Ningde era welcomes 370 billion “tsunami” of lifting ban

On February 2, 2021, Ningde times (300750. SZ) issued a number of announcements, disclosing that “phase V and phase VI project of Yibin power battery manufacturing base with an investment of 12 billion”, “Zhaoqing project with an investment of 12 billion” and “FAW power battery” project with an investment of 5 billion “, with a total investment of 29 billion. Affected by this news, Ningde times continued to rise, with a cumulative increase of more than 10% and a market value of more than 900 billion yuan.

Ningde era welcomes 370 billion "tsunami" of lifting ban

There was also an announcement on February 2: 122 million additional shares (accounting for 5.25% of the total shares) issued in July 2020 will be listed and circulated on February 4. The floating profit of highland, Honda technology research, Pacific asset management and other institutions will exceed 23 billion, of which highland floating profit will exceed 10 billion.

 

On June 10, the 952 million shares held by Ruiting investment, Huang Shilin and Li Ping Ping before listing will be lifted. If the stock price exceeds 350 yuan, the market value of this part of the stock will exceed 330 billion yuan.

 

In the first three quarters of 2020, Ningde era was also shrouded by the “lifting ban cloud”. Fortunately, at that time, the stock price was not high and there was a heavy positive support——

 

In February, there were two consecutive good news: the announcement of business cooperation with Tesla disclosed in early February, and the stock plan of non-public development bank disclosed in late February (raising no more than 20 billion, high-level investment);

 

In March, CMB international timely launched the plan to reduce its holdings, with a planned reduction of no more than 44.17 million shares (2% of the total share capital) within six months;

 

In April, Ningbo united innovation announced that it would reduce its holding of 33.12 million shares (1.5% of the total share capital);

 

By the end of the reduction plan in August, CMB international had reduced 26.59 million shares and cashed out 4.03 billion yuan at an average price of 151.6 yuan per share; Ningbo Lianchuang had reduced 8.3 million shares and cashed out 1.53 billion yuan at an average price of 183.9 yuan per share. With the increase of 19.7 billion yuan raised in July, Ningde times and its shareholders will “pump” 25.2 billion yuan from the capital market in 2020.

 

In the fourth quarter after the completion of the reduction, Ningde Times rose nearly 60%, and its share price closed at 351.11 yuan at the end of the year.

 

In 2021, Ningde era is facing an unprecedented scale of lifting the ban. Although it reached a new high of 424.99 yuan in January, and its market value is only one step away from 1 trillion yuan, it has stepped out of a “negative cross” in the whole month, and has no chance with the popularity of other new energy related stocks.

 

The market value is more than 800 billion, and the lifting market value is nearly 400 billion. Assuming that 20% of the holders of the lifting shares choose to reduce their holdings, investors need to take the next 80 billion to stabilize the market. Will there be such a level of “cooperation with Tesla” this time? Last year, hillhood entered the market with 161 yuan / share, and now its share price is more than 350 yuan / share. Can we still find a giant like hillhood to throw tens of billions?

 

After all, lifting the ban is a technical problem. If we can maintain high-speed growth, the Ningde era will pass 2021 without danger.

 

Does the share of power battery still have room for growth?

 

From 2017 to 2020, the power battery installed capacity of Ningde times ranked first in the world for four consecutive years. In 2019, among more than 4600 new energy vehicle models in the catalogue of MIIT, 1900 models adopt Ningde era power battery. In 2019, the sales amount of the top five customers accounted for 41.9% of the revenue, 10% lower than two years ago (51.9% in 2017).

 

In H1 of 2020, the sales volume of domestic new energy vehicles and the installed capacity of power batteries decreased by 44% and 42% respectively, the shipment of Ningde power batteries decreased by 20.2% year on year, while the revenue of lithium battery materials business for other power batteries decreased by 46.5%, which demonstrated the anti risk ability of leading enterprises.

 

Ningde times disclosed its main business in three parts: power battery, lithium battery materials and energy storage system. The first two are the main sources of income. The energy storage business was launched in 2017. In 2018, the revenue soared tenfold to 190 million, accounting for 0.6% of the total revenue; in 2020, the revenue of H1 reached 570 million, accounting for 3% of the total revenue.

 

In the past three years, the proportion of power battery revenue has stabilized at over 80%. In 2019, the revenue of power battery will be 38.6 billion yuan, accounting for 84.3% of the revenue; in 2020, the revenue of power battery will be 13.5 billion yuan, a year-on-year decrease of 20.2%, while the revenue of energy storage system will increase by 136%. The total revenue of Ningde times only dropped by 7.1%, but the share of power battery dropped to 71.6%.

 

Lithium battery materials are valuable metals in waste lithium batteries for recycling. This business accounts for a considerable proportion in the revenue of Ningde era. In 2019, the revenue will be 4.3 billion, accounting for 9.4% of the revenue. In 2020, H1’s revenue will reach 1.23 billion yuan, a year-on-year decrease of 46.5%.

 

Energy storage system, including cell, module / box and battery cabinet, is more and more widely used in power generation, transmission and distribution and power consumption. It can effectively overcome the problem of irregular output of wind energy and solar energy at the power generation end, and cut the peak and fill the valley at the power consumption end (such as commercial buildings and charging piles), which has great potential. In 2019, the global energy storage battery shipment will be 18.8gwh, and the share of Chinese companies will reach 83.5%.

 

In 2017, the business revenue of Ningde times energy storage system was about 16.4 million yuan, 190 million yuan in 2018, 610 million yuan in 2019 (a year-on-year increase of 222%), and the revenue of H1 was 570 million yuan in 2020 (a year-on-year increase of 136%).

