text | Zheng Cancheng
edit | Peng Xiaoqiu
On October 6, China Innovation Airlines officially landed on the Hong Kong Stock Exchange, becoming the "first stock of Hong Kong stock power battery". But at this time, the listing has missed the 2021 New Energy bonus in the secondary market. The performance of Innovation Airlines on the first day of listing in
was not satisfactory. It broke the issue price as soon as it was listed, and the stock price returned to the issue price of HK$38 at the last closing moment; the issue price still fell by the next day, and the closing price of was HK$36.65, a drop of 3.55%. The actual controller of Zhongchuang Airlines is the Jintan District Government of Changzhou City, Jiangsu Province. In addition to the state-owned assets background, China Innovation Airlines has conducted two rounds of external financing, corresponding to the corresponding cost per share of RMB 10.95 and RMB 41.67 in December 2020 and October 2021 respectively. It is worth noting that the cost and issue price of the latter round were inverted.
Zhongchuang Airlines equity structure, source: Zhongchuang Airlines prospectus
There are many star capitals such as Xiaomi Yangtze Industry Fund and Sequoia. As a key customer of China Innovation Airlines, its industrial fund Guangqiruidi invested 700 million yuan in December 2020; upstream supplier Tianqi Lithium (002466.SZ, 9696.HK) subscribed 0.3% of shares for US$50 million in June this year.
According to Frost & Sullivan data, calculated by installed capacity, , the global installed capacity of Innovation Airlines in mid-2021 was 9.3GWh, with a market share of 3.2%, ranking seventh in the world; the installed capacity in China in 2021 was 9.1GWh, with a market share of 5.9%, ranking third in China. The top two names of are CATL (300750.SZ) and BYD (002594.SZ, 01211.HK). As of press time, the corresponding market value is 978.4 billion yuan and 653.1 billion yuan respectively.
Power battery manufacturer market share, source: Frost Sullivan, 36Kr Mapping
You should know that in 2018, China Innovation Airlines' domestic market share was only less than 1%, ranking ninth in the country.
So, how did China Innovation Airlines become a dark horse and jump to the third place in China? What milestone incident happened in the middle? What expectations will China Innovation Airlines bring to the market in the future? 36Kr tried to answer the above questions by dismantling the prospectus.
GAC is the key
From 2019 to Q1 2022, China Innovation Airlines' revenue was 1.734 billion yuan, 2.825 billion yuan, 6.817 billion yuan and 3.897 billion yuan respectively, with a CAGR of 98.3% in the past three years. In terms of installed capacity, from 1.62GWh in 2019 to 9.31GWh in 2021, the CAGR is 139.7%. According to the prospectus, China Innovation Airlines is the only company in China whose installed capacity growth rate has remained above 100% in the past three years.
2019-2022Q1 Zhongchuang Airlines revenue situation, data source: Zhongchuang Airlines prospectus, 36Kr map
Note: 2022Q1 year-on-year growth rate based on the same period data in 2021 as a comparison based on the results of
.
Although China Innovation Airlines listed it as customer G in its prospectus, 36Kr inferred that customer G is GAC Group by viewing public information.
inferred reason is the four information points about customer G disclosed in the prospectus: 1) It holds 78.86% of the equity of GAC Aion and is the controlling shareholder of GAC Aion; 2) It is a dual listed company of the Stock Exchange and the Shanghai Stock Exchange; 3) It was established in June 1997 and its registered place is in Guangzhou City, Guangdong Province; 4) Its total assets in 2021 are 154.3 billion yuan.
In the second half of 2018, Zhongchuang Performance Airlines implemented a strategic transformation, shifting its focus from passenger buses to passenger car market . At that time, the new energy vehicle broke out, and CATL could not handle the orders and the delivery was affected. A model under GAC Aion was affected and instead cultivated its own second supply. China Innovation Airlines seized the opportunity at this time and served GAC well.
The top five customers of China Innovation Airlines, Source: China Innovation Airlines Prospectus, 36Kr map
The list of the top five customers in 2019-Q1 2022, GAC Group is all on the list, rising from the second place in 2019 to the first place in 2020, and has been China Innovation Airlines’ largest customer since then. 70% of GAC Group's mainstream electric vehicle Aion series use China Innovation Airlines' batteries.
In the following three years, GAC Group signed strategic procurement agreements with China Innovation Airlines. In terms of amount, GAC Group contributed 26.6% of China Innovation Airlines' revenue in 2019, and this proportion rose to 55.1% in 2020. It fell slightly in 2020, at 51.9%.
