HNZK Electric.(SZ:300035) Changjiang Securities·2024-05-16 08:02Investment Rating - The investment rating for the company is "Buy" and is maintained [4]. Core Insights - In 2023, the company achieved operating revenue of 4.908 billion yuan, a year-on-year decrease of 6.64%. The net profit attributable to shareholders was 42 million yuan, down 88.55% year-on-year, and the net profit after deducting non-recurring items was 93 million yuan, a decrease of 79.67%. In Q1 2024, the company reported operating revenue of 1.066 billion yuan, an increase of 2.38% year-on-year, with a net profit of 24 million yuan, up 117.57% year-on-year, and a net profit after deducting non-recurring items of 33 million yuan, a growth of 124.31% [4][11]. Summary by Sections Business Performance - The company's anode material business achieved a shipment of 141,100 tons in 2023, representing a year-on-year increase of 23.84%. This growth was primarily due to an optimized customer structure, with major domestic clients including CATL, Yiwei Lithium Energy, and BYD, as well as overseas clients like SK and LG actively increasing their orders. The effective production capacity for anode materials in 2023 was 188,200 tons, with a capacity utilization rate of 76.24%. The company has 125,000 tons of capacity under construction, mainly at the Qujing and Gui'an bases [5]. Profitability - The gross margin for anode products was 12.84%, which saw a year-on-year decline due to high-cost raw materials purchased in the first half of 2023 that could not be timely digested. As the prices of end products decreased, the rising costs from raw materials and asset impairments negatively impacted the company's overall profitability for the year. In Q4 2023, the shipment of anode products is expected to increase quarter-on-quarter, with stable prices for anode products and a reduction in high-cost impacts as the high-cost inventory is digested [5][14]. Future Outlook - Looking ahead to Q2 2024 and the full year, the company expects a continued recovery in production rates since the end of March, with full production and sales anticipated in Q2. The company is focused on strengthening relationships with existing domestic and international clients while actively pursuing new customer certifications. The demand for fast-charging models is expected to drive growth in orders from major clients, leading to sustained high capacity utilization [14].