People tend to focus on the participants in the battle, but ignore the planners and beneficiaries.
Better tools make good work.
Confucius spoke about the importance of tools more than two thousand years ago, and to this day, his words are still ringing in his ears.
China's manufacturing industry has made rapid progress in recent years and has successfully risen. In addition to the factors of enjoying the demographic dividend, there are reasons for policy support, as well as advanced infrastructure facilities and complete supply chain support.
The scale effect is often one of the labels of China's manufacturing industry.
The distinctive feature of this model is that it rapidly expands through capital and forms large-scale industries. In the process, the gradual transition to lean production stands out with cost advantages.
While China's manufacturing industry enjoys the profits brought by the rapid expansion of the industry, there are also many problems.
Especially in some key equipment links, the lack of core technology has always been unavoidable.
For example, the lack of core technology of semiconductor equipment makes the development of the industry often fall into the situation of card neck, often need to look at the face of others to act.
However, in the field of new energy, it is a different scene. The new energy industry has become a brand exporter of Made in China. As one of the typical representatives of the new energy vehicle, it has successfully achieved the curve transcendence in the original domestic automobile industry pattern formed by Europe, the United States, Japan and South Korea.
There is no doubt that the key to standing out is that the process of autonomy of lithium battery equipment is much more optimistic than that of industries such as semiconductors.
Lithium battery equipment, usually refers to the equipment used in the assembly process of lithium batteries, in this link, the degree of localization is higher, and the corresponding profits are more lucrative.
Under the background of the gradual expansion of the penetration rate of new energy vehicles, assembly equipment ushered in good development opportunities. On the one hand, it stems from the demand brought by incremental lithium batteries; on the other hand, with the improvement of the degree of localization, it is expected to expand the domestic and overseas market share in the future. Both form a dual driver of growth.
The purpose of this report is to discuss with readers the easily overlooked aspect of lithium battery assembly equipment.
Lithium battery assembly equipment will be in high demand in the future
I believe that the word lithium battery assembly equipment is both familiar and unfamiliar to the majority of investors, familiar with lithium batteries, strange is assembly equipment. Then, we first need to establish a perception of lithium battery assembly equipment.
As shown in the figure, the assembly equipment is located in the middle of the lithium battery industry chain, and the battery assembly plant uses lithium battery materials (positive electrode, negative electrode, separator, electrolyte, etc.) to assemble lithium battery parts into lithium batteries by using assembly equipment, which is used in automobiles, electronic products and other fields.
After figuring out the industrial chain link, we can determine the prosperity of lithium battery assembly equipment (hereinafter referred to as lithium battery equipment) by analyzing downstream demand, so as to determine whether it has research value.
In recent years, with the rapid growth of terminal markets such as new energy vehicles, the pace of expansion of the upstream lithium battery industry has begun to accelerate, which has correspondingly driven the market demand for lithium battery equipment.
From January to August 2021 alone, battery manufacturers such as CATL (300750.SZ), BYD (002594.SZ), AVIC Lithium Battery, Guoxuan Hi-Tech (002074.SZ), Ewell Lithium Energy (300014.SZ), Fu Neng Technology (688567.SH), Honeycomb Energy and other battery manufacturers have announced orders for lithium battery equipment of about 24.4 billion yuan, which is close to the market size of 26.7 billion yuan in 2020.
Looking to the future, the most intuitive data reflecting the demand for lithium battery equipment is the capacity planning of major lithium battery manufacturers.
According to statistics, at present, the planned production capacity of 21 enterprises, including Ningde Times, LG New Energy, AVIC Lithium Battery, Yiwei Lithium Energy, SKI, BYD, etc., has reached 3155GWh, and will add more than 2700GWh production capacity by the end of 2020.
Among them, the production capacity planning of 4 lithium battery manufacturers such as Honeycomb Energy, AVIC Lithium Battery, Ningde Times, and Yiwei Lithium Energy 2025 will exceed 1800GWh in 2025, not including the expansion of production of other battery manufacturers and future projects.
That is to say, if in the next five years, the lithium battery industry enters the TWh era, the new production capacity will bring great incremental demand to the lithium battery equipment market.
