Double Kill Lithium Electric Industry Lithium Electric Enterprise Competition intensifies

"Red Weekly": There are Baihua Village first, and then Guangyi Technology. This week, another company has revised its net profit as high as 4.211 billion yuan due to impairment of goodwill. Within a few days, many companies have turned from profit to huge losses. One public company after another seems to be testing whose goodwill is worse.

Xiao Xu: last week the column prompted the goodwill "mine" is constantly being detonated. Again, we are reminded that there are nearly 250 listed companies with goodwill of more than 1 billion yuan. Among them, companies that show signs of declining performance should be vigilant, especially companies with signs of a decline in the industry as a whole.

"Red Weekly": After the large expansion of the polysilicon industry, more than half of the companies were eliminated by the market. Only a few companies have survived the reshuffle and grown so far. You have talked about the current lithium battery industry many times before. The polysilicon industry has similarities. In the past two years, due to the enthusiasm of the lithium battery industry, a number of listed companies have purchased lithium battery-related assets at a high premium. The above-mentioned company was the first to detonate goodwill mines in the lithium battery industry.

It's not the last one, is it?

Xiao Xu: In the next 1-3 years, this situation will continue to appear. Take the lithium battery diaphragm industry that we have mentioned many times as an example, after the industry's endless large expansion of production, the hidden dangers are constantly emerging.

According to the annual report of Zhangzhou Pearl 2017, the company's "60 million square meters of wet lithium-ion battery diaphragm project" was successfully completed as planned, and the two production lines were completed and put into production in April and July 2017 respectively. An annual production line of the 105 million square meter wet lithium-ion battery diaphragm project was completed and put into production in July 2017. Judging from the above data, Cangzhou Pearl's production capacity increased significantly in the second half of 2017. However, in the first half of 2017, the company's lithium battery diaphragm product revenue was 212 million yuan, while in the second half of the year, the figure was 220 million yuan. After the increase in production, the company's lithium battery diaphragm product revenue did not increase significantly.

In 2016, the gross margin of the Pearl Lithium battery diaphragm product was 63.61 %, while the gross margin of the product in 2017 was 47.75 %, a significant drop of 15.86 percentage points. In fact, in the first half of 2017, the company's operating income from lithium battery diaphragm products was 212 million yuan, operating costs were 89 million yuan, and the gross profit margin was 57.96 %. In 2017, the company's operating income from lithium battery diaphragm products was 432 million yuan, operating costs were 225 million yuan, and the gross profit margin was 47.75 %. According to this calculation, the operating income of the lithium battery diaphragm product in the second half of 2017 was 220 million yuan, the operating cost was 137 million yuan, and the gross profit margin was only 37.94 %, compared with 63.61 % in 2016. The decline is extremely significant.

Red weekly: Star material is also a lithium-ion battery separator listed company, but the company's net profit in 2017 increased by 158.13 % from a year earlier, and it seems to be doing well.

Xiao Xu: There are two main factors in the profit increase of Xingyuan Material in the first quarter of 2018. One of them is: A dry diaphragm production line in the company's "Third Generation High-Performance Lithium-ion Battery Dim Production Line Expansion Project" was completed and put into operation; Second, the company received 50 million yuan in government support and reward funds.

The company estimates that the net profit from January to June 2018 will be approximately 12.70555 million yuan to 13.95461 million yuan, calculated according to the company's net profit of 89.4354 million yuan from January to March 2018, and its net profit from April to June 2018 will be approximately 3.7621 million yuan-5011.07 million yuan, while the company's net profit in the same period last year was 3.62694 million yuan. Although the company's net profit in the second quarter of 2018 continued to grow, the growth rate fell rapidly from the first quarter, and the company's performance growth was based on a dry diaphragm production line established in the "third-generation high-performance lithium-ion battery diaphragm production line expansion project." On the basis of the gradual release of the company's holding subsidiary Hefei Xingyuan's wet diaphragm production capacity, the company's second-quarter performance growth was obviously insufficient after the increase in production capacity.

Red Weekly: Although the gross margins of products in the entire lithium battery diaphragm industry have fallen sharply in 2017, the gross margins of products such as the star-sourced lithium battery diaphragm products are still as high as 51.85 %. By increasing production capacity, it can still increase the company's profits. Assuming that the original production capacity remains unchanged, What about the company's earnings?

Xiao Xu: In 2017, Xingyuan's lithium battery diaphragm product sales were 15.52617 million square meters, an increase of about 12 % from 13868.02 square meters in the previous year, but the company's net profit dropped sharply from 155 million yuan in the previous year to 107 million yuan, a decrease of 31.29 %. Without increased capacity, the company's profitability will immediately decline, and increased capacity will increase the company's profits temporarily. However, after the endless expansion of production, the price war will lead to a further decline in the overall gross profit rate of the industry, and the company's performance is bound to be greatly affected. In March 2018, Xingyuan Material announced that it plans to invest 3 billion yuan to further expand the company's lithium battery diaphragm production capacity, and the gross profit margin has fallen, coupled with endless expansion of production. The current lithium battery diaphragm industry is in a dilemma.

Red Weekly: Back to Goodwill again. This week's approval of innovative shares for the lithium-battery diaphragm company, Shanghai enjie, follows the 2017 acquisition of the chasm. If the dilemma lithium-battery diaphragm industry continues to decline in profitability, the huge amount of goodwill generated by the acquisition of listed companies will face the risk of large sums of money.

The page contains the contents of the machine translation.