Hunan Changyuan Lico (688779) 华创证券·2024-09-06 15:37Investment Rating - The report downgrades the investment rating of Wukuang New Energy (688779) to "Recommend" [1] Core Views - Wukuang New Energy's revenue for H1 2024 was 2.507 billion yuan, a year-on-year decrease of 48.73% [1] - Net profit attributable to the parent company was -66 million yuan, a year-on-year decrease of 202.2% [1] - In Q2 2024, revenue was 1.419 billion yuan, a quarter-on-quarter increase of 30.48%, but net profit attributable to the parent company was -69 million yuan, a quarter-on-quarter decrease of 2265.54% [1] - Excluding the impact of tax arrears and late fees, the adjusted net profit attributable to the parent company in Q2 2024 was approximately 15 million yuan [1] - The company has made significant technological breakthroughs in high-voltage, high-nickel, and lithium iron phosphate (LFP) materials, with several products nearing mass production [1] - The company is expanding its global presence, with a 50% quarter-on-quarter increase in cathode material shipments in Q2 2024, reaching 15,000 tons [1] - The company has established partnerships with international clients, including Toyota PPES, and is expanding its LFP product customer base [1] Financial Performance - Revenue for 2024E is projected to be 6.422 billion yuan, a year-on-year decrease of 40.1% [2] - Net profit attributable to the parent company for 2024E is projected to be -80 million yuan, with a year-on-year increase of 35.5% [2] - The company's gross margin is expected to improve from 4.4% in 2023A to 7.5% in 2024E [5] - The company's net profit margin is expected to remain negative at -1.2% in 2024E, but improve to 3.2% by 2025E [5] Technological Advancements - The company has developed 4.4V high-voltage fast-charging battery products, which are nearing mass production [1] - High-nickel materials have been optimized to reduce costs and enhance market competitiveness [1] - The company has achieved small-scale production of ultra-high-nickel materials and has passed tests with several high-end clients [1] - New LFP products for power and energy storage applications have been developed and are in mass production [1] - The company has also made progress in sodium-ion battery materials, with the first-generation sodium-ion cathode material entering mass production [1] Global Expansion - The company is steadily expanding its global footprint, with a focus on the new energy materials market [1] - It is advancing its collaboration with French company Axens and has secured stable mass production orders from Toyota PPES [1] - The company is also forming joint ventures in China for battery recycling and resource utilization [1] Future Outlook - The company is expected to face short-term pressure due to competition and price fluctuations in ternary cathode materials [1] - However, its technological breakthroughs and global expansion are expected to drive long-term growth [1] - The projected net profit attributable to the parent company for 2024-2026 is -80 million yuan, 268 million yuan, and 370 million yuan, respectively [1] - The current market valuation corresponds to a PE ratio of -109x for 2024E, 33x for 2025E, and 24x for 2026E [1]