GAC's revenue contribution situation (from the prospectus), 36Kr chart
further dropped to 31.0% in 2022, but this seems less important to China Innovation Airlines. If you look carefully at the list of the top five customers in 2021, you will find that in addition to the customers G (GAC) and C ( Changan ), customers X ( Xiaopeng ), customers M (Huating Power) and customer L (Zero Race) have been added. The brackets of are 36Kr and proof and inference through multiple parties.
whole machine factory Changan, Xiaopeng and Leapmotor are market values of 109.4 billion yuan, 69.7 billion yuan and 28.3 billion yuan respectively. Huating Power is a supplier of the whole machine factory, and its main business includes power system assembly, motor and transmission power system, etc. 36Kr learned from public information that Huating Power signed an framework agreement with JAC Motors in 2015 and established a joint venture to produce new energy vehicle battery management system (BMS) .
In September 2020, Xiaopeng Motors and China Innovation Airlines signed a procurement agreement, and the agreement will take effect until the end of 2023. During this period, Zhongchuang Airlines began mass production and delivery in October 2021. At that time, only 6% of Xiaopeng Motors used Zhongchuang Airlines' power batteries.
Xiaopeng Motors contributed 537 million yuan in 2021, accounting for 7.9% of China Innovation Airlines' revenue. By Q1 2022, the two were tied deeper. Xiaopeng Motors contributed 1.067 billion yuan in revenue in just one quarter, accounting for 27.4%, which made Xiaopeng Motors the second largest customer after GAC. China Innovation Airlines' penetration rate of to Xiaopeng Motors also reached 48.9%.
also has Leapmotor , which contributed 291 million yuan in revenue from 2021, accounting for 4.3%, and contributed 471 million yuan in revenue in Q1 2022, accounting for 12.1%, rising to China Innovation Airlines' third largest customer. China Innovation Airlines' penetration rate of Zero-Performance Automobile has also reached 49.0% (the penetration rate of 2022H1 is 30%).
In general, the choice of the major customer GAC has made China Innovation Airlines grow rapidly. GAC has established a subsidiary to develop its own power battery at the beginning of this year. For China Innovation Airlines, it needs to reduce its dependence on major customers. The addition of new car-making forces is still enough to make the outside world look forward to China Innovation Airlines' revenue capabilities.
China Innovation Airlines VS CATL
Revenue soared, but its net profit was not satisfactory.
From 2019 to Q1 2022, China Innovation Airlines' net profits were -156 million yuan, -18 million yuan, 112 million yuan and 58 million yuan respectively. The net profit was incurred in 2019 and 2020, and the turnover of losses in 2021 was largely due to the 347 million yuan gained from the sales of subsidiaries in this year. Even if profits were achieved in Q1 2022, net profit accounted for less than 1.5% of revenue. If this income is deducted, China Innovation Airlines will still suffer losses.
2019-2022Q1 Zhongchuang Airlines Net Profit Status, Data Source: Zhongchuang Airlines Prospectus, 36Kr map
Not only that, government subsidies also contributed a certain amount of income. From 2019 to Q1 2022, the government subsidies received by China Innovation Airlines were RMB 309 million, RMB 135 million, RMB 365 million and RMB 151 million, of which RMB 122 million, RMB 51 million, RMB 77 million and RMB 03 million are not sustainable. Compared with net profit, this number is not small.
The proportion of government subsidies for CATL and China Innovation Airlines (from the announcement, prospectus ), 36Kr mapped
Note: CATL's 2022 data is listed as H1, and China Innovation Airlines' 2022 data is listed as Q1
This phenomenon is not only China Innovation Airlines, and the leader CATL receives much more government subsidies, but compared with CATL's 100 billion revenue, the proportion seems to be very small.
Another factor affecting net profit is gross profit margin, which is much inferior to Innovation Airlines. From 2019 to 2021, CATL's gross profit margin was above 20%. Even if the H1 briefly fell to 18.68% in 2022, the smooth transmission of upstream price increases and the decline in the cost of travel raw materials, the overall gross profit margin is expected to continue to rise, while China Innovation Airlines' gross profit margin in 2021 is only 5.5%.
CATL and China Innovation Airlines gross profit margin situation (from announcement, Wind), 36Kr map
Note: CATL's 2022 data is listed as H1, and China Innovation Airlines 2022 data lists the difference in gross profit margin of
in Q1, mainly because the scales of the two are very different. In comparison, China Innovation Airlines has less profits in economies of scale. However, during the reporting period, China Innovation Airlines has already tasted the sweetness of scale effect. Manufacturing costs dropped from 1 cents 5/Wh in 2019 to 1 cents/Wh in 2020 to 7 cents/Wh in 2022; labor costs dropped from 5 cents Wh to 3 cents Wh to 2 cents/Wh.
prospectus shows that in the future, with the expansion of production capacity of , the economies of scale will continue.
In 2020, it is benefiting from the economy of scale. China Innovation Airlines' gross profit margin reached 13.6%, an increase of 8.8% compared with the previous year, but it encountered the most difficult year in the industry in 2021. Even CATL's gross profit margin was affected, down 1% in 2021, and more in 2022H1. In this year, China Innovation Airlines' gross profit margin was halved from 13.6% in the previous year to 5.5%.
