LK(SH:600388) Soochow Securities·2024-03-26 16:00Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected relative price increase of over 15% compared to the benchmark in the next six months [11][31]. Core Insights - The company reported a slight decline in performance for 2023, with operating revenue of 10.973 billion yuan, down 7.64% year-on-year, and a net profit attributable to shareholders of 509 million yuan, down 36.74% year-on-year. This decline was primarily due to goodwill impairment and costs associated with new energy projects under construction [22][31]. - The company is expected to see a reversal in performance as new projects come online, particularly the 5GWh lithium iron phosphate battery production capacity set to start operations in January 2024 [22][31]. - The company has a robust order backlog in the environmental protection sector, with new contracts signed amounting to 10.287 billion yuan in 2023, reflecting a 5.11% increase [31][37]. Summary by Sections Financial Performance - The company achieved an operating revenue of 10.973 billion yuan in 2023, a decrease of 7.64% year-on-year, and a net profit of 509 million yuan, down 36.74% year-on-year. The gross profit margin was 23.68%, an increase of 0.28 percentage points [34][31]. - The company’s operating cash flow significantly improved, reaching 1.706 billion yuan, a 104.44% increase, indicating better cash collection from operations [31][55]. Project Developments - The company is accelerating the construction of renewable energy projects, including several photovoltaic and wind power projects expected to commence operations in 2024 [31][38]. - The company has signed contracts for energy storage systems and equipment totaling 1.56 billion yuan, marking a significant breakthrough in its energy storage business [31][38]. Market Position and Strategy - The company is positioned as a key player in the renewable energy sector, with a focus on integrating its operations with Zijin Mining, which is expanding its renewable energy capacity [31][45]. - The report highlights the potential for significant returns from self-consumed renewable energy projects, estimating an internal rate of return (IRR) of up to 12% for projects with a 70% self-consumption rate [28][42].