Lithium battery equipment will usher in a new round of high growth cycle

Core view of lithium battery industry

Key assumption: industry supply and demand in the medium term to maintain structural excess, lithium battery leading expansion is still determined

1. Domestic demand: It is estimated that there will be 3 million domestic electric vehicles in 2020, corresponding to the demand for power lithium batteries of 120GWh, the new production capacity will reach 87GWh, and the equipment demand will exceed 26 billion Yuan.

2. Global demand:

From the perspective of electrification rate, it is estimated that in 2025, the penetration rate of electric vehicles will reach 25%, the demand for power lithium batteries will exceed 1700GWh, and the total equipment demand will reach 500 billion Yuan.

The total cumulative demand for power lithium batteries in 2018-2025 exceeded 5000GWh.

From the sales plan of the leading car manufacturer, it is estimated that the leading car companies (Volkswagen Benz BMW Audi, etc.) will have 10.8 million electric vehicles in the world in 2025, corresponding to the demand for power lithium batteries 540GWh, the supply and demand gap exceeds 290GWh, and the total equipment demand in 2020-2025 is nearly 90 billion. Yuan.

Drivers:

1. The introduction of the dual-point system ensures high growth in the industry;

2. International car giants and European and American countries to launch electrification strategies;

3. Domestic equipment manufacturers ushered in two major opportunities for import substitution and automation.

A different view from the market:

1. Considering the technical iterative equipment update and the market have new entrants, the demand is 1-2 times more than the model prediction;

2. In 2018, the structural excess of the domestic power battery industry and the impact of subsidies will be degraded. The industry will accelerate the reshuffle, and the industry concentration will be greatly improved. At the same time, foreign battery giants will increase their efforts to expand their production, which will exceed expectations;

3. It is estimated that the top five global lithium batteries will monopolize more than 80% of the shares, and the growth of equipment companies bound to the global lithium battery leader will remain highly determined;

4. The market has not shaken off the subsidy policy thinking. With the intensive introduction of new models in 2019-2020, the sales of electric vehicles are expected to exceed market expectations.

Investment suggestion: At present, domestic battery companies are facing an accelerated reshuffle, which will suppress industry valuation and performance; and equipment companies entering the global supply chain will get rid of the short-term fluctuations in the domestic industry. It is expected that the top five lithium-ion battery companies in the world will monopolize more than 80% of the shares, and the equipment companies that are bound by the global lithium battery leader will still have high growth.

The global electric wave will accelerate the birth of the next "Sanyi Heavy Industry": optimistic about the equipment company that binds the leading battery companies, the performance growth and sustainability will be significantly exceeded expectations, and continue to be the first to be globally competitive equipment leader, not entering Equipment companies with international leading battery supply systems will be at risk.

Risk factors: Downstream investment was lower than expected, and sales of new energy vehicles were lower than expected.

The latest view of lithium battery equipment: leading equipment manufacturers will welcome a new round of high growth cycle!

The new energy automobile industry entered the post-subsidy era, and the spring rushing market continued to ferment, and the industry maintained a high boom. According to data from the Soochow Power New Group, the cumulative sales of new energy vehicles in January-April was 225,300 units, up 149.2% year-on-year, of which sales volume was 81,900 units in April, up 138.4% year-on-year and 21% quarter-on-quarter; 2018Q1 power battery production was 8.6Gwh, a year-on-year increase of 32%, is expected to increase by 30-50% Q2, and continue to strengthen. With the subsidy policy landing before the Spring Festival, it will be implemented in mid-June, and it is currently in the buffer period. The electric vehicle grabs the market and continues to ferment. We expect the battery demand to pick up significantly. In addition, due to the expected fullness, the current operating rate of leading battery companies has recovered to 70% and is still gradually improving. The prosperity is better than expected, showing a high growth trend in 2017.

The global trend of electrification cannot be ignored. The electrification has been changed from the Chinese government and Tesla to the traditional automobile giant Volkswagen, Mercedes-Benz and BMW. The supply and demand gap of lithium batteries is huge, and the expansion will exceed expectations. We estimate that the global electric vehicle sales volume will be 5-6 million units in 2020, corresponding to the demand for power lithium batteries 200-250GWh, and the total equipment demand is about 70 billion Yuan. At the same time, as the subsidies for Chinese car companies will end by the end of next year, the expansion of foreign leading capacity will exceed expectations in 2018 (the cumulative expansion of LG, Panasonic, Samsung SDI, etc. is expected to exceed 25GWh, with a year-on-year growth rate of more than 60%). Equipment companies in the supply system will offset the short-term fluctuations in the domestic industry.

In addition to the factors affecting the expansion schedule, the lithium battery equipment leader will welcome a new round of high growth cycle! The listing of CATL and the BYD battery business is an important factor affecting the expansion of the two giants since Q4 2017. In 2018, CATL will build 24 production lines, and BYD expects to expand production by about 10GWh. With the landing of these two important events, we judge that the progress of the expansion of the production of CATL and BYD will speed up, it is expected that the industry will soon enter the peak of bidding, lithium battery equipment will usher in a new round of high growth cycle.

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