We can roughly estimate the lithium battery equipment market space by measuring the amount of investment per GWh.
According to the forecast of Tianfeng Securities, the investment amount (cumulative) of CATL unit GWh will be 5.12, 5.65, 4.41, 356 and 257 million yuan in 2015-2020, which means that the annual investment in new production capacity units is declining; the amount of investment (new) in unit GWh units will be 5.12, 5.92, 3.41, 2.00, 1.98 and 180 million yuan in 2015-2020, respectively.
The amount of investment in unit equipment expanded by overseas battery factories may be higher than that in China. The amount of GWh investment per unit calculated by Northvolt is about 260 million yuan, which may be related to the high degree of automation overseas and the use of automation supporting investment.
With an incremental capacity of 2700GWh alone, taking into account the future decline in the price of lithium battery equipment and the lower cost of CATL than average, according to the required lithium battery equipment per GWh of 150 million yuan, the demand for lithium battery equipment will reach 2700GWh * 150 million yuan = 405 billion yuan.
Lithium battery capacity expansion syndrome is not listed for the time being, if we look at it from the perspective of the beneficiaries, the demand for downstream assembly equipment for the huge capacity plan of lithium batteries is highly certain.
Therefore, it is necessary for us to carry out a more in-depth analysis of the assembly equipment.
Simplify complexity
In the process of making batteries, according to the manufacturing order, it can be divided into three links: the front, the middle and the back. The value of the equipment in these three links is roughly equal.
The front section is the process of positive and negative production, including stirring, coating, roller pressing, slitting, filming, die cutting and other six processes, of which the most core link is the coating process, the value of the entire front stage of the process accounted for 85%.
Obviously, the main research in this link is the coating link.
The middle section is the process of battery production, including lamination /winding, shelling, welding, drying, liquid injection and other five processes, the most core link is the winding /lamination process, the value of the entire middle process accounts for about 70%.
The latter section is the process of testing and assembly, including three processes such as chemical formation, capacity detection, and packing, of which the value of the volume detection process accounts for the highest proportion, and the value of the entire back section of the process accounts for about 70%.
In summary, we can focus our research on front-stage coating, mid-stage winding/lamination, and rear-stage volumetric detection.
First, let's look at the coating session in the previous section.
The working principle is to use a coating machine to evenly coat the stirred slurry on the metal foil and dry it to make positive and negative electrode pieces.
Since there is a big gap between the coating width of the coating machine and the Japanese and Korean companies, the high-end products in this field are still dominated by foreign coating machines. The low-end is a domestic enterprise, mainly Putailai, Keheng shares, and Yinghe Technology, which together occupy more than 50% of the market share.
The middle winding process is the use of a winding machine to wind the pole pieces made by the film making process or the winding die cutting machine into the cells of the lithium-ion battery.
Its process can be understood as a common food - the process of making burritos, which is the process of rolling together positive electrodes, diaphragms, negative electrodes such as eggs, meat, cakes and other ingredients.
The lamination link is to stack the positive, diaphragm, and negative electrodes regularly together, which can be imagined as the production process of sandwich biscuits.
Compared with the core equipment coating machine in the previous section lagging behind Japanese and Korean enterprises, the performance of domestic winding machines has not lost to the international advanced level in all aspects.
The core leading intelligence has ranked among the first echelon of the world, with a market share of more than 60% in the domestic high-end field, followed by Win He Technology and Chengjie Intelligence.
The latter part of the volume detection process is to test the capacity of the battery and other electrical performance tests. At present, the localization rate of the latter-end equipment has exceeded 90%, hangke technology (688006. SH) is the absolute leader of the rear-end equipment, accounting for more than 60% of the market in the top ten power battery companies.
The amount of value in this link is also the most easily overlooked. When testing the battery, the probability of explosion is much higher than that of the previous process, which puts forward strict requirements for the quality of the equipment, so the value contained in this link is higher.
Demonstration of the pattern of lithium battery assembly equipment
After our study of the development status of lithium battery assembly equipment, we can draw a triple conclusion.
First, it can be clearly seen that the localization of lithium battery assembly equipment is relatively high, and in the global market competition, it has a certain strength and will not be stuck in the neck, which is also a necessary premise for the vigorous development of an industry.
