(Producer/Author: Huaxin Securities Liu Huafeng )
1. Deeply cultivate high-nickel ternary positive electrodes and quickly grow into the world's leading high-nickel
1.1 Company profile
Rongbai Technology's predecessor, Jinhe Lithium Battery, was established in 2014. It integrated the industrial resources of the China-South Korea positive electrode materials industry at the beginning of its establishment. It was jointly created by experts with rich industrial experience in China and South Korea, with a high starting point.
In 2018, the company underwent a share reform and was renamed Ningbo Rongbai New Energy Technology Co., Ltd., and was listed on the Science and Technology Innovation Board in 2019.
Company is deeply engaged in the research and development and manufacturing of ternary positive electrode materials and precursors of lithium-ion batteries. Its main products include NCM523, NCM622, NCM811, NCA and other series of ternary positive electrode materials and precursors.
Company firmly plans to build a high-nickel ternary system, becoming the first positive electrode material manufacturer in China to achieve mass production of NCM811 series products and apply them to mainstream international terminal car companies. The technology and production scale of NCM811 series products are both leading the world.
The company's equity structure is clear and stable.
The actual controller of the company is Chairman Bai Houshan, who indirectly holds shares through the controlling shareholder Shanghai Rongbai and the joint actors Rongbai Development, Rongbai Management, Zunyi Rongbai Partnership, and Rongbaike Investment.
Bai Houshan obtained control of Jinhe Lithium Battery through capital increase during the establishment stage of the company in September 2014, and was one of the important strategic layouts for its investment and development of power battery ternary positive electrode materials business.
Company is committed to building a business partner and partner mechanism, implementing a multi-round rolling equity incentive plan, and has three employee stock ownership platforms: Rongcheng Partnership, Rongke Partnership, and Rongguang Partnership.
In October 2020, the company launched an equity incentive plan and awarded 12.75 million shares to 200 incentive targets in the first batch.
In July 2021, the company launched the 2021 restricted stock incentive plan, awarding 2.022 million shares to 135 backbone members.
assessment requirements are that the net profit attributable to shareholders of non-operating items (excluding share payment fees) will reach 12/18/2.5 billion yuan respectively, or the arithmetic average of the closing market value for any 20 consecutive trading days in 2022-2024 will reach 800/1000/120 billion yuan respectively. The implementation of the
equity incentive plan improves the company's long-term incentive mechanism and further clarify the confidence of the management.
Company's main products include NCM523, NCM622, NCM811, NCA and other series of ternary positive electrode materials and their precursors.
ternary positive electrode material is mainly used in the manufacturing of lithium batteries, and is mainly used in new energy vehicle power batteries, energy storage equipment and electronic products.
The ternary precursor is a nickel-cobalt-manganese hydroxide intermediate of the ternary positive electrode material. Their processing quality has an important impact on the performance and quality of the ternary positive electrode material.
's company's revenue is mainly three-yuan positive electrode, and the revenue share of three-yuan positive electrode business increased from 78% in 2016 to 93% in 2020. From 2016 to 2020, the company's three-yuan positive electrode shipments increased year by year, with a CAGR reaching 48%.
precursors are mostly used for self-use, resulting in fluctuations in shipments.
The company's core product NCM811 has a clear advantageous position, ranking first in the domestic market share from 2017 to 2020. From 2017 to 2020, the company's NCM811 series materials shipments grew rapidly, with a CAGR reaching 140%, and the shipment share increased from 16% in 2017 to 82% in 2020.
1.2 Analysis of the company's financial status
2016-2019 overall revenue scale showed a growth trend, with a CAGR of 68%, while in 2020, the revenue declined by 9% year-on-year due to the epidemic.
Starting from Q3 2020, as the impact of the epidemic gradually subsides, the company's profitability is rapidly recovering.
Q1-Q3 of 2021, the company achieved revenue of 6.251 billion yuan (YOY+167%) and net profit attributable to shareholders of 549 million yuan (YOY+384%).
The company's significant performance growth is mainly affected by the following factors:
(1) The company's core products NCM811, Ni90 and above high-nickel, ultra-high-nickel series, NCA products sales increased year-on-year;
(2) New production capacity is effectively released, capacity utilization rate is improved, production line scale effect is revealed, and single ton cost is improved;
(3) The self-supply rate of precursors increases, and single ton profit is improved;
(4) The rising raw material prices drive product prices to rise, and inventory appreciation is enjoyed.
