GOTION(SZ:002074)2025-09-03 01:22Summary of Gotion High-Tech Co. (002074.SZ) Conference Call Company Overview - Company: Gotion High-Tech Co. (002074.SZ) - Market Cap: Rmb69.4 billion / $9.7 billion - Enterprise Value: Rmb89.0 billion / $12.5 billion - Target Price: Rmb45.40 (up from Rmb28.80) with a current price of Rmb40.12, indicating an upside of 13.2% [1][20] Financial Performance - 2Q25 Results: - Net Profit: Rmb266 million, +32% YoY, +164% QoQ, but below estimates by 31% (or ~Rmb120 million) [1] - Gross Profit: Rmb1.5 billion, -7% YoY, -8% QoQ, below estimates by 3% [1] - Revenue: Rmb10.3 billion, +11% YoY, +14% QoQ, above estimates by 17% [1] - Sales Volume: ~22 GWh, +47% YoY, +22% QoQ, beating estimates by 25% [1] Key Insights - Earnings Miss: Attributed to an unexpected asset impairment of Rmb154 million related to lithium price corrections [1] - Unit Gross Profit (GP): Estimated at ~Rmb62/kWh in 2Q25, below estimates of ~Rmb78/kWh and down from Rmb84/kWh in 1Q25 due to: - Stronger-than-expected US tariff impacts hindering exports [2] - Industry-wide GP decline due to price competition [2] - Unit depreciation, depletion, and amortization (DD&A) inflation from new capacity ramp-up [2] - OPEX Efficiency: Improved OPEX efficiency at 11% of revenue, significantly below earlier estimates of 15% [2] - Consistent decline in OPEX ratio from 14% in 4Q24 to 11% in 2Q25 [2] - OPEX improvements expected to sustain due to stronger volume growth [2] Future Projections - Revenue Forecasts: - 2025E: Rmb44.14 billion (up from Rmb40.42 billion) - 2026E: Rmb54.91 billion (up from Rmb48.43 billion) - 2027E: Rmb58.71 billion (up from Rmb56.36 billion) [4][39] - Earnings Per Share (EPS): - 2025E: Rmb0.86 - 2026E: Rmb2.24 - 2027E: Rmb2.36 [4][39] Risks and Challenges - Volume Growth: Slower-than-expected volume growth could lead to a 4%/2%/3% earnings downside in 2025E-2027E for every 1% volume miss [21] - Market Competition: Potential share loss with major OEMs could undermine revenue and earnings forecasts [21] - Price Competition: Stronger-than-expected price competition could significantly impact earnings, with a Rmb10/kWh GP decline potentially lowering earnings by ~60% in 2025E and ~30% in 2026E [21] Subsidy Insights - Government Subsidies: Major swing factor for earnings, with updated forecasts reflecting CAPEX-based subsidies from China and production-based subsidies from the US [26] - Total subsidies expected to peak in 2026E, representing 58%/25%/7% of net profit for 2025-2027E [28] Conclusion - Investment Rating: Maintain Buy rating with a revised target price reflecting strong volume trends and operational efficiency improvements [20]