Current power battery business performance differentiation

China's power battery industry is developing at a high speed, and related companies have had mixed results last year.

In 2017, Ningde Times, BYD and Waterma ranked the top three in the domestic installed capacity with the installed capacity of 10.5Gwh, 5.65Gwh and 2.41Gwh respectively, and only one in the Ningde era accounted for 30% of the market share.

In addition to BYD, Lishen, BAK and other traditional battery giants, there are four new faces in the top ten companies in terms of power battery installed capacity in 2017 – Fu Neng Technology, Beijing Guoneng, Yiwei Lithium and Suzhou Xingheng quickly join the fierce competition in power batteries.

In terms of profit, the top ten battery companies in terms of installed capacity showed a polarization. Net profit in Ningde era reached 4.288 billion Yuan, a year-on-year increase of 38.8%. Waterma's parent company, Jenweng, is expected to lose a total of 3.68 billion Yuan.

As the 2017 Waterma profit did not meet expectations and the future profitability was far from the expected level, Jianruiwo announced on April 19 that it would fully accumulate the goodwill arising from the acquisition of Waterma. In 2016, the goodwill generated by this acquisition was 4.61 billion Yuan.

According to the published annual report or performance report, BYD and Guoxuan Hi-Tech also have the same profit decline.

Affected by the decline in new energy subsidies and the decline in fuel vehicle sales, BYD's net profit for 2017 was 4.07 billion Yuan, down 19.5% year-on-year. The net profit is expected to fall 75.24%-91.75% in the first quarter of this year.

Guoxuan Hi-Tech said in the announcement that due to the adjustment of the subsidy policy for new energy vehicles, the domestic power battery prices generally declined in 2017, while the upstream raw material prices rose, affecting the overall profitability. The company is expected to achieve a net profit of 920 million Yuan in 2017, down 10.73% year-on-year.

According to relevant data, as of the end of 2017, the price of power batteries fell by 20%-25% compared with the beginning of the year. The price of lithium iron phosphate battery pack dropped from 1.8 Yuan to 1.9 Yuan/Wh at the beginning of the year to 1.45-1.55 Yuan/Wh at the end of the year. The price of the ternary power battery pack dropped from 1.7-1.8 Yuan/Wh at the beginning of the year to 1.4 Yuan-1.5 Yuan/Wh at the end of the year.

According to the goal set by the Ministry of Industry and Information Technology in the "Long-term Development Plan for the Automotive Industry", by 2020, the new energy vehicle power battery system will strive to reach 260watt-hours/kg and the cost will be reduced to less than 1 Yuan/kWh.

However, the price of raw materials does not decrease. According to the statistics of Everbright Securities Research Institute, as the price of electrolytic cobalt increased by more than 100% in 2017, the price of lithium carbonate rose by more than 30%, and the cost of some types of ternary cathode materials even increased by nearly 50%. The price of negative electrode materials also increased slightly.

In 2017, the output value of the four key materials of China's power battery (positive electrode material, anode material, separator and electrolyte) was 61 billion Yuan, a year-on-year increase of 62%. The output value of cathode materials accounted for the largest proportion, accounting for 71.5%, and the output value of this material increased the most.

Affected by the sharp increase in the positive electrode material business, the lithium battery material company Shanshan shares achieved a net profit of 896 million Yuan last year, an increase of 171.42%. The revenue of Dangsheng lithium electric materials business reached 1.929 billion Yuan, up by 89.41% year-on-year, and the sales volume increased by 21.73% year-on-year. Driven by its lithium electric materials business, Dangsheng achieved a net profit of 250 million Yuan in 2017, up 151.79 percent year-on-year.

Some upstream enterprises have also joined the competition of ternary materials by expanding the layout of the industrial chain. At present, Huayou Cobalt Co., Ltd. has a ternary cathode material production capacity of 20,000 tons/year. This year, Huayou Cobalt Co., Ltd. also established a joint venture with South Korea's Pohang Steel and LG Chemical to produce precursors and cathode materials. Xiamen Tungsten Industry also expanded its cathode material capacity by 16,000 tons in Xiamen and Sanming, and designed a production capacity of 20,000 tons in Ningde.

Also driven by the demand for power batteries and related lithium batteries, Lithium's new energy core material supplier Tianqi Lithium achieved a record high in 2017, achieving revenue of 5.47 billion Yuan and net profit of 2.15 billion Yuan, a year-on-year increase of more than 40%. Ganfeng Lithium achieved a net profit of 1.469 billion Yuan, a year-on-year increase of 216.36%.

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