Since 2020, the company's gross profit margin and net profit margin have gradually recovered.
The company's gross profit margin increased from 12.1% in 2016 to 16.6% in 2018. Starting from Q3 2018, the company's gross profit margin declined, mainly due to insufficient capacity utilization, decreased precursor self-supply rate and decline in raw material prices.
With the rapid recovery of the new energy vehicle industry, the company's capacity utilization rate has increased and the price of raw materials has bottomed out and rebounded, and the company's gross profit margin and net profit margin have been restored.
2. Lithium iron phosphate recovers in the short term and does not change the trend of ternary high nickelization
2.1 Power batteries mostly use lithium iron phosphate and ternary positive electrode
positive electrode material accounts for the highest proportion of the total cost of lithium-ion batteries, reaching 30%-40%.
The performance of the positive electrode material directly affects the core performance indicators of lithium-ion batteries, among which factors such as the gram capacity, voltage platform and compaction density of the positive electrode material have a direct impact on the energy density of the battery; the structural stability and surface characteristics of the positive electrode material largely determine the upper limit cutoff voltage, cycle life and safety performance of the battery; the transmission characteristics of ions and electrons of the positive electrode material have a great impact on the power performance of the battery.
Currently, the mainstream positive electrode materials commercialized mainly include lithium cobalt oxide (LCO), lithium manganese oxide (LMO), lithium iron phosphate (LFP) and ternary positive electrode materials (NCM and NCA), among which the power batteries mainly use lithium iron phosphate and ternary positive electrodes.
In the field of power batteries, the positive electrode material has undergone a development process mainly from lithium manganese oxide, lithium iron phosphate to ternary positive electrode materials. The application range of ternary positive electrode materials in the field of power batteries has been continuously improved. Since 2018, it has become the largest market share of the power battery positive electrode material and is one of the mainstream choices in the current power battery industry.
2.2 Short-term lithium iron phosphate recovers, and medium- and long-term high-nickel ternary has a large development space
In the short term, lithium iron phosphate recovers significantly.
According to data from the China Chemical and Physical Power Industry Association, my country's lithium iron phosphate batteries in the power field reached 69% in 2016. As subsidies shift to high energy density and long range, the market share of lithium iron phosphate batteries dropped to 33% in 2019.
At the same time, the market share of ternary batteries has rapidly increased from 27% in 2016 to 65% in 2019.
is subject to subsidies, and the switching of high-end models such as Tesla and BYD brought about by the advancement of CTP/blade battery technology, coupled with the growth in sales of A00-class models, the recovery trend of lithium iron phosphate batteries is obvious.
According to data from the China Automobile Power Battery Industry Innovation Alliance, from January to October 2021, my country's installed power battery capacity was 107.5GWh, a year-on-year increase of 168.1%. Among them, the installed capacity of ternary batteries was 54.1GWh, accounting for 50.3% of the total installed capacity, an increase of 100.1% year-on-year; the installed capacity of lithium iron phosphate batteries was 53.2GWh, accounting for 49.5% of the total installed capacity, an increase of 316.4% year-on-year. The installed capacity of lithium iron phosphate batteries was greater than that of ternary lithium batteries.
In terms of shipment volume, from January to October 2021, the shipment volume of lithium iron phosphate batteries reached 87.52GWh, with a market share of 52%, and has completed the overtake of the market share of ternary batteries.
In the medium and long term, Sanyuan still has a lot of room for development.
From the perspective of energy density, iron lithium has limited room for improvement, and high nickel ternary energy density has a large room for improvement. In line with electrification's continuous pursuit of high energy density, semi-solid state/solid state batteries can be entered in the future.
From a cost perspective, high nickel ternary has more room for long-term cost reduction. From the perspective of battery recycling, the comprehensive recycling value of ternary batteries is higher.
In the future, the new energy vehicle market will maintain a long-term coexistence of ternary positive electrode materials and lithium iron phosphate positive electrode materials. The ternary positive electrode materials dominate the market structure of long-term mid-to-high-end passenger car market and the market share of lithium iron phosphate positive electrode materials in short-term mid-to-low-end passenger car market.
1. Energy density: There is limited room for improvement in iron lithium, high nickel ternary energy density improvement space is large
has achieved high volume utilization through innovation in structural forms such as CTP and blade batteries. The grouping efficiency has been increased from the original 70%-80% to the current 90%, and the improvement space is limited.
