The problem of overcapacity in the power battery industry in Ningde era

In today's capital market, it seems difficult to see a rush of collective revelry. Today, this scene has been staged and continues to deepen in the Ningde era. Before becoming the object of capital pursuit, the former world of Ningde era has become a hot spot of media attention.

Ningde era previously revealed to the media that the company's shares issued no more than 217 million shares, accounting for not less than 10% of the total share capital after the issue, all issued new shares. The fundraising projects are: the Ningde era Huxi lithium-ion power battery production base project and the Ningde era power and energy storage battery research and development project, and plans to use the raised funds to invest 13.12 billion yuan.

Raising funds of 13.1 billion yuan and transferring about 10% of the shares, it is inferred that the valuation of Ningde era has exceeded 130 billion yuan, exceeding the valuation of BYD's 84 billion yuan. This news will inevitably attract attention to companies that have only been established for six years.

Such a high valuation has exceeded the market value of most automakers, second only to SAIC (market value of 34.23 billion yuan), Guangzhou Automobile (market value of 167.46 billion yuan), Geely (market value of 140.38 billion yuan), the industry believes that it may become The market value of the GEM is the first.

Capital raising and expansion

Ningde era started to produce batteries for mobile phones brands such as Apple and Samsung. Later, it was transformed into a research and production of electric vehicles and energy storage lithium-ion battery systems. ATL's automotive power battery division was spun off and the Ningde era was established in Ningde, Fujian.

According to founder Zeng Yiqun, the round batteries and square batteries commonly found in the market at the beginning of the business are the world of Japanese companies such as Sony and Panasonic. The degree of automation is high and the quality is uniform. It is difficult for Chinese companies to compete with them.

According to public information, in 2016, the output value of the Ningde era reached 14 billion yuan, with a profit of 3 billion yuan, ranking first in the country. In Ningde era, the operating income in 2014, 2015 and 2016 was 867 million yuan, 5.7 billion yuan and 14.879 billion yuan respectively, with an average annual compound growth rate of 314.31%; net profit was 56 million, 951 million yuan and 3.089 billion, respectively. The growth rate was 642.70%.

At the end of each reporting period, the total assets were 2.875 billion yuan, 8.673 billion yuan, 28.588 billion yuan and 40.84 billion yuan. The company's net assets were 335 million yuan, 1.498 billion yuan, 15.791 billion yuan and 23.154 billion yuan respectively.

According to the prospectus, the funds raised are mainly used for two projects: First, the project of Huxi Lithium-ion power battery Production Base in Ningde Times is planned to invest 9.86 billion yuan, and the construction land area is 385 mu. The products mainly include power battery cells, modules and batteries. package. The project will build 24 production lines with a total annual production capacity of 24GWh power battery products. The second is the power and energy storage battery research and development project, with a planned investment of 4.2 billion yuan. The research and development direction of the project mainly includes new energy passenger car power batteries, new energy commercial vehicle power batteries, energy storage batteries, and next generation batteries.

Overcapacity problem

The controlling shareholder of Ningde Times is Ruiting Investment. As of the signing date of the prospectus, Ruiting Investment directly holds 29.23% of the shares. Zeng Yiqun holds 100% equity of Ruiting Investment, the controlling shareholder of the company, and indirectly holds 29.23% of the company's shares; Li Ping directly holds 5.73% of the company's shares, and the two are acting in concert, holding a total of 34.95% of the total share capital before the company's issuance. .

The data shows that the Ningde era is able to achieve ultra-high-speed growth, mainly due to the surge in sales of its power battery products. In 2014-2016, many lithium battery companies have enjoyed the big development bonus of new energy vehicles, but none of them have the explosive power of the Ningde era.

In 2016, Ningde era market share in power battery over BYD, with the market share of 23.3% in the country, and became the only global leading lithium battery manufacturer that can compete with Samsung and Panasonic. According to statistics, in the first half of 2017, the installed capacity of electric vehicle batteries in Ningde era was 1312.4MWh, which accounted for 20.98% in the domestic power battery market. It has pushed BYD out of the top position and became the No. 1 and the world's second largest power battery supply in China. Business. In the same period, BYD's electric vehicle battery installed capacity was 1084.9MWh, with a market share of 17.35%.

At present, the annual production capacity of Ningde has reached 7.5GWh, and lithium iron phosphate and ternary yuan each account for half. Next, it plans to double every year. By 2020, the production capacity is expected to reach 50GWh, which exceeds the 35GWh previously announced by Tesla and 34GWh announced by BYD. Production capacity during the same period.

