the consumer electronics market has recovered, and Zhuhai Guanyu (688772.SH) has greatly improved its performance.

On the evening of August 21, Zhuhai Guanyu released the 2023 semi-annual report. During the period, the company achieved operating income of 5.474 billion yuan, a year-on-year decrease of 4.59; the net profit attributable to shareholders of listed companies was 0.14 billion yuan, a year-on-year increase of 125.06.

Zhuhai Guanyu is mainly engaged in the research and development, production and sales of consumer batteries. The application fields include notebook computers, tablet computers, smart phones, smart wearable devices, consumer drones, power tools, etc. The company is one of the major suppliers of consumer batteries in the world. In 2022, the company's market share of lithium-ion batteries for notebook computers and tablets will be 31.09, ranking second in the world. In the past two years, the company has gradually accelerated its layout in the field of power batteries.

Zhuhai Guanyu's performance has rebounded significantly for many reasons.

First, consumer battery products have bottomed out and profitability has increased . During the reporting period, the company's consumer products finally achieved a main business income of 4.934 billion billion yuan, a year-on-year decrease of 6.79, and a gross profit margin of 24.32, a year-on-year increase of 5.4 percentage points.

in terms of notebook products business, according to the analysis of TrendForce Jibang consulting, global notebook shipments have roughly bottomed out in the first quarter. the primary goal of notebook computer brands in the first quarter is to fully eliminate terminal inventory, with obvious quarterly growth in the second quarter. In the second quarter of this year, global notebook computer shipments will reach 40.45 million units, an increase of 15.7 per cent, the first time in six consecutive quarters that growth has resumed.

In the mobile phone product business, demand for smartphones has shrunk significantly due to the global economic downturn. According to Canalys data, global smartphone shipments fell 13% in the first quarter of 2023 to 0.27 billion units. At present, the company's downstream mobile phone customers include Huawei, Glory, Xiaomi, OPPO, vivo, Lenovo, etc. It is worth noting that the company for the first time in the reporting period Apple mobile phone battery products mass production .

Second, the price of raw materials has fallen, and the cost of Zhuhai Guanyu has fallen . The company's products mainly purchase raw materials including positive materials, negative materials, diaphragms, electrolytes, copper foil, aluminum plastic film, aluminum foil, etc., the price of which is affected by global commodity price fluctuations, market supply and demand, foreign currency exchange rate fluctuations.

In 2022, the prices of major raw materials represented by lithium cobaltate increased higher than the previous year, increasing the unit production cost of Zhuhai Guanyu products. Since the beginning of this year, the price of lithium cobalt oxide has continued to decline. iChoice data show that the price of lithium cobalt oxide has fallen since the beginning of 2021 and is still hovering at a low level in the near future.

From the financial report, in the first half of this year, Zhuhai Guanyu's operating costs fell by 9.48 year-on-year, exceeding the decline in operating income.

third, exchange rate changes make Zhuhai guanyu "lie down and earn" about 24 million yuan . The company's revenue mainly comes from overseas. In the first half of this year, the company's export business income was 3.365 billion yuan, accounting for 63.31 of the main business income. As the Company's export products are mainly denominated and settled in U.S. dollars, exchange rate fluctuations will result in significant foreign exchange gains and losses for the Company.

in the first half of this year, Zhuhai guanyu's financial expenses were -24.0546 million yuan, compared with 13.7852 million yuan in the same period last year. In this regard, the company explained that the change in financial expenses was due to the increase in the exchange rate of the US dollar, which led to the increase in the company's foreign exchange earnings.

Finally, the poor performance in the same period last year, resulting in a low comparable base, is the direct cause of the substantial increase in performance in the current period . According to a previous report by Interface News, in 2022, due to the global economic downturn, a significant contraction in smartphone demand, a decline in smartphone shipments, and a combination of raw material price increases, the company's net profit fell 90% year-on-year, the worst since 2017.

Zhuhai Guanyu achieved a net profit of 0.14 billion yuan attributable to shareholders of listed companies in the first half of this year, but achieved a net profit of 0.576 billion yuan in the first half of 2021 and 0.254 billion yuan in the first half of 2020. Profitability has been much worse than before.

Zhuhai Guanyu urgently needs new growth points and chooses to bet on the power battery business.

In recent years, Zhuhai Guanyu's heavily dependent consumer battery business is struggling, and the power battery business has expanded rapidly in recent years, but profitability is still unknown. Power battery revenue accounted for less than 1% from 2017 to 2022, and has been losing money for four consecutive years. In the first half of this year, the company's power and energy storage business achieved a total operating income 0.421 billion, an increase of 189.81 over the same period last year, but did not disclose the profitability.

At present, Zhuhai Guanyu still has a number of planned or under-construction battery projects:

in may this year, the company disclosed that it would gamble 10 billion yuan on the power battery business and plan to invest in the power battery production project in Deyang, with a total investment of no more than 10.3 billion yuan. As of the end of June, the project is still in the pre-planning stage;

The company plans to build a lithium-ion power battery project in Jiaxing, Zhejiang, with a total investment of no more than 4 billion yuan. The construction period of the project is 36 months (2022-2025). As of the end of June, the first phase of the project is in the factory building decoration stage, and the second phase of the project has completed the land delisting and the planning and design of the factory building and production line

The company plans to build a lithium-ion battery project in Chongqing Wansheng Economic and Technological Development Zone, with a total investment of no more than 4 billion yuan. It is planned to be completed and put into operation in 2025. By the end of June, the project had completed the delisting of the land.

The lack of bright spots in the performance of consumer batteries and the high investment in power batteries have not yet paid off. The market's concerns about Zhuhai Guanyu are reflected in the stock price. Judging from the performance of the secondary market, the company's share price has been hovering at a low level so far this year, less than 1/3 of the 2021 high.

the list of top ten shareholders shows that Hubei Xiaomi Changjiang Industrial Fund Partnership (Limited Partnership) reduced its stake in Zhuhai Guanyu by 1% in the second quarter of this year. In addition, in the second quarter of this year, Zibo Yikehui Huaxin No. 3 Equity Investment Partnership reduced its stake in the company by 0.97.