's pursuit of high energy density is the continuous pursuit of the electrification of new energy vehicles. The further key to battery energy density in the future will depend on the improvement of the battery cell's own energy density.
, and the actual specific capacity of lithium iron phosphate has reached 80%-90% of the theoretical specific capacity, which is close to the theoretical limit; there is a lot of room for improvement in the actual specific capacity of high nickel ternary.
For ternary batteries, nickel elements help to improve material capacity; cobalt elements play a role in stabilizing the structure; manganese/aluminum are mainly used to stabilize the ternary architecture.
is combined in the ternary system. As the nickel content increases, the specific capacity of the ternary positive electrode increases, thereby achieving higher battery energy density.
At present, lithium iron phosphate power battery cells have a mass energy density between 180-200Wh/kg (volume energy density 350Wh/L-450Wh/L).
With the optimization of the material system and process, the mass energy density of lithium iron phosphate battery cells is expected to increase to 210-230Wh/kg (volume energy density is increased to 450Wh/L-500Wh/L).
Currently, the mass energy density of high nickel battery cells is between 240-300Wh/kg (volume energy density 560Wh/L-650Wh/L).
In the next stage, after the high nickel battery cell is introduced into the positive electrode and the negative electrode is introduced into the silicon carbon negative electrode, the mass energy density of the battery cell is expected to reach 300-400Wh/kg (volume energy density 630Wh/L-750Wh/L), widening the gap with lithium iron phosphate battery cell.
From a short-term perspective, the current mainstream high-nickel material is NCM811. With the further increase of nickel content, positive electrode materials such as Ni85, Ni90, and Ni92 have been developed and mass-produced. Ultra-high nickel products such as Ni96 are also under development. High nickel/ultra-high nickel and new silicon carbon negative electrodes have a lot of room for improvement in the energy density of the battery cell.
From a medium-term perspective, the NCM upgraded quaternary material NCMA incorporates a small proportion of aluminum elements on the basis of NCM ultra-high nickel batteries. The doping of Al and Mn inhibits volume expansion during charging, reduces the generation of cracks inside secondary particles, and significantly improves cycling performance. Thermal stability is also improved compared to NCM and NCA, so the overall performance of the battery is greatly improved.
From a long-term perspective, in the early and mid-term development stage of semi-solid/solid-state batteries, the mainstream development route of positive electrode materials is still the best in high nickel ternary.
2. Cost: High nickel ternary cost reduction space is greater for long-term cost reduction
ternary cost reduction space is greater for long-term cost reduction. The cost reduction of high nickel ternary units is mainly based on:
(1) 8 series is moving towards 9-type ultra-high nickel batteries, and the cost reduction of positive electrode materials is achieved by increasing nickel content and reducing cobalt content;
(2) Huayou, Greenmei, Zhongwei and other companies are deploying Indonesian nickel ore, which will reduce nickel prices as production capacity is released;
(3) unit investment in production lines decreases;
(4) manufacturing costs caused by scale effects;
(5) Improvement of production processes brings an increase in yield rate of production lines;
(6) The usage and cost of non-positive electrode materials brought about by the increase in energy density.
According to Huajing Industry research data, as the subsequent high-nickel process matures and technologies such as CTP have begun to be commercially applied, the cost decline curve of high-nickel ternary is steeper. It is expected that the cost of high-nickel ternary is lower than that of 5/6 series ternary in 2023-2024, and the cost in 2027-2028 will be lower than that of lithium iron phosphate batteries. The final theoretical cost is 10-15% lower than that of lithium iron phosphate batteries.
Considering that the ternary battery has a high energy density and the same range requires less power, the cost of a ternary battery in a bicycle will be closer to lithium iron phosphate batteries.
3. Battery recycling: The comprehensive recycling value of ternary batteries is higher
With the rapid development of the lithium-ion battery industry, the recycling and utilization of waste lithium-ion batteries has become an increasingly prominent industry problem. The recycling of waste lithium-ion batteries is an inevitable requirement for environmentally friendly and economic development. From an environmentally friendly perspective, the recycling and utilization of waste lithium-ion batteries is an important way to achieve closed-loop secondary utilization of resources and reduce the mining of valuable metals (metals with relatively high value and relatively scarce resources); from an economic perspective, the recycling of waste lithium-ion batteries is an effective solution to improve the cost-effectiveness of lithium-ion batteries and promote the healthy development of the industrial chain.