According to public news, in China, due to the rapid expansion of power battery capacity, the supply of power batteries will continue to be surplus, and reach its peak in 2018, with overcapacity reaching 257%. After the market demand continues to increase, this phenomenon will occur. It has improved, but until 2025, the domestic market will maintain a state of overcapacity.

In the Ningde era, the capacity of such a capacity will be more serious.

Questioning still exists

Although the expectations are hot and the market performance is good, the ultra-high valuation of 130 billion yuan has made the industry cast doubt on the Ningde era, which has only been established for six years.

In particular, it is BYD, the leading domestic electric vehicle company that directly competes with it. BYD, which owns complete vehicles and complete new energy auto parts including batteries, currently has a market capitalization of only RMB 88 billion.

Different from the model of Ningde era, BYD power battery has been a closed production operation mode for self-production in the past. According to statistics, current automotive power batteries account for one-third to one-half of the cost of manufacturing pure electric vehicles. Because of its self-produced power battery, BYD enjoys a huge price/performance advantage in pure electric vehicles. However, in the first half of this year, the sales of new energy vehicles that BYD has been proud of have been declining due to the policy of subsidized subsidies and adjustment of product access rules.

In the face of the aggressive business "enclosure" in the Ningde era, BYD batteries, which had been closed for many years, also made an open decision. Wang Chuanfu, president of BYD, said that the export of power batteries has entered a substantive stage with several large passenger vehicles. BYD announced that it has teamed up with Guoxuan Hi-Tech to deploy ternary cathode materials. In September 2017, Great Wall Motor acquired the equity of Australia's lithium mine and built a base for its new energy battery. Therefore, the risks faced by the Ningde era cannot be underestimated.

In December 2016, in order to further promote the healthy development of the new energy automobile industry, continuously improve the industrial technology level and enhance the core competitiveness, the Ministry of Finance, the Ministry of Science and Technology, the Ministry of Industry and Information Technology and the National Development and Reform Commission issued the Notice on Adjusting the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles. , reduce the amount of subsidies, raise the threshold for the recommended model, and transfer the subsidy method from the pre-dial system to the annual clearing system. Changes in policies related to the new energy auto industry may have an impact on the development of the power battery industry.

In fact, the Ningde era is basically based on the battery business. From 2014 to the first half of 2017, the battery business accounted for 94.17%, 87.98%, 95.55% and 87.14% of the main business income. Changes in national industrial policies will affect the development of the power battery market, which in turn will affect the sales and operating income of the company's products. If there are major adverse changes in the relevant industrial policies, it will have a material adverse impact on the company's sales scale and profitability.

According to the prospectus, in 2014, 2015, 2016 and January-June 2017, the sales amount of the top five customers of the company accounted for the proportion of the total operating income of the current period. 91.91%, 82.62%, 79.49% and 60.50%.

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Strong support from national policies

Benefiting from the promotion of the national new energy automobile industry policy, China's new energy automobile industry has developed rapidly since 2009. The power battery is the core component of new energy vehicles, and its market is also developing rapidly.

In December 2016, in order to further promote the healthy development of the new energy automobile industry, continuously improve the industrial technology level and enhance the core competitiveness, the Ministry of Finance, the Ministry of Science and Technology, the Ministry of Industry and Information Technology and the National Development and Reform Commission issued the Notice on Adjusting the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles. , reduce the amount of subsidies, raise the threshold for the recommended model, and transfer the subsidy method from the pre-dial system to the annual clearing system.

Changes in policies related to the new energy auto industry may have an impact on the development of the power battery industry.

In September 2017, the Ministry of Industry and Information Technology, the Ministry of Finance, the Ministry of Commerce, the General Administration of Customs and the General Administration of Quality Supervision, Inspection and Quarantine jointly issued the “Parallel Management Measures for the Average Fuel Consumption of Passenger Vehicle Enterprises and New Energy Vehicles”, and the annual production of traditional energy passenger vehicles. If the quantity or import volume reaches 30,000 or more, the new energy vehicle integral ratio requirement will be set from 2019, among which the 2019 and 2020 points ratio requirements are 10% and 12% respectively.

The auto double-point system has officially landed, pointing the Chinese auto industry to a road that must be taken – electric vehicles. The Chinese government has been working on new energy vehicles for nearly two years and has invested huge amounts of money and energy. Changes in national industrial policies will affect the development of the power battery market, which in turn will affect the sales and operating income of the company's products. If there are major adverse changes in the relevant industrial policies, it will have a material adverse impact on the company's sales scale and profitability.

The page contains the contents of the machine translation.