Negative Electrode Material Prices Decline, Yet Zhongke Electric Achieves Counter-Trend Growth; Net Profit Expected to Increase More Than Fivefold in 2024

In 2024, the overall price of anode materials will continue to show a downward trend. However, Zhongke Electric (300035.SZ) achieved counter-trend growth, with its net profit expected to increase more than fivefold in 2024.

Zhongke Electric released its 2024 annual performance forecast, estimating a net profit attributable to shareholders of publicly listed firms at 288 million-325 million yuan, up 590%-680% YoY. In Q1, Q2, and Q3 of 2024, Zhongke Electric's net profits were 23.7675 million yuan, 45.4925 million yuan, and 114 million yuan, respectively. Based on these figures, the company's Q4 net profit is calculated to be 105 million-142 million yuan.

In its announcement, Zhongke Electric stated that during the reporting period, the demand for its lithium-ion battery anode materials significantly increased compared to the previous year, driven by the rising penetration rate of NEVs, especially fast-charging car models, and the rapid development of the ESS market. Additionally, the company implemented a series of cost-reduction and efficiency-enhancement measures in 2024, which improved its profitability.

According to Zhongke Electric's disclosure during its 2024 investor communication activities, downstream customers showed strong demand for its anode materials, and the company's capacity utilisation rate remained at a high level in 2024. The first graphitisation production line equipped with a new generation of "fully automated intelligent graphitisation furnaces" further improved the company's self-sufficiency in graphitisation.

In 2023, Zhongke Electric's performance hit its lowest point in nearly five years, with a profit of only 41.7062 million yuan. Its 2024 performance can be described as a "comeback."

From the performance of anode material companies in the first three quarters, a clear divergence was observed. Net profits of Putailai (603659.SH), Shanshan Corporation (600884.SH), and Xiangfenghua (300890.SZ) showed a YoY decline, while Shangtai Technology (001301.SZ) and Zhongke Electric demonstrated YoY growth, with Zhongke Electric turning losses into profits.

In terms of industry prices, the price of anode materials in 2024 continued to decline and hovered at low levels. According to Choice industry price data, the price of low-end artificial graphite dropped from 21,000 yuan/mt to 16,500 yuan/mt, a decrease of 21.43%.

According to several industry insiders interviewed by a reporter from CLS, although anode material prices remain at low levels and industry enterprises face profit pressure, the demand for anode materials in 2024 has increased YoY. Many top-tier enterprises maintained high capacity utilisation rates, and recently, some battery enterprises' anode material tenders failed due to low prices, reflecting strong sentiment to stand firm on quotes among anode material enterprises.