Due to the large differences in the metal content in different positive electrode materials, the recycling value of lithium-ion batteries produced with different positive electrode materials varies greatly. Since the ternary battery contains much higher value of the value of metal (lithium cobalt nickel) than lithium iron phosphate batteries, the comprehensive recycling value of the ternary battery is higher.
2.3 The penetration rate of high nickel in the ternary system continues to increase
According to Xinli information data, the penetration rate of high nickel (8 series + NCA) in China increased from 13% in 2019 to 23% in 2020.
In August 2021, the penetration rate of domestic high-nickel materials reached 43%, of which the penetration rate of 8 series ternary materials was 41%. With the release of high-nickel production capacity of leading enterprises in the fourth quarter, Xinli Information expects that the penetration rate of high-nickel materials is expected to reach 40% in 2021, which is mainly due to the continued hot sales of Tesla, new car manufacturing forces, and overseas high-nickel models.
Take the Shanghai Auto Show in April 2021 as an example. According to incomplete statistics, among the nearly 80 new energy models, 43 of them have been equipped with or will be equipped with high-nickel batteries, including foreign Mercedes-Benz, Volkswagen, BMW, Audi, domestic NIO, Xiaopeng, etc.
At present, leading Chinese, Japanese and Korean battery companies such as CATL, Panasonic, LG, Samsung SDI, SKI, etc. have mass-produced and supplied high-nickel batteries, and are actively developing next-generation batteries with higher nickel content, which will drive the rapid release of high-nickel materials demand.
In the future, with the requirements of electric intelligence on high-energy density batteries, high nickel penetration will further increase.
3. The company has many advantages and has a stable leading position in high nickel
3.1 The leading high nickel positive electrode enterprise benefits from the increase in high nickel penetration rate
ternary positive electrode industry structure is scattered.
From the market share of CR3/CR5/leading companies, the three-way positive electrode is the most scattered among the several main links. According to Gaogong lithium battery data, the CR5 in 2020 was 52%, and the market share of the top five companies was between 8% and 13%, with a small gap. CR5 reached 56% in the first half of 2021, an increase of 4pct compared with 2020, and the concentration increased significantly.
ternary positive electrode industry has a low concentration, mainly because:
(1) The positive electrodes such as 3 series, 5 series, 6 series, and 8 series coexist for a long time in the industry, and the technical barriers of medium and low nickel products are low;
(2) Raw material costs account for nearly 90%, and there is little cost difference between enterprises;
(3) The positive electrode market size is the largest, and industry enterprises and cross-industry capital pay attention to it;
(4) The positive electrode has a great impact on battery performance, and battery manufacturers have seized part of the market share in a vertical integration.
In the future, the ternary positive electrode industry will usher in an increase in concentration with high nickelization, and the company will benefit the most as a leader in high nickel.
We expect market concentration to increase in the future. The main reason is:
(1) Under the high nickelization process, the process complexity and technical barriers have been increased;
(2) The positive electrode enterprises achieve an integrated layout by layouting precursors, nickel-cobalt lithium resource terminals, and battery recycling, which will widen the cost difference between enterprises.
According to Xinli Information Data, the domestic high-nickel (8-series + NCA) penetration rate has increased from 13% in 2019 to 23% in 2020, and will continue to increase in the future.
In 2020, the market share of Rongbai Technology and Tianjin Bamo are 49% and 36% respectively, which is far higher than the market share of ordinary three yuan.
In the first half of 2021, Rongbai Technology and Tianjin Bamo had a total market share of 59%. The high-nickel leader still maintained a large advantage, a decrease of 21pct compared with 2020. It was mainly due to the high-nickel production capacity of second-tier manufacturers such as Berry and Bangpu, and the second-tier market share has increased.
According to Xinli information and Gaogong lithium battery data, the company is the only domestic company with a production of ternary positive electrode materials exceeding 25,000 tons in 2020. The domestic shipment of high-nickel ternary materials ranked first in 2017-2020, with first-mover advantages, technical advantages and capacity advantages.
In the stage of rapid increase in high nickel penetration, the company is the most benefiting as a leader in high nickel.
3.2 The first-mover advantage is obvious, and the technological innovation capabilities are outstanding. The company firmly plans to build a high-nickel tri-system, and its overall technical level and mass production progress are leading its peers for 1-2 years.
