performance

The company released its 2024 semi-annual report. 2024H1 achieved operating income of 6.888 billion yuan, realized net profit of 0.01 billion yuan, -97.29% year over year, and realized deduction of non-net profit of -0.004 billion yuan; split into the second quarter, the company achieved operating income of 3.196 billion yuan, -29.39% year-on-year, and realized attributable net profit of 0.048 billion yuan, turning loss into profit month-on-month, achieving deduction of 0.035 non-net profit billion yuan.

The market share is stable, and the 9 series ultra-high nickel is shipped on a large scale to speed up the construction of overseas production capacity

The company sold 0.053 million tons of ternary cathode materials in the first half of the year, an increase of nearly 17% over the previous year. The market share in the global ternary cathode field reached 11%, ranking first. Among them, Q2 sold 0.0265 million tons of ternary cathode materials in Q2, a year-on-year increase of 37.4%, far exceeding the industry's growth rate. During the reporting period, the company's domestic market share of high-nickel ternary cathode materials was nearly 40%, an increase of 5 percentage points over the previous year, and its leading position in the industry was further consolidated. In the first half of 2024, with the large-scale application of high-energy density batteries such as Kirin batteries, large cylindrical batteries, and solid-state batteries, the company's technical advantages in the fields of high nickel and ultra-high nickel were further consolidated. During the reporting period, the company's 9 series ultra-high nickel products have achieved large-scale mass production and stable supply, with a cumulative sales volume of 0.012 million tons, accounting for nearly 25%. In terms of production capacity, the overall plan for the Korean plant is 0.1 million tons/year of ternary material production capacity and 20,000 tons/year of phosphate production capacity, with a propeller production capacity of 0.08 million tons/year. Among them, construction of the first phase of 0.02 million tons/year of ternary material production capacity has been completed, and production continues to increase steadily; the second phase is over half of the construction process of 0.04 million tons/year. After completion, the production line is expected to become the largest production line in Korea, and construction is expected to be completed by the end of 2024.

Investment advice

Considering the intensification of competition in the industry, we lowered our profit forecast for 2024-2026. We expect the company's net profit to be 0.194/0.508/0.699 billion yuan in 2024-2026 (the original forecast was 0.514/0.88/1.251 billion yuan), corresponding to 57, 22, and 16 times PE, maintaining a “buy” rating.

Risk warning

Demand for new energy vehicles fell short of expectations; downstream market growth fell short of expectations; raw material prices rose sharply; industry competition intensified; customer expansion fell short of expectations, etc.