GOTION(SZ:002074)2025-09-07 16:19Summary 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 a 13.2% upside [1][20] Financial Performance - 2Q25 Results: - Net Profit: Rmb266 million, +32% YoY, +164% QoQ, but missed estimates by 31% (approximately 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, exceeding estimates by 17% [1] - Sales Volume: ~22 GWh, +47% YoY, +22% QoQ, beating estimates by 25% [1] Key Insights - Earnings Miss: The earnings miss was attributed to an unexpected asset impairment of Rmb154 million linked 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: OPEX was 11% of revenue, significantly below the earlier estimate of 15%, indicating improved efficiency supported by volume growth [2] Future Outlook - OPEX Projections: OPEX assumptions for 2025-27E have been lowered to 11% from 13%, with each 1% decline in OPEX ratio expected to lead to net profit expansions of 29%/14%/13% in 2025-2027E [18] - Earnings Revisions: 2026-27E earnings raised by 45% and 16% respectively, mainly due to OPEX savings and higher volume assumptions [19] - Target Price Increase: The target price was raised to Rmb45.4 based on a near- and long-term valuation approach [20] Risks - Volume Growth: Slower-than-expected volume growth could lead to earnings downside of 4%/2%/3% in 2025E-2027E for every 1% miss [21] - Market Competition: Loss of market share 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 approximately 60% in 2025E and 30% in 2026E [21] Subsidy Insights - Government Subsidies: Expected to peak in 2026E, with total subsidies representing 58%/25%/7% of net profit for 2025-2027E [28] - China CAPEX Related Subsidies: Increased estimates for 2025E-26E from Rmb655 million/Rmb595 million to Rmb896 million/Rmb1,017 million [28] Conclusion - Gotion High-Tech Co. shows strong sales volume growth and improved OPEX efficiency, although it faces challenges from market competition and price pressures. The revised target price reflects a positive outlook based on operational improvements and expected subsidy support.