Based on industry experience and forward-looking market judgment, the company is the first company in China to develop and mass-produce NCM811. It has made efforts to study NCM811 at a high starting point since its establishment. In 2016, it was the first to break through and master the key process technology of high-nickel ternary cathode materials. In 2017, it became the first domestic positive electrode material company to achieve large-scale mass production of high-nickel NCM811. It was the first globally to apply high-nickel cathode power batteries to new energy vehicle power batteries and introduce it into the supply system of mainstream international customers.
Compared with competitors in the same industry, the company has the earliest layout of high-nickel positive electrodes, the earliest mass production time, fast product iteration speed and the largest mass production scale. It is a well-deserved leading high-nickel enterprise, and its overall level is 1-2 years ahead of its peers.
Company actively makes technical layout around the cutting-edge lithium battery materials.
main core technologies cover the lithium battery positive electrode materials, precursors and resource recycling industry chain, including ultra-high nickel (Nimol%≥90) positive electrode material production technology, NCMA quaternary positive electrode material production technology, positive electrode material atmosphere sintering technology, high voltage single crystal material production technology, precursor co-precipitation technology, NiCoMn metal recycling technology, etc., and have clear independent intellectual property rights.
Company has continuously made technological breakthroughs in the development fields of new materials such as modified high-nickel\ultra-high-nickel positive electrode materials and solid electrolytes, sodium ion battery positive electrode materials, lithium-rich manganese-based positive electrode materials, spinel nickel lithium manganate positive electrode materials, and other modified new materials, and has obtained a number of patented technology reserves to promote the commercial application of cutting-edge materials in downstream market segments.
At present, the company has Ni90 series NCM, NCA, and NCM, NCA, and above Ni90 NCM, NCA, NCMA material technology and product reserve capabilities. Related products can be applied to the cylindrical, soft-pack and square, as well as the next generation full/semi-solid state battery fields produced by some downstream customers, including 46,800 large cylindrical batteries with higher energy density and lower cost.
In the field of ultra-high nickel positive electrode materials, the company's Ni90 ultra-high nickel positive electrode materials have been mass-produced for some domestic cylindrical battery manufacturers, and solid-state battery manufacturers are supplied in a ton-level, and at the same time, it ships a small number of overseas customers.
In the field of high voltage nickel-manganese, high voltage nickel-manganese systems are an important battery material direction in the future. Spinel nickel-manganese materials have cost advantages over high nickel and energy density advantages over lithium iron phosphate.
has applied for a number of patents in the field of single crystal cobalt-free high voltage spinel nickel manganate, and actively sent samples to many customers, and cooperated with leading electrolyte companies and battery cell companies in the industry to develop this material system. At the same time, the company's existing production lines are compatible with the production of this type of materials and have large-scale production capabilities.
Company is based on R&D, and core executives have technical R&D capabilities and forward-looking vision.
As a high-tech enterprise, the company focuses on product research and development and scientific and technological innovation.
is led by the group chairman Bai Houshan. He hired high-level materials research experts, engineering technology experts, product management experts and analysis and testing experts at home and abroad to form an international R&D team of more than 300 people. The company's R&D personnel are distributed in China and South Korea. Among them, the domestic R&D team is positioned in basic R&D, product development and process optimization, and the Korean R&D team is positioned in the direction of precursors, resource regeneration, and technical exchanges and cooperation with international lithium battery manufacturers and other industries.
Company integrates China-Korea multinational R&D teams and resources, and through independent R&D and technical cooperation, it actively develops new products and promotes the quality of existing products. Bai Houshan, the founder and chairman of the company, is a professor-level senior engineer. He is a senior technical expert and entrepreneur in my country's lithium battery materials industry. He serves as a director of the China Electric Vehicle Hundred People Association, a director of the China Chemical and Physical Power Industry Association and an expert in the National Science and Technology Awards. Liu Xianglie, general manager of
, is an expert in lithium battery materials in South Korea, and an operation committee member of the WPM secondary battery materials business group in South Korea. He has more than 30 years of industry experience and rich R&D and management experience. The company's core technical personnel are bundled with the company's interests through employee stock ownership platforms and equity incentive plans, forming deep binding.