Second, there is a pattern of common competition at home and abroad, and the degree of marketization is relatively high.
The impact of this competitive pattern on the industrial chain is that downstream lithium batteries are less constrained by equipment, but the equipment needs to be bound to downstream lithium battery manufacturers to develop and grow. This can be clearly seen by analyzing the customer situation of equipment manufacturers.
Third, there is a certain technical threshold for lithium battery assembly equipment, and there are access qualifications and certification cycles. The characteristics of non-standardization and following the iteration of lithium batteries make the development of the industry dynamic, the hematopoietic effect of new products is obvious, and the products have higher returns.
In addition, the gross profit margin ranking of each link can also be calculated according to the degree of localization and technical content.
The front-end link mainly occupies the low-end market, the gross profit margin should be the lowest, the degree of localization of the middle link is high, the gross profit margin is also higher, and the technical content of the latter link is the highest, while the degree of localization is high, so it should be the link with the highest gross profit margin.
We confirmed the speculation through a comparative analysis of the gross profit margin of the leading stocks in three links.
Image source: Alpha Factory Research Institute
From the above data, we can see a few problems.
First of all, the localization substitution process is more profitable. Secondly, after the gradual improvement of the level of localization in the future, it will usher in a fierce competitive situation, and there is a downward trend in gross profit margin.
Finally, the ability to expand the circle of friends determines the competitiveness of the enterprise in the future to a certain extent.
For example, the pilot intelligence is deeply bound to the Ningde era.
In 2021, The pilot intelligent fixed increase to raise funds of 2.5 billion yuan, and the participation object is the Ningde era, which ranks third among the top ten shareholders after participating in the shares.
At the same time, Pilot Intelligence won the bid for about 4.547 billion yuan of lithium battery equipment orders from CATL and its holding subsidiary.
And in the next three years, CATL will give pilot priority according to the amount of no less than 50% of the new investment amount of core equipment (including coating, winding, chemical formation, etc.) in the core equipment of the battery cell segment.
Through strong cooperation, the two consolidate the position of the industry, strengthen the moat, and win the golden age of high growth of lithium batteries.
At present, the three major equipment manufacturers of lithium batteries, Winhe Technology, Pilot Intelligence, and Hangke Technology have their own advantages, which are the leaders of the front, middle and rear sections of lithium battery equipment, and the competition pattern seems to be relatively stable.
However, the actual situation has changed, in the industry where technology iteration is so fast, no one will be willing to the status quo, and not thinking of making progress means being eliminated.
On the one hand, various equipment manufacturers will seize market share through an integrated strategy, which will intensify the competition of lithium battery equipment; on the other hand, with the rise of second-tier equipment manufacturers such as Golden Galaxy and Nebulas Shares, the original market pattern is bound to be impacted.
More critical is that the equipment link is affected by the overall demand for lithium batteries, lithium batteries in the future staged a price war, the industrial development may fall into a period of decline, which is bound to have an impact on equipment demand. At that time, the ability of various equipment manufacturers to resist risks will be tested.
End
Since ancient times, sandpipers and clams have competed, and the stories of fishermen who have gained profit abound.
People tend to stay on the sidelines, obsessed with the win-loss comparison of the two, with a focus limited to the participants. But forget, the planners, initiators, participants, supporters, beneficiaries of this fight.
As everyone knows, the discourse power of the industrial chain has also changed, and the industrial pattern has been reshaped.
On the side of the bed, do not allow others to snore. As the downstream of lithium batteries, the car factory is often the most vocal link in the consumer side, and now it is restricted by lithium batteries, and it is urgent to compete for the status of the industrial chain, which is the planner and beneficiary of this campaign.
The participants are various battery manufacturers, even if the throne is difficult to shake, even if it is facing a bloody war, this is also the way out for the possible rise of second- and third-tier manufacturers, and it is the initiator and participant of this battle.
There is also a beneficiary that is often overlooked, that is, the equipment companies that have relied on lithium battery manufacturers in the past, which is the direct profiteer of this campaign. In any case, at this stage, the demand for downstream assembly equipment for the huge capacity plan of lithium batteries is obvious.