Guangzhou Tinci Materials Technology (002709.SZ) semi-annual report released: Under industry pressure, product sales continue to grow, "integration" + "internationalization" strategy solidifies leading advantages.

On the evening of August 27, Guangzhou Tinci Materials Technology, a leading domestic electrolyte company (002709.SZ), announced its financial results for the first half of 2024. The report shows that Guangzhou Tinci Materials Technology achieved revenue of 5.45 billion yuan in the first half of 2024, a year-on-year decrease of 31.76%; net profit of 237 million yuan, a year-on-year decrease of 81.56%, with a net cash flow of 364 million yuan. In the first half of this year, the lithium battery materials industry faced pressure as product prices declined due to fluctuations in raw material prices and insufficient downstream demand. During the reporting period, Guangzhou Tinci Materials Technology continued to adhere to its core development strategy of "integration" and "internationalization", steadily promoting the increase in the proportion of self-supply of core raw materials and the progress of overseas production capacity construction. The company also gradually advanced and implemented plans to turn around loss-making businesses, maintaining good competitiveness in core products with increasing sales volumes. In addition, the company actively expanded into new materials business to increase profits, further highlighting its product competitiveness and maintaining a leading position in gross profit margin. The integration layout solidified product competitiveness, with the proportion of self-supplied core materials steadily increasing In the first half of 2024, the electrolyte industry was still in a downturn, with companies, except for the leading ones, generally facing pressure at the bottom of the profit cycle and fierce competition. In the current market environment, Guangzhou Tinci Materials Technology, with its integrated and horizontally coordinated business layout, continued to maintain a high self-supply ratio of core raw materials, while expanding its new materials business to increase profits. Despite the industry's overall pressure, the company still maintains good product competitiveness and a leading gross profit margin. For lithium-ion battery materials, the company achieved revenue of 4.73 billion yuan in the first half of the year, with a gross profit margin of 17.11%. During the first half of the year, the company focused on integrating the supply chain of battery basic materials and additives, as well as cost reduction measures for key materials such as LIODFB. It steadily increased the proportion of self-supplied core raw materials, further reducing product costs. By the end of the reporting period, the self-supply ratio of core raw materials such as lithium hexafluorophosphate and LiFSI had exceeded 97%, an increase of nearly 5 percentage points. Regarding positive electrode materials business, the company focused on the commissioning of the 300,000-ton iron phosphate project (Phase I) production line, reducing the cost of iron phosphate by improving product quality stability and production capacity utilization. Thanks to the increase in volume from major customers and the improvement in product stability, the company achieved a 67% year-on-year increase in sales volume of iron phosphate products, leading to a 21% year-on-year increase in sales income. With the continuous increase in output of iron phosphate products, it is expected to further promote the company's horizontal layout of positive electrode materials. Strategic cooperation steadily increases market share, accelerating overseas expansion to build a foundation for future development In the face of cyclical challenges in the lithium battery materials industry, Guangzhou Tinci Materials Technology has signed strategic cooperation agreements with top customers to ensure stable market share. The company has adjusted its sales strategy for lithium-ion battery materials, promoting the external sales of core raw materials such as lithium hexafluorophosphate and LiFSI to optimize production capacity utilization. Currently, Guangzhou Tinci Materials Technology has accelerated the development of its overseas business, with multiple overseas designated projects entering the pilot stage smoothly, and the construction of overseas factories proceeding in an orderly manner. In addition, the company is actively advancing multiple international projects in North America and Morocco to expand its business and market competitiveness globally. Furthermore, the company plans to set up a sample room in North America to meet customer sample delivery needs, further enhancing the efficiency and service quality of new projects. GF SEC believes that the industrialization and scale of new lithium salt LiFSI will promote technological breakthroughs in fast-charging systems, accelerating global electrification and opening up long-term growth space for electrolytes and their lithium salts. In the future, with the opening of a new paradigm for China-Europe and China-US cooperation, the marginal demand for lithium hexafluorophosphate will focus on a few companies including Guangzhou Tinci Materials Technology, and the pricing power of lithium hexafluorophosphate and its downstream electrolytes will quickly return to leading companies, driving concentration and profitability enhancement simultaneously. The Matthew effect at the bottom of the cycle continues, and core competitiveness continues to improve Regarding the current market situation of electrolytes, Orient believes that the current downward price cycle of electrolytes has lasted for more than 2 years, with the industry's profit level at historical lows. Due to the imbalance of supply and demand caused by the release of new capacity and the decline in lithium carbonate prices, the price of lithium hexafluorophosphate is currently at historical lows, approaching the cost line of the third largest company in the industry, leading to continued losses for other manufacturers. As electrolyte prices decline, low-end capacity in the industry is accelerating out of the market, while leading companies are seizing the market due to their outstanding production scale. The Matthew effect in the electrolyte industry is further evident. According to GF SEC estimates, the industry gap between supply and demand for lithium hexafluorophosphate is expected to narrow to 75% and 8% in 2024-2025. The continued low-price transactions in 2024 will accelerate the clearance of low-end capacity in the industry, and the continuous growth in end demand will drive the steady recovery of profits in the electrolyte sector and rapid concentration enhancement. As an industry leader with the largest global capacity for LiFSI, Guangzhou Tinci Materials Technology is expected to further gain the initiative in the current market environment, maintain close cooperation with downstream customers due to its scale and cost advantages, and steadily increase market share while maintaining profitability. With high certainty of growth in the current overseas new energy vehicle market and the prospect of a balanced supply in the domestic new energy market, Guangzhou Tinci Materials Technology is expected to continue to excel in the future.Further release of profit potential under the market and product advantages, returning to the path of high-quality growth."Bonjour, comment a va?"