3.3 Accelerate production expansion and consolidate the leading position of high-nickel positive electrode, and the customer structure continues to be optimized
As of the end of 2020, the company has an annual production capacity of 40,000 tons of ternary positive electrode materials, and the high-nickel production capacity is leading in China. In order to meet downstream needs, the company has rapidly expanded the production scale of high-nickel cathode materials.
In 2021, the company will start building bases on a large scale in four places, including South Korea, Ezhou, Hubei, and Zunyi, Guizhou, and precursor bases, and Yuyao, Zhejiang. The total production capacity of positive electrode materials is expected to reach more than 120,000 tons by the end of the year.
By 2025, the company will expand its production capacity of high-nickel cathode to more than 300,000 tons, build manufacturing bases in Europe and North America, and serve international strategic customers.
At that time, the company will form a global industrial layout between China, South Korea, Europe and the United States, basically covering the global mainstream electrification area. From the perspective of fixed assets, projects under construction, and capital expenditure, the company's expansion is ahead of its peers.
As of the end of September 2021, the company's fixed assets scale is not much different from its peers, but the company's unit capacity investment is low, so the cathode production capacity is relatively high; the company's under-construction projects and capital expenditures are significantly ahead of its peers, and will be the first to enjoy the explosion of high-nickel cathode demand brought about by the increase in penetration rate of new energy vehicles in the future.
Strategic collaboration deepens and customer structure is optimized.
Company has increased its cooperation depth with major domestic and foreign customers such as CATL, Yiwei Lithium Energy, Funeng Technology, Honeycomb Energy, SKI, and signed a strategic supply agreement with Funeng Technology and other customers.
At the same time, the company actively matches the international layout plan of new energy terminal car companies, deepens comprehensive strategic cooperation with terminal car companies, and further increases global market share.
Take Funeng Technology as an example. In July 2021, the company signed a framework agreement with Funeng Technology. In the second half of 2021 and 2022, Funeng Technology will purchase 5,505 tons and 30,953 tons of high-nickel ternary cathode materials from the company respectively.
The company and its major customer CATL began to cooperate in 2016. In October 2016, the company's relevant small test samples passed CATL certification; in 2017, the company's pilot samples passed the certification, and CATL began to use the company's products tons; in January 2018, the company's high-nickel product production line passed CATL mass procurement certification review, and related products began to be supplied in large quantities.
In 2018, CATL entered the top five customers of the company for the first time, with sales of 284 million yuan and revenue accounting for 6.9%; in 2019, CATL became the company's largest customer, sales of 2.06 billion yuan and revenue accounting for 49.2%.
3.4 Low-production line investment intensity + precursor integration + battery recycling, multi-path comprehensive cost reduction
ternary positive electrode material is priced as a cost bonus model, and the price fluctuates with the prices of ternary precursors (nickel, cobalt, manganese) and lithium hydroxide.
According to the cost-plus pricing mechanism, the processing fee in the product quotation actually reflects the product pricing power and competitiveness of the positive electrode material company.
Unit product processing fee is usually determined by factors such as manufacturing costs, labor costs, and market supply and demand conditions, company brand value and expected profits.
Therefore, for product types or new products with market first-mover advantages and technological competitive advantages, enterprises can usually obtain higher processing fees, reflecting product innovation, added value of core technologies and the company's continuous profitability.
For the company, it is expected to obtain processing fees that exceed the average level of peers.
First of all, through continuous R&D investment and experience accumulation, the company continuously optimizes and iterates and upgrades the NCM811 products. The multi-generation NCM811 series products maintain the industry-leading first-mover advantage of technology, ensuring the company's strong product bargaining power.
Secondly, leveraging the first-mover advantages of products and technical advantages, the company has formed a close strategic cooperative relationship with its core customers, which can effectively, timely and reliably meet customer product needs and maintain a high market share.
Again, as the core material of new energy batteries, the certification and testing of NCM811/NCA products by power battery companies and the cross-level certification procedures of downstream car companies are relatively complicated, and they usually do not easily change suppliers, which promotes the stability of cooperation between the company and core customers and terminal cars.
relies on its technological advantages to launch the NCM811 product, and its gross profit margin ranked high in the same industry in 2018.
The company's gross profit margin has declined since Q3 2018, mainly due to insufficient capacity utilization, decreased precursor self-supply rate and decline in raw material prices.