Zhongchuang Airlines cost structure, source: Zhongchuang Airlines prospectus
From the perspective of cost structure, raw material costs are the most important component, accounting for nearly 80%. The raw materials are further dismantled, mainly composed of four parts: positive electrode material, negative electrode material, cover shell and electrolyte. The proportion in 2021 is 40.9%, 15.0%, 9.5% and 9.4% respectively,
The gross profit margin in 2021 declines. The main reason for is that the upstream metal raw materials cost has increased significantly, especially lithium, the element with the largest proportion, has also increased the most. According to data from Shanghai Nonferrous Network, the commonly used materials such as lithium, nickel and cobalt used in power batteries in 2021 increased by 103%, 12% and 27% respectively in 2021, and increased by 351%, 44% and 57% year-on-year in Q1 2022. The average purchase price of Chuangxin Airlines also rose accordingly. In 2021, positive electrode materials rose by 37%, electrolyte rose by 60%, and in Q1 2022, 104% and 60% year-on-year respectively. This has led to the increase in the proportion of raw material costs in total sales costs to from 76.1% in 2020 to 84.2%.
In 2022, a landmark action of the industry is to transmit the price increase of upstream raw materials to downstream customers.
, China Innovation Airlines' main products, ternary batteries and phosphate iron lithium batteries, rose from 0.64 yuan/Wh and 0.60 yuan/Wh to 0.83 yuan/Wh and 0.69 yuan/Wh. The increase in was 29.7% and 15% respectively, which brought China Innovation Airlines' gross profit margin to 8.2%.
CATL is no exception. According to the forecast of the Soyuz Securities Research Institute, the average price of CATL's power battery in Q2 this year increased by 12% month-on-month, which led to the gross profit margin of CATL's increase by about 8% month-on-month.
In addition, is also the energy storage business of the second growth curve. CATL and China Innovation Airlines account for 12% and 2.6% of the total revenue in this business, respectively. Both said that because the delivery cycle of energy storage is long and the price adjustment is difficult after the project contract begins, the price adjustment of the energy storage business will need to be delayed for a period of time.
This has led to the reduction of CATL's gross profit margin in energy storage to 6.4% of H1 in 2022, a year-on-year decrease of 30%; China Innovation Airlines' gross profit margin in this business was -7.9% in Q1 2022, a decrease of more than 20% from +13.9% in Q1 2021. According to data from the Soyuz Securities Research Institute, the energy storage business is expected to contribute 800 million to CATL, and then it will be interesting to Innovative Airlines and have 422 million orders in hand. Both are like shadows.
production capacity determines the future outbreak of
power battery industry, which is inseparable from the accelerated penetration of downstream new energy vehicles. According to Frost & Sullivan data, the global penetration rate of new energy vehicles has reached 9.7% in 2021. The compound growth rate of global new energy vehicles has reached 52.0% in the past five years, and is expected to maintain a growth rate of around 24.3% in the next five years.
China is the country with the fastest penetration of new energy vehicles. The penetration rate in 2021 reached 15.5%, and the average growth rate in the past five years was higher than that of the world, at 54.9%. The penetration rate in the first half of 2022 reached 21.6%, and the penetration rate in August alone was even higher than 27.9%. As an upstream power battery supplier, R&D is not the main factor in the competition. From the perspective of the battery itself, energy density, safety and cycle times are the main technical indicators, but the top manufacturers are not much different.For example, the energy density of CATL's Kirin batteries can reach 255Wh/kg, which can reach a range of 1,000 kilometers; while the energy density of CATL can reach 280Wh/kg, which can achieve a range of 800 kilometers.
This may be one of the reasons why CATL sued Zhongxin Airlines.
In August 2021, CATL claimed 648 million yuan from China Innovation Airlines on the grounds that China Innovation Airlines infringed on the intellectual property rights of CATL. In its prospectus, China Innovation Airlines explained that before CATL applied for a patent, China Innovation Airlines had adopted the technical solution in the patent and provided the court with the comparison documents of its solution and CATL's patent at that time, requesting National Intellectual Property Office to to determine the patent is invalid. As of press time, the court has not made any judgment on the lawsuit. Under the homogeneous competition of
, the competition point is even more about production capacity. In 2021, the total capacity of China Innovation Airlines is 11.9GWh, while the capacity of CATL has exceeded 170GWh. China Innovation Airlines raised more than 10.1 billion yuan on the Hong Kong stock market listing, of which 80% was used to expand production capacity. According to the prospectus, the production capacity of CATL is expected to be 35GWh in 2022 and 90GWh in 2023, which is equivalent to the installed capacity of CATL in 2021.
Judging from this production capacity, it is not easy to digest the price-to-earnings ratio of nearly 400 times in China Innovation Airlines. If the stock price remains unchanged, compared with CATL's nearly 50 times price-to-earnings ratio, the performance needs to be increased by 8 times...