 

China is the world’s largest market for new energy vehicles. Under the protection of the “white list”, Chinese power battery enterprises enjoy four years of policy dividends, surpass Japanese and Korean manufacturers, and occupy seven seats in the list of the world’s top ten power battery enterprises in 2018. As the energy density of LiFePO4 battery is difficult to meet the subsidy standard, Ningde era, which focuses on ternary lithium battery, becomes the biggest winner.

 

After the decline of subsidies, LiFePO4 batteries have become popular by market forces. In 2020, the sales volume of power batteries in China will be 65.9gwh, of which the ternary lithium battery will be 34.8gwh, a year-on-year decrease of 34.4%; the lithium iron phosphate battery will be 30.8gwh, a year-on-year increase of 49.2%.

 

After the “white list” was abolished, Panasonic, LG and other giants entered the Chinese market, and their global market share was increased. According to the data released by SNE research, the global installed capacity of power batteries will reach 137gwh in 2020, with Ningde times, LG and Panasonic accounting for 24.8%, 22.6% and 18.3% respectively.

 

In the domestic market, BYD’s blade battery (which can be understood as a cell to pack Technology) has greatly increased the energy density of iron batteries (BYD’s “Han” with blade battery sold more than 10000 yuan a month, surpassing Tesla’s sales in China). GuoXuan hi tech and Ningde times lag behind “one position” in the CTP / CTC field (the highly integrated CTC battery of Ningde times will be officially launched in 2025). In addition, solid state batteries, graphene batteries and cobalt free batteries are running to the market day and night.

 

According to the latest news, Panasonic will start producing Tesla’s latest 4680 battery in 2021. Compared with the traditional battery, the 4680 battery has five times higher energy density, six times higher output power and 16% higher range.

 

With the abolition of the “white list”, internal and external attacks, and technological changes, the dominant position of power battery in Ningde era is unstable. The layout of energy storage system and lithium battery materials is very necessary, but it is not enough to change the overall situation.

 

Gross profit margin of power battery declines

 

In 2019, affected by the “recession” of subsidies, the sales volume of new energy vehicles changed from rapid growth to slight decline, with the annual shipment of 1.206 million vehicles, a year-on-year decrease of 4%. However, Ningde era’s shipment volume rose 90% against the trend, reaching 40.25gwh, accounting for about one third of the global market.

 

At the same time, the unit price of power battery dropped again and again. In 2019, Ningde times will deliver 40.25gwh of power batteries, generate 38.58 billion yuan of revenue, and cost 985.6 yuan per kilowatt hour of capacity, which is 8.5% lower than that in 2018 and only 46.6% of that in 2016. A pure electric vehicle with a power battery capacity of 80kwh (about 500km) will cost 164400 yuan in 2016, 83800 yuan in 2018 and 76700 yuan in 2019.

 

With the decline of sales unit price, the gross profit margin of Ningde era has been declining all the way, which is still 34% in 2018, 28% in 2019 and only 27% in H1 in 2020. However, until 2019 before the outbreak of the epidemic, the gross profit of Ningde times has maintained a rising momentum, with 5.9 billion in 2017, 8.4 billion in 2018 and 11 billion in 2019. In H1 of 2020, affected by the epidemic situation, the power battery revenue of Ningde times will drop by 20.2%, the gross profit margin will drop by 2.4%, and the gross profit will be 3.57 billion yuan, a year-on-year drop of 26.8%.

 

In 2017, the unit price gross profit of Ningde times power battery was 496 yuan / kWh. In 2018 and 2019, it will be 357 yuan and 273 yuan respectively.

 

In 2018 and 2019, direct materials accounted for 83.58% and 81.35% of the cost of power battery in Ningde era, respectively, and there was little room for controllable manufacturing cost. If the bargaining power is insufficient, the increase of material cost can not be transferred to the downstream, and the gross profit margin will inevitably decline. From this point of view, the power battery business means relying on the weather.

 

The total revenue of energy storage system and lithium battery materials is less than 30% of the total revenue, but they have broad development prospects, and the gross profit margin is higher than that of power battery.

 

In 2019, the gross profit of non power battery business (energy storage and battery materials) will reach 2.33 billion yuan, with a gross profit margin of 32%, 4 percentage points higher than that of power battery; in H1 of 2020, the gross profit of non power battery business will reach 1.54 billion yuan, with a gross profit margin of 29%, 2 percentage points higher than that of power battery.

 

In the gross profit of Ningde era, power batteries always account for more than 80%. In 2019, the gross profit of power battery will be 11 billion, accounting for 82.5% of the total gross profit. In 2020, the gross profit of H1 power battery and non power battery will be 3.6 billion and 1.5 billion respectively, and the latter is equivalent to 43.1% of the former, accounting for more than 30% of the total gross profit margin for the first time.

 

Ningde era realized the continuous growth of gross profit while the gross profit rate declined. In the first three quarters of 2020, the gross profit is 2.3 billion, 2.8 billion and 3.5 billion respectively, while the sales, R & D and management expenses are 1.4 billion, 1.5 billion and 1.68 billion respectively.

 

In terms of percentage, the gross profit margins of the first three quarters of 2020 are 25.1%, 29.1% and 27.8% respectively, and the total proportion of the three expenses in the revenue is 15.5%, 15.3% and 13.2% respectively.

 

In Q3 of 2020, the net profit of Ningde times reached a record 1.54 billion yuan (net profit rate 12.2%), with a year-on-year growth of 8.8%.

 

In the past four quarters, the net profit of Ningde times totaled 4.61 billion yuan. On February 2, 2021, the market value corresponding to the closing price of Ningde times was 856.7 billion, equivalent to 185.8 times of the net profit of the past four quarters. In the current context, the valuation is not high, but considering the market value of 370 billion, it is not easy to catch up in the first half of 2021.

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