In 2020, the gross profit margin of the company's positive electrode business is at the upper middle and upper level in the industry, slightly lower than Dangsheng Technology and Changyuan Lithium Technology.The main reason for Dangsheng Technology's high gross profit margin is that its capacity utilization rate reaches 100%, and its international customers account for nearly 70%; the main reason for its long-term high gross profit margin is that its precursor self-supply rate is nearly 80%, far higher than the company's level in the same period.
With the company's capacity utilization rate increasing, the self-supply rate of precursors increases, and the price of raw materials bottomed out and rebounded, the company's gross profit margin was restored in 2021.
In 2020, the company's net profit per ton was about 6,000 yuan/ton, and increased to 11,000 yuan/ton in 2021Q1. The company's net profit per ton has reached 14,000-15,000 yuan/ton in 2021Q2/Q3, which is close to Dangsheng Technology's 15,000-16,000 yuan/ton and Changyuan Lithium Technology's 16,000-17,000 yuan/ton.
The profitability difference between enterprises in each link is related to the link attributes (investment intensity, cost composition).
positive electrode link is a typical asset-heavy link, with a unit investment amount per 10,000 tons/per GWh investment amount per GWh, so the unit investment intensity needs to be paid attention to. The proportion of cathode raw materials accounts for 87% of the cost, so expanding upstream to achieve integration is the core path to effectively reduce comprehensive costs and achieve excess profits.
1, low unit investment strength of production line and short production cycle
Because high-nickel ternary positive electrode materials have higher technical requirements for doping coating technology, sintering equipment accuracy and processing technology, the company, as the first domestic positive electrode material enterprise to mass-produce NCM811, based on the independent design and construction of production lines, took the lead in building the first fully automated high-nickel positive electrode material production line in 2017, and achieved mass production and sales that year.
Company strengthens engineering technical barriers, accelerates the innovative design and equipment development of production lines, and relies on independent design of advanced production equipment and fully automated high-nickel positive electrode material production lines to achieve large-scale, flexible and intelligent high-nickel manufacturing, and promotes the reduction of manufacturing costs and product quality improvement.
company independently designs the control system to promote the optimization of centralized control. The second generation of the company's automated integrated control technology has been implemented, realizing the transformation from "independent operation of single-unit equipment system programs" to "integrated and unified control deployment".
relies on the mature modular management system to carry out production line design and equipment selection in parallel, effectively shortening the construction cycle and reducing investment costs. The construction cycle of
10,000 tons of high-nickel cathode production line is only 6-8 months, and the investment amount is only 64% of the average level of peers, achieving high efficiency and low cost and rapid expansion of production.
Assuming that based on the 80% capacity utilization rate and 10-year depreciation period, Rongbai Technology's unit depreciation cost is only 4,265 yuan/ton, which is 2,355 yuan/ton lower than the average level of peers.
2, layout precursor integrated
ternary precursor is one of the main raw materials for producing ternary positive electrode materials. It is made by mixing and sintering with lithium salts (lithium carbonate for ordinary products and lithium hydroxide for high-nickel products). Its composition and structure have an important impact on the performance and quality of ternary positive electrode materials. The value of ternary precursors can account for 50%-70% of the value of ternary positive electrode materials (fluctuates with the fluctuation of lithium carbonate prices).
Considering the scale effect, the gross profit margin of specialized precursor manufacturers is mostly between 15% and 20%; because precursor-positron integrated manufacturers mainly supply themselves and have a small scale of external sales, the gross profit margin is mostly between 10% and 15%.
Assuming that the precursor-positron integration manufacturer's gross profit margin is 13%, the production cost of 6.5%-9.1% will be reduced if the positive electrode manufacturer 100% of its own precursors are used.
Starting from 2021, the company's precursor self-supply rate will increase to reduce costs and increase gross profit margin.
In order to meet the rapid growth of downstream demand, the company's early fixed asset investment and process technology improvement phasedly focused on the positive electrode material manufacturing link. The upgrade and expansion of precursor supporting production lines have lagged relatively behind, making some models of high-nickel precursors mainly derived from external procurement.
2019 and 2020 showed a significant decline in the self-supply rate of precursors, with the self-supply rate being less than 25% for two consecutive years, and the self-supply rate in 2020 was even less than 15%.
