passenger car start-stop batteries have entered a centralized replacement cycle, and installing parking air conditioning batteries in commercial vehicles has become the choice of more and more car owners. However, low-voltage lead-acid batteries involve fields such as lead recycling, and the threshold is high. We believe that as a leading enterprise in the industry, Camel Co., Ltd. is expected to continue to consolidate its advantages and achieve definitive growth.
Low-voltage lithium batteries are booming. Some new energy models around the world already use 12V lithium batteries as auxiliary batteries. As energy saving and emission reduction and environmental standards become stricter, 24V lithium parking air conditioning batteries and 48V lithium batteries are used in medium and large commercial vehicles and passenger vehicles respectively. Camel Co., Ltd. completed a total of 35 designated projects in 2023. In order to guarantee future product delivery capacity and market demand, the company's new energy low carbon industrial park project began construction in July 2023. It is expected that equipment and production line commissioning work will be carried out by the end of 2024.
There is great potential for dividends. The 2023 annual report of Camel Co., Ltd. suggests a dividend of 0.27 yuan per share, a dividend payment rate of 55.34%, and steady dividends. The closing price on May 17, 2024 corresponds to a static dividend rate of about 3.2%. We speculate that lead-acid batteries, as a mature industry, do not need much CAPEX anymore, and camel shares have strong dividend potential.
We believe that the value and growth of Camel shares are equal. We expect revenue to reach 152/159/16.7 billion yuan in 2024/25/26, net profit to mother of 8/8.9/970 million yuan, corresponding EPS of 0.69/0.76/0.83 yuan. The company's closing stock price on May 17, 2024 corresponds to 12/11/10x PE. Referring to comparable companies, the company was given 14-16x PE in 2024, with a corresponding reasonable value range of 9.6-10.97 yuan. Maintain an “better than the market” rating.
Risk warning: Economic growth falls short of expectations, and raw material prices have risen sharply.