Lithium Battery link in the upstream material price general rise and downstream demand, full orders, but generally do not make money, pain and happiness. With the shipment price "reluctantly" rise, production capacity gradually released, this contradiction seems to be alleviated, but it is a drop in the bucket.
The lithium industry is still struggling to find a new balance.
01
Supply chain strain continues
At present, the effective supply of lithium battery industry is relatively tight, the upstream material not only rises in price, individual supply is insufficient, and the acceptance of downstream customers is not sensitive, so the contradiction is more prominent, the upstream and downstream industry chain game is obvious.
At the end of January, it was rumored that Xiaopeng Automobile would mainly use Xinwanda batteries in a new model due to the large price increase of Ningde Times. However, xiaopeng Automobile clarified that it would continue to choose powerful suppliers such as Ningde Times to become core partners.
In any case, the fragile supply chain relationship has been put on the table.
In this context, both lithium enterprises and downstream automakers are actively seeking change and stability of the supply chain.
Lithium enterprises, especially giants, have established equity ties or formed strategic cooperation and signed long order purchase agreements with upstream suppliers, especially the four major materials. Industry giants such as Ningde Times, BYD and Honeycomb Energy have established their own industrial chain "circle of friends" to varying degrees.
There has been a lot of previous analysis on the lithium supply chain, which will not be covered here.
02
Obvious differentiation of performance
Upstream material prices rise, supply chain tension, directly resulting in downstream lithium enterprises' gross margin differentiation, uneven performance.
A shares of the three typical power and Energy Storage battery enterprises, more can explain the problem.
Ningde Times net profit after deduction is expected to be 12-14 billion yuan in 2021, with a year-on-year growth of 181.38%-228.28%.
In contrast, Fu Neng Technology is expected to lose 1.1-1.4 billion yuan in net profit after deduction of non-profits in 2021, with a year-on-year increase of 102.80%-158.11%.
Guo Xuan High-tech did not disclose 2021 performance forecast, but from the three quarterly reports can also be a glimpse of 2021 operating conditions. In the first three quarters of 2021, The operating revenue of Guoxuan High-tech increased by 40.40% year-on-year, and the net profit after deducting non-profits was -172.7 million yuan.
Although Evman Lithium energy, Xinwanda and Penghui Energy have disclosed 2021 performance forecasts with year-on-year growth, there are no separate data for power and energy storage battery business at present, and it is not clear the specific situation of this business.
The main reason for performance differentiation is the problem of upstream supply chain, and the impact of material cost pressure on downstream lithium enterprises is different.
In the investor exchange, Feuneng technology said, "The company will continue to strengthen supply chain management through strategic cooperation, investment and equity."
In addition, over the past year has been the stage of "rapid development" of lithium battery production capacity, many new capacity is in the climbing stage, the production experience is also different, the rate of good product also has a process of improvement, which is another reason for the current gross margin of many lithium battery enterprises is insufficient.
In contrast, the Ningde era was much more leisurely, able to ensure profit growth as the industry grew in size. Ningde times explained the significant growth in 2021 as follows: "In 2021, the penetration rate of new energy vehicles and energy storage market will increase, driving the growth of battery sales; The company's market development has made progress, the release of new capacity, production and sales increased accordingly; The company has strengthened expense control and reduced expenses as a percentage of revenue."
03
The industry as a whole looks for the lowest reasonable gross margin
At present, for lithium enterprises, "market share" is a macro strategic indicator, while "gross margin" is a micro operating indicator.
Comparing the gross margin of the same period in 2020 and the first three quarters of 2021, Ningde Times offset the rising pressure of material cost due to supply chain management and scale effect, and the gross margin remained stable, 27.41% and 27.51% respectively. However, the gross margin of some lithium enterprises declined to varying degrees under the impact of upstream cost pressure. Phoneng Technology fell to 0.54% from 19.22%, and Guoxuan Technology fell to 18.3% from 25.4%.
Any industry or enterprise can sacrifice profits for market share or customers in the short term and make money at a loss, but it is not sustainable and will eventually return to a reasonable gross margin.
At present, the gross profit margin of some lithium enterprises is low, and the performance is different degrees of loss, which is destined to be difficult to widespread and long-term existence. To this end, lithium enterprises began to brew price rises, in order to ease the upstream cost pressure.
Cost pressures start to flow downstream, leaving little room for further deterioration in gross margins to keep the industry running smoothly. However, no matter how to alleviate, the lithium industry as a whole is difficult to have excess profits, and ultimately need to find a reasonable gross margin level.
First, in the context of "dry and fast" lithium production capacity, capacity is gradually released, and even partial surplus, competition will be more fierce, which constitutes a large pattern of competition in the lithium industry. At the same time, with the release of capacity, capacity utilization rate and yield rate is a double-edged sword, if the utilization rate and yield rate is not high, it will further drag on enterprise performance.
Second, upstream cost pressure is temporarily difficult to ease, especially lithium carbonate, diaphragm, copper foil and other upstream capacity is insufficient, doomed to scarcity in the short term, the price is still high in the short term, diaphragm is even further rising in price.
Third, although the current price of lithium battery begins to loosen, to the downstream transmission, but the power battery downstream automotive industry cost control pressure is greater, bargaining space is very small; As a means of production, large energy storage batteries are constrained by the return on investment model, and there is little room for bargaining. Only small power batteries for consumer or home energy storage batteries and high-end power batteries, the bargaining space is relatively large, but after all, the proportion is limited.
In the above context, the gross margin of the lithium battery industry may not become worse in the short term, but it is difficult to be optimistic in the medium and long term. The industry needs to find a minimum reasonable gross margin.
In other words, gross margins won't be worse, but they won't be great either. Seek and maintain at a minimum reasonable level, will be large probability.
Ningde Times is an unusual company with a high stable gross margin. The main reasons are as follows: first, it has captured the most beautiful customers and market share in the industry; second, it has scale effect; third, it has capacity utilization rate and good yield rate based on long-term solid experience; fourth, it has reduced procurement costs through supply chain management.
However, for other domestic enterprises in the lithium industry, it is very good to have the above advantages, not to mention ningde Times has the above four advantages at the same time, and absolutely leading. So other lithium enterprises face much greater gross margin pressure.
In general, the lithium battery industry is facing several objective situations: first, the material cost remains high, lithium carbonate, diaphragm, copper foil and other materials are still in shortage, not only directly impact on the downstream gross margin, but also restrict the downstream capacity utilization rate; Second, the price of lithium battery began to loosen, some customers accept a certain degree of price increase, appropriate to ease the upstream cost pressure; Third, the gradual release of lithium capacity, competition will be more intense, fixed assets depreciation pressure began to appear.
Considering these factors, the gross margin of lithium battery should not become worse. After all, the industry should run normally. However, under such a background, it is difficult for most lithium battery enterprises to make excess profits, so they need to find a reasonable minimum gross margin level.
Under the influence of customer resources and bargaining power, capacity utilization and yield, supply chain management and other multiple factors, the gross margin is destined to be different, the industry will continue to remain differentiated, even intensified, which will be reflected in 2022.