As the company's high-nickel precursor supporting production capacity is gradually released, the self-supply rate is expected to reach more than 30% in 2021.The company's IPO project "2025 Power Type Lithium Battery Material Comprehensive Base (Phase I)" is used to expand precursor production capacity and will be put into production in installments at the end of 2021 and the end of 2022. It is expected that the company's precursor production capacity will reach 90,000 tons by the end of 2022, and the precursor production capacity matching degree will reach 53%. According to the company's plan, it is expected that the precursor production capacity matching degree will reach 67% in 2025, which will further optimize the company's profit space.
Considering the importance of precursors to positive electrode performance and integrated cost reduction of precursors, the company established a precursor business unit in 2020. The
precursor sector strengthens its independent operation capabilities, mass production of high-nickel precursors, and improves capacity utilization. It turns losses into profits in 2021Q1 and doubles profit growth in 2021Q2. By leveraging the synergistic effect of precursor and high-nickel positive electrode technology, the product and engineering process technology have been effectively improved. New products of higher nickel NCM, NCA and NCMA have been certified by many internationally renowned customers, and the cobalt-free precursor small trial process is finalized.
In order to further control upstream resources, the company has established a vertical supply chain management mechanism, carried out in-depth strategic cooperation with industry-leading precursor raw material suppliers, laid out the upstream smelting links, and strengthened precursor-positive electrode integration; strengthened cooperation on the resource side, and established a "back-to-back" long-term cooperation agreement with nickel-cobalt lithium resource suppliers to reduce supply chain risks and improve cost advantages.
In May 2021, the company signed a strategic cooperation agreement with Maolian Technology to lay out the field of smelting of new nickel and cobalt materials for MSP and MHP.
In November 2021, the company signed a "Strategic Cooperation Agreement" with Huayou Cobalt Industry. The agreement stipulates that the company will establish long-term and close cooperation with Huayou Cobalt in the fields of upstream nickel and cobalt metal resource development, precursor technology development, precursor product supply and marketing. From January 1, 2022 to December 31, 2025, the company's precursor procurement volume in Huayou Cobalt will not be less than 180,000 tons. Under the condition that Huayou Cobalt provides the company with competitive advantages in metal raw material pricing methods and precursor processing fees, it is estimated that the precursor procurement volume will reach 415,000 tons.
The signing of this agreement will work with Huayou Cobalt Industry to jointly build a cost-competitive high-nickel ternary materials industry chain, which will help the company to stabilize the acquisition of ternary precursors and reduce costs.
3. Layout battery recycling and realizing recycling closed loop
. While mastering the integrated core technologies of ternary positive electrode materials and their precursors, the company actively makes arrangements in the field of recycling and reuse of waste lithium battery materials, forming a complete closed loop and competitive advantage of power battery recycling.
company has core technologies for recycling and reuse of waste materials such as "NiCoMn metal recycling technology" and "Li2CO3 recycling technology". It recycles nickel, cobalt, manganese and lithium element materials that can be used through inorganic acid dissolution, decomposition, and co-precipitation. The comprehensive recovery rate is high (≥98%) and is at the leading level in the industry. TMR Co., Ltd., a joint venture subsidiary invested by
, has realized the mature application of lithium battery waste recycling business, which is an important strategic layout for the company to expand into the field of power battery recycling.
TMR The main product is the relevant metal salt solution produced after the recycling and processing of battery materials. After the metal salt solution is adjusted with other metal salts according to the required ratio, it can be used to produce precursors and other battery materials.
According to the company's announcement, the company expects that the amount of nickel, cobalt and manganese mixture from TMR to reach 62 million yuan in 2021.
In addition, the company has adopted a number of recycling and recycling technologies in the production process of ternary material precursors, which has achieved an ecological circular economy for precursor production while avoiding environmental impacts.
4. Profit forecast
The company has a stable leading position in high-nickel with its rapidly expanding production capacity, high-quality customer base, precursor integration and technological research and development advantages. In the future, the company will benefit from the growth of the positive electrode track, the increase in high nickel penetration and the improvement of profit per ton.
We predict that the company will achieve net profit attributable to the parent company from 2021 to 2023 to be RMB 817 million, RMB 1.536 billion and RMB 2.388 billion, respectively, with the corresponding EPS of RMB 1.82, RMB 3.43, and RMB 5.33 respectively, and the current stock price corresponds to PE of RMB 71.5/38.1/24.5 times, respectively.
5. Risk warning
1) Risk of raw material supply and price fluctuations
2) Risk of downstream demand being less than expected
3) Risk of intensified market competition exceeding expectations
4) Risk of changes in industry technology route
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