On May 5, the share price of Ningde times, whose quarterly report was less than expected, fell by more than 13% and finally closed down by 8.13%, and its market value shrank by 77.7 billion yuan a day. After yesterday's closing, facing the sharp decline of share price, Zeng Yuqun urgently responded to investors that as a fast-growing high-tech enterprise, Ningde era valuation should refer to the early level of world-class high-tech enterprises, and in the face of more than 10 times of market space in the future, the company has great growth potential in the future.
On May 6, the share price of Ningde times opened low and went high, and finally closed flat at 375.99 yuan, with a total market value of 876.4 billion yuan.
Gross profit margin of price adjustment and repair in the second quarter
As the first heavyweight on the gem, Ningde times has been plagued by negative market news in the past five months, and its market value is close to halving. The sharp rise in the price of raw materials, the continuous decline in profitability and the rise of second-line brands are pressing on Ningde era like "three mountains".
According to the data of Shanghai Nonferrous Metals network, the average market prices of lithium carbonate, ternary cathode material, lithium iron phosphate cathode material and electrolyte required for power batteries increased by about 277%, 80%, 155% and 213% respectively last year, and further increased by 111%, 58%, 64% and 2% respectively in the first quarter of this year.
First financial mapping
With the sharp rise in the price of raw materials, the profitability of Ningde era has weakened year by year. From 2019 to 2021, the gross profit margin of Ningde times was 29.06%, 27.76% and 26.28% respectively. In the first quarter of this year, the data plunged to 14.48%, a record low.
In this regard, Ningde times explained to investors that in order to maintain the healthy and sound development of new energy vehicles and power battery industry, the company assumed the main pressure of raw material price rise in the first quarter of this year, which is the main reason for the decline of gross profit margin month on month.
The sharp decline in profitability also led to the net profit of Ningde times in the first quarter significantly lower than market expectations. In the first quarter of this year, the net profit attributable to the parent company of Ningde era was 1.493 billion yuan, a year-on-year decrease of 23.6%; The net profit after deduction of non return to parent was 977 million yuan, a year-on-year decrease of 41.57%.
In order to solve the imminent cost pressure, Ningde Times said that on the whole, the company has basically completed the price adjustment through negotiation with customers, will gradually implement the implementation in the second quarter of this year, and the gross profit margin will be gradually and reasonably repaired, but the specific results depend on the implementation.
A number of brokerage research reports pointed out that the follow-up profits of Ningde era will be improved. Guotai Junan research report pointed out that since April, the prices of most lithium battery materials have declined to a certain extent, and the profitability of Ningde era may hit the bottom in the second quarter. But at the same time, Guotai Junan also believed that the problem of sharp price rise of raw materials could not be completely eliminated in a short time, and lowered the target price of Ningde era from 297.6 yuan to 500.7 yuan to maintain the overweight rating.
In addition to the price rise of raw materials, the profitability of Ningde era is also affected by the change of market competition pattern.
As car companies have increased their attention to the second and even third supply of power batteries, the second-line power battery brand is rising. According to the data of China automotive power battery industry innovation alliance, the market share of Ningde era in the domestic market in the first quarter was 49.75%, still accounting for nearly half of the country, but it decreased by 2.35 percentage points compared with last year's market share (52.1%).
In the face of the "hukou grabbing food" of second tier brands, Zeng Yuqun responded that the new energy industry is currently in the early stage of development, and there is more than ten times the growth space of the market scale. The comprehensive competitive advantage of Ningde era is very obvious. It will continue to innovate in products, technology, production and manufacturing, business model and services, and continue to expand its leading advantage. The company plans to officially release Kirin battery in the second quarter of this year. Under the same electrochemical system, the energy density of the new battery is 13% higher than that of the large cylindrical battery, which will be highly competitive. Any small-scale battery manufacturer cannot change the current competitive pattern without disruptive technology.
At the investor activity on May 4, Ningde Times said that the future industry competition will not only look at a single product or technology, but a competition of comprehensive strength. Ningde era has a more complete supply chain system and stronger manufacturing system and technology R & D strength. With the mass production of new products with high cost performance, the advantage gap between the company and the second tier is increasing.
Is there still three times the growth space in four years
Yesterday evening, in addition to Zeng Yuqun's personal response to stock price fluctuations, Ningde times also released the latest news of the previous 45 billion yuan fixed increase project.
Ningde Times said that the above fixed increase project has obtained the approval of the CSRC for registration on April 29, 2022, and the approval is valid for 12 months. Ningde times will choose a reasonable time to handle matters related to this fixed increase within 12 months.
The first financial reporter learned that the 45 billion yuan raised this time will be mainly used to expand production capacity, which will add about 135gwh of annual production capacity of power batteries for Ningde era. In addition, the battery capacity base projects previously announced by Ningde times, such as Yichun production base, Guizhou Gui'an new area production base, Xiamen production base, Yibin manufacturing base phase 7-10 projects, will add an annual capacity of about 218gwh.
At present, the new annual capacity planned by Ningde times is 353gwh, which is more than doubled compared with 170.39gwh in 2021. Ningde Times said that there is still a gap between these capacity planning and future capacity demand. From the perspective of capacity demand, the demand for power and energy storage batteries is expected to continue to increase significantly in the next few years, and the company's market share still has room for further improvement.
According to GGII data, the global sales volume of new energy vehicles in 2021 was 6.5 million, and the average annual compound growth rate from 2015 to 2021 was 44%. The growth of new energy vehicle sales has also effectively driven the rapid development of power battery industry. In 2021, the global power battery shipment volume was 375gwh, with a year-on-year increase of 101.6%, of which the market share of Ningde era was 28.5%. In the first quarter of this year, the global market share of Ningde era has increased to 35%.
Ningde Times said that according to the calculation, the company's battery capacity demand is expected to reach more than 670gwh before 2025, which is nearly three times higher than the 170.39gwh capacity in 2021.
From the perspective of capacity supply, after the capacity climb of the existing power battery production line of Ningde era is completed, the total design annual capacity reaches 260gwh ~ 280gwh, plus the new annual capacity of 353gwh, the cumulative annual capacity will be 613gwh ~ 633gwh, and the supply-demand gap is about 37gwh ~ 57gwh.
Thanks to the broad market space of the new energy vehicle industry in the future, not only Ningde era, many power battery giants are expanding their production capacity significantly.
It is reported that LG new energy is expected to increase the global battery capacity to 520gwh by 2025, an increase of 1.6 times compared with 200gwh at the end of this year. Ski, another power battery giant in South Korea, also announced to increase its annual battery production to 220gwh by 2025, an increase of 1.9 times compared with 77gwh at the end of this year. The capacity expansion speed of both in the next three years is faster than that in Ningde era.
In this regard, Zeng Yuqun said in investor activities that power battery capacity expansion needs huge financial support. At present, peers often announce hundreds of GWH capacity planning, which requires hundreds of billions of capital investment, so it depends on the final implementation. At the same time, it also depends on the matching between the products and technologies that will be continuously updated in the future and the existing processes and equipment.
Zeng Yuqun believes that the high-quality and effective capacity of power batteries will still be scarce in the future, and there is also the problem of ineffective overcapacity.
Author / Xiao Yisi