Qunyi**(Hong Kong)**Fei Qianran recently conducted research on Tianci Materials and released a research report "Supply and Demand Pattern Loose, Performance Declines Year-on-Year", this report gives a hold rating to Tianci Materials, and believes that its target price is 2100 yuan, the current stock price is 1948 yuan, the expected range is 78%。
God-given material (002709).
Event: The company released its 2023 performance report, and the annual revenue is expected to be 1550.6 billion yuan, yoy-31%, net profit attributable to the parent company of 190.8 billion yuan, yoy-6661%, which is in the median of the earnings forecast, in line with expectations. Among them, Q4 is expected to achieve revenue of 33 in a single quarter8.2 billion yuan, YOY-43%, QOQ-18%, net profit attributable to the parent company 15.6 billion yuan, YOY -88%, QOQ -66%.
Conclusions and Recommendations:
In 2023, the production capacity of the lithium battery industry chain will expand rapidly, and the superimposed raw materials** will be greatly reduced, and the profitability will decline as a whole. The company's main product electrolyte volume increase and decrease, cathode precursor iron phosphate is expected to lose, and the company's annual profit decreased significantly year-on-year due to the asset impairment loss of raw materials and products. At present, the electrolyte is at the bottom of the profit range, and it is expected that the supply and demand pattern will remain loose in 2024. As a leading enterprise in the industry, the company has a complete layout of the whole industrial chain, and its profitability is at a high level in the industry, waiting for the optimization of the overall supply and demand pattern of the industry. At present, the company's valuation is reasonable, and it maintains a "range operation" rating.
The decline in product ** will affect the company's profit performance: In 2023, the lithium battery industry chain will decline significantly, and the company's main product electrolyte will be 560,000 tons to 2 at the end of the year250,000 tons, a decrease of 62%, the key electrolyte lithium hexafluorophosphate** from 2420,000 tons to 640,000 tons, a decrease of 73%; The cathode material precursor iron phosphate ** from 220,000 tons to 110,000 tons, a decrease of 50%, the decline in the main products affected the company's profits. In terms of sales volume, we expect the company's annual electrolyte shipments to be about 400,000 tons, YOY+25%, and the overall growth is stable. In addition, affected by the decline in the price of raw materials and products, the company's lithium carbonate and cathode material iron phosphate inventory decline provisions have increased, which further lowered the company's profitability.
Earnings bottomed out, and single-quarter performance was under pressure: The company's Q4 performance decreased significantly from the previous quarter, mainly due to the decline in electrolyte ** and the impact of asset impairment losses. The average price of electrolyte in Q4 was 2280,000 tons, QOQ-29%, the average price of lithium hexafluorophosphate is 8470,000 tons, QOQ-34%. We expect Q4 companies to ship 110,000 tons of electrolyte, a slight decrease from the previous month. Q4: The volume and price of electrolyte, the company's main product, showed a month-on-month decline. In the cathode precursor section, 300,000 tons of iron phosphate production capacity is still being released, the cost is not advantageous, and the iron phosphate ** is declining, and the section is expected to lose money. In addition, the company made provision for impairment losses on lithium carbonate and cathode material assets at the end of the year, which lowered the single-quarter performance. At present, the profitability of electrolyte is at the bottom range, and some production capacity in the industry is already in a state of loss, and there is little room for further decline in profits.
Loose supply pattern, waiting for the industry to recover: In the past two years, electrolyte production capacity has grown rapidly, and according to EVTANK, China's electrolyte shipments will reach 113 in 202380,000 tons, yoy+277%, the company's domestic market share reached 347%, down from 2022. In 2024, there is still a large amount of electrolyte capacity planning and construction, and the current electrolyte production capacity is in a state of surplus, and the situation of oversupply is difficult to change in a short time. The company has no major new production capacity plans in the next few years, and has overseas layouts in North America, Morocco and Europe. The company has a high proportion of hexafluoro-self-supply, and has laid out lithium bisfluorosulfonimide production capacity in advance, and the proportion of high-margin products has increased. We expect the electrolyte** to remain at the bottom in 2024, but considering that the electrolyte** is at a high level in the first half of 2023, which has raised the average price of the whole year, it is expected that the average price of electrolyte in 2024 will be similar to that in Q4 of 2023, and the company's overall gross profit level is expected to decline at about 20,000 yuan. In the cathode precursor sector, the supply and demand of the iron phosphate industry are also in a relaxed state, but after the company's production capacity climbs, the unit cost is expected to decline, and we expect the company's loss in this sector to decrease.
Profit**: Considering the loose supply pattern of the lithium battery industry, we revised down the profit** and added the 2025 profit**, and it is expected that the company will achieve a net profit of 19 in 2023, 2024 and 20251/13.3/16.0 billion yuan (previous value 29..)2/44.600 million yuan), YOY -67% -31% +21%, equivalent to EPS of 099/0.69/0.83 yuan, the current PE corresponding to the A-share share price is 20 29 24 times, the valuation is reasonable, and the "range operation" rating is maintained.
Risk Warning: 1. The company's products are less than expected; 2. The progress of the project under construction is not as expected.
*According to the calculation of the research report data released in the past three years, the research team of Wu Hao of Cinda has conducted in-depth research on the stock, and the average accuracy of the past three years is as high as 9295%, and its **2023 attributable net profit is 33200 million, and the **pe converted according to the current price is 113。
The latest profit** breakdown is as follows:
A total of 9 institutions have rated the stock in the last 90 days, 7 have ** rated and 2 have overweight ratings; The average institutional price target over the last 90 days is 5776。
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