Does Ningde era can master the logic of lithium battery industry ?

As the market heats up this week,

Can the lithium battery industry usher in a reversal of investor confidence?

The power battery "unicorn" Ningde era has passed, and it is a good day to ring the bell before the listing.

In the era of Ningde(full name: Ningde New Energy Technology Co., Ltd.), it quickly broke through the meeting and became a high-end manufacturing giant after Foxconn(36 days) and Yaoming Kant(50 days).

From the disclosure of the prospectus to the success of the IPO, it took only 24 days before and after the Ningde era to refresh the IPO record.

Judging from the scale of fundraising, the Ningde era plans to publicly issue no more than 217 million shares and raise 1.12 billion yuan in funds. The valuation is expected to exceed 130 billion, firmly seated in the first share of the GEM.

Looking at the performance, in 2017, the Ningde era achieved a main income of 199.997 billion yuan, belonging to the parent company's net profit of 3.972 billion yuan. From 2015 to 2017, the company's main income and the net profit of returning mothers reached 87 % and 106 % respectively.

Such performance can be described as rapid, the market is now relatively stable, we can expect that the Ningde era of the listing will bring a wave of lithium battery industry market?

With the domestic new energy battery subsidy threshold and policy adjustment, it has caused a great impact on some new energy companies that rely on subsidies to increase profits. The former A-share market fire first share, one of the three domestic power battery manufacturers, has been deep in the quagmire.

Prior to the revised announcement of the performance letters of Kennedy in 2017, it was also expected that the profit would be 522 million yuan. When the annual results were released, the net profit of the parent would become a loss of 3.68 billion yuan. The most immediate reason is the decline in subsidies, and the slow return of accounts receivable is only an incidental problem.

The Ningde prospectus has also made it clear that the company has received a total of 1.063 billion yuan in government subsidies in the past three years. This suggests that the lithium-ion battery industry as a whole is too dependent on financial subsidies, and that even the ningde era could be hit hard if subsidies are cut or stopped.

Subsidies are more conducive to the elimination of backward production capacity, conducive to industry integration shuffling, the industry shuffling must go through adjustment period.

Lithium battery industry driver logic

Downstream new energy car industry: new energy car production and sales doubled in the first quarter of this year, with sales of 140,700 vehicles in January-March of the 18th year, an increase of 158.59 % year-on-year. From the March data alone, the output of Xineng Automobile is obviously released, and the side shows that the impact of subsidy sloping has begun to digest.

In 2015, China surpassed the United States to become the world's largest market for electric vehicles. In 2017, China's electric vehicle sales exceeded 700,000 vehicles. China has become a global leader in new energy. With the Advancement of environmental protection, the target for new passenger car fuel consumption in China is to drop to about 5L/100km by 2020. The energy conservation pressure of companies is relatively large, and it is necessary to develop new energy models to meet the requirements. The policy side is also constantly promoting passenger vehicles, which are expected to increase by 45 % to 60 % in 18 years.

Upstream lithium cobalt resources, especially positive materials, have recently been reduced, such as lithium cobalt acid, while the prices of other constituent materials(electrolytes, diaphragm) have not changed much. If maintained, manufacturing costs will be reduced.

In terms of policy, six new energy vehicle policies were introduced at the national level in recent April. Hainan will accelerate the promotion of new energy vehicles and will gradually ban the sale of fuel cars. Lithium battery demand is still expected to increase.

Although the lithium battery market in 2017 has gained more market attention, the main investment focus is on upstream resource stocks rather than other links in the lithium battery industry chain. In addition to the upstream resources of lithium batteries, the color of the resource plate, steel has also started the market. The coal market has also started recently.

This shows that the logic of the lithium battery market last year is that downstream demand for new energy vehicles has boosted production and sales, and superimposed resource price increases. The increase in resource prices may also be driven by downstream demand. The entire logical relationship is more complicated.

From the current point of view, the price of the positive electrode material upstream of the lithium battery may cause the market to reduce its attention to lithium cobalt. Therefore, the focus of investment in the lithium battery market may move downstream to the lithium battery manufacturer.

At the macro level, the U. S. sanctions Iran, and crude oil prices must be bullish and remain high. At the same time, domestic prices of chemical products are expected to be stronger, lithium batteries upstream of other chemical materials also have price expectations.

Therefore, the logic of this year's lithium battery market is still "rising prices + rising demand for lithium batteries", but the focus has shifted to electrolytes and diaphragm, and the tendency of financial subsidies is more favorable to companies with high energy density.

Investment highlights

1. Resource Advantages: Lithium upstream raw materials enterprises with resource advantages, especially those related to price increases

2. Core technology: Enterprises that have formed technical barriers

3. Ningde era concept: Ambush in advance and Ningde era cooperation companies, such as Hua Zi technology, two-wheel drive and so on.

Related subject matter

Tianci materials: electrolyte faucet, new lithium salt LiFSI mass production, performance stabilized rebound.

Changyuan group: New lithium-material in the merger and acquisition to achieve wet diaphragm layout, control automation business and wet diaphragm business dual growth drive.

When Sheng Technology: Positive material faucet, 2018 high probability to achieve NCM811 mass production.

Innovative shares: lithium-ion battery wet diaphragm leading, overseas customers develop smoothly.

Xingye shares: The company announced that it plans to acquire the Jiangsu Ronghui lithium industry held by Tianci for 1.07 yuan. Other new materials such as electronics and new energy are expected to be actively promoted.

Pilot intelligence: high performance of lithium-electric equipment leader.

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