Briefly explain the layout of the lithium battery industry

With the rapid development of the new energy automobile industry and the breakthrough of energy storage technology, China's lithium ion power battery industry has entered a period of rapid development. Through the combing of lithium batteries and related business companies in the Shanghai and Shenzhen stock markets, we can clearly see that more and more enterprises have stepped into the field of new energy vehicle power batteries through external mergers and acquisitions, but most of them are lithium. The battery and raw material related business is still in the early stage of construction, and the investment is far greater than the return. Although the power battery is promising, it also has huge investment risks.

The 2016 annual report of listed companies has all been released. With the heat of new energy vehicles, the performance of lithium batteries and related business companies has attracted much attention. In 2016, the new energy vehicle market was affected by “cheat”, and the overall development was ups and downs, but it was still a good year for lithium battery companies.

With the global awareness of energy conservation and environmental protection, clean energy represented by lithium batteries has gradually become the main development direction of new energy vehicles in the future. According to the "2016 Battery Manufacturing Economic Operation" released by the Ministry of Industry and Information Technology, in 2016, the cumulative revenue of lithium ion products of the above-scale battery manufacturing enterprises nationwide was 282.4 billion Yuan, a year-on-year increase of 33.3%; the total profit was 23.56 billion Yuan, a year-on-year increase of 73.5%.

At present, new energy vehicle lithium battery cells, battery packs and control systems, as well as cathode materials, separators, electrolytes and additives for lithium batteries have become key investment areas for some auto parts companies, battery companies and chemical materials suppliers. The related new capacity will become the main profit growth point for the company in the future.

According to the reporter's review, 32 listed companies in the Shanghai and Shenzhen stock markets were included, including 19 home appliance cores, battery packs and control system suppliers, 9 suppliers of electrodes, diaphragms, electrolytes and additives, two charging systems, and parts suppliers and two suppliers of battery production equipment and testing equipment.

The revenue performance of these 32 listed companies in 2016 generally increased year-on-year, and only one company declined. It is worth noting that in the main business structure of these enterprises, the business income related to lithium-ion power batteries has maintained a substantial increase.

Lithium-ion business promotes overall corporate revenue growth

These 32 listed companies are mainly suppliers in the chemical industry. New energy vehicle batteries and raw materials related businesses are not the only source of income for these companies. According to statistics, the total operating income of 32 listed companies in 2016 was 149.8 billion Yuan, of which the revenue related to new energy vehicle batteries and raw materials totaled 41.6 billion Yuan, accounting for 28%. In the future, this proportion will continue to expand with the growth of demand for new energy vehicles and the layout of new capacity for lithium batteries and raw materials.

The main components of the lithium battery include a material positive electrode, a separator, an electrolyte, and the like. Specifically, the revenue of lithium-ion cathode materials listed companies in 2016 increased significantly year-on-year. At present, the mainstream choice of cathode materials for new energy vehicle power batteries is lithium iron phosphate and ternary systems. It is reported that 70% of the new energy buses are equipped with lithium iron phosphate, while 70% of passenger cars and special vehicles use ternary batteries. Statistics show that in 2016, China's lithium battery cathode material output value of 20.8 billion Yuan, an increase of about 54% over 2015.

In fact, many listed companies have increased their presence in the field of lithium battery cathode materials. According to CITIC Guoan's 2016 annual report, under the rapid development of the new energy automobile industry, the company's Mengli New Materials Co., Ltd. promoted the construction of “4,500 tons of lithium ion battery cathode material project” and expected to trial production in the near future. At the same time, CITIC Guoan's Mengli Power Company relies on the key material technology of power batteries to continue to maintain its competitive edge in the field of hybrid and plug-in hybrid commercial vehicle power batteries.

The lithium ion battery separator industry is a branch of the high performance membrane material industry. The battery separator industry is also in a period of rapid growth. However, China's lithium-ion battery separator industry started late, most of the high-end diaphragms rely on imports, accelerating the industrialization of advanced diaphragm technology has become the key to the development of lithium-ion power batteries. Star Source Materials 2016 Annual Report pointed out that vigorously developing high-end lithium-ion battery separator has important strategic significance for the healthy development of China's lithium-ion battery industry. The company has established a new production line for dry and wet lithium-ion battery separator preparation technology to improve the level of product manufacturing.

Further expand the scale of development

Transforming through mergers and acquisitions is the main path for many listed companies to enter the power battery field.

In 2016, Aoyang Shunchang acquired a 47.06% stake in Jiangsu Luwei through the acquisition of equity and capital increase, taking the power lithium battery and related industries as the company's new development focus and profit growth point. In recent years, the scale of Jiangsu Luwei lithium battery business continued to grow. In 2016, it achieved operating income of 354 million Yuan and net profit of 62.28 million Yuan, up 102% and 105% respectively over the same period of last year. It is reported that Jiangsu Luwei Nissan's 1 million lithium battery cell project is under construction.

Mengshi Technology has planned a longer-term route, cutting from the lead-acid battery field, and based on the battery industry, it has developed a clean energy micro-network closed loop from photovoltaic power generation to user-side management and from core components to vehicle production and sales. The two main business lines of the new energy automobile industry chain operating. According to the data, since the strategic transformation began in 2015, Mengshi Technology has invested in the construction of 6GWh ternary 18650 lithium-ion battery cells and battery packs and PACKs in Zhaoan, Fujian, to support its new energy vehicles and energy storage business. The first phase of 1GWh project has realized mass production on March 9 this year. In 2016, the revenue of the Lions Technology lithium battery business increased by 126% year-on-year.

As a newly listed company, Kodali is in the lithium battery industry. Based on the development strategy of lithium battery precision structural parts, Kodali continues to develop well-known customers in the downstream new energy vehicle power lithium battery and consumer electronics lithium battery industry, and has already cooperated with BYD, ATL, lishen, AVIC Lithium, Yiwei Lithium, etc. The company has established a long-term stable strategic partnership. The revenue of the Kodali Power and energy storage Lithium Battery business has increased from 200 million Yuan in 2014 to 930 million Yuan in 2016.

Leverage the capital market to become bigger and stronger

In fact, many listed companies are active and hope to enter the power battery industry to expand their business landscape. In 2016, Oriental Seiko took “Intelligent Manufacturing” as its strategic vision and business core, and based on the development of intelligent packaging equipment, it opened up outboard power and automotive power battery business. This year, Oriental Seiko has completed a major asset restructuring project to acquire 100% of Pride's shares, and successfully achieved a rapid entry into the core battery component of the new energy vehicle. According to Pride's strategic plan, based on the Beijing production base, the two production bases of Changzhou Fuyang and Guangzhou Zengcheng will be added in the future, which will form a scale of 10GWh annual power battery.

Changxin Technology plans to compare the restructuring of the power assets. On March 8 this year, Changxin Technology announced that it intends to purchase 75% of the shares of BAK Power by issuing shares and paying cash. If the transaction is completed, plus the 9% stake already held, Changxin Technology will hold the ratio 84% stake in Kegen. It is reported that BAK Power focuses on the R&D and manufacturing of ternary materials lithium-ion batteries for more than 10 years, and the current market valuation reaches 9 billion Yuan.

Today, the lithium battery industry has formed a market environment of “big fish eat small fish, small fish eat shrimp”, competition will become more and more fierce, industrial concentration is expected to increase, industry integration will accelerate, and the future may only manufacturers with strong technology accumulation, sufficient financial support, rational market positioning and rapid response to the market can stand out from the competition. In 2017, what new changes will happen to the lithium battery industry that seems to be booming? Let us wait and see.

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