Challenging "Ning Wang", South Korea's LG New Energy IPO initial market value of 375.85 billion yuan!

Author 丨 Jiang Yue

Editor 丨 Li Yanxia

Figure Source 丨 Figure worm

South Korea's LG Energy Solution, which calls the Ningde era and wants to challenge the "first stock of new energy batteries", plans to list on the Korea Stock Exchange on January 27. The company, which has just been established for more than 1 year, is currently the power battery provider with the largest market share in overseas markets.

On January 14, the company set the price for the IPO, with a total financing amount of $10.76 billion and a market capitalization of 70.2 trillion won, or about 375.85 billion yuan. According to the closing price of A shares on January 14, the market value of CATL is 1.35 trillion yuan, which is 3.6 times the current market value of LG New Energy.

Compete with the Ningde era for the first place

LG New Energy's IPO attracted countless attentions, because it is another listed asset of LG Group, the fourth largest consortium in South Korea, and because the company bet on the new energy vehicle track. At present, many Chinese investors are also interested in it, because LG has openly spoken of the "calling" of the Ningde era.

In the four years from 2018 to 2021, the cumulative stock price increased by 198.3%, 44.7%, 231.2% and 67.6% respectively, and the current market value reached 1.35 trillion yuan, which is the fourth largest market capitalization company in A-share after Guizhou Moutai, Industrial and Commercial Bank of China and China Construction Bank.

LG New Energy borrowed the listing of Dongfeng and rubbed the heat of the Ningde era, making its IPO suddenly become "eye-catching". On January 10, LG New Energy CEO Kwon Young-soo said at the IPO media exchange that considering the backlog of battery orders on hand, it is expected that its global market share will surpass the NINGDE era and become the world's first.

What is the current actual market ranking? According to the data released by SNE Research, a South Korean market research institute, in the global market share from January to November 2021, catheter era accounted for about 1/3, and LG new energy accounted for about 20.5%, which reflects that the world's "first share of power batteries" is still the NINGDE era.

However, LG New Energy's confidence is not unfounded. In overseas markets, LG New Energy has won foreign car manufacturers such as Tesla, German Volkswagen, and GM of the United States, and it is said that the current order volume is higher than that of the Ningde era.

According to market data, the installed capacity of overseas new energy vehicle power batteries outside China in 2020 was 81.2GWh, of which the installed capacity of LG new energy was 26.8GWh, and the market share reached 33.1%. The overseas loading volume of catheter in the NINGDE era was 5.3GWh, and the market share was 6.5%, ranking fifth. In fact, according to the 2020 financial report of CATL, its overseas business income is only 7.908 billion yuan, equivalent to 18.6% of its domestic revenue, and the proportion is not high.

The gap in the power battery market is still large

Although LG New Energy wants to compete with "Ning Wang", people are not so concerned about the "inner volume" of these two companies, because the market cake still has a lot of room for growth. In 2021, the new energy vehicle market in major markets around the world will grow rapidly, making power batteries one of the "leading tracks" in the investment industry. Market data shows that at present, power battery factories around the world are running at full capacity, but there is still a huge capacity gap in the industry.

At least until 2023, the entire market cake will be getting bigger and bigger, bringing battery suppliers a "strong seller market". According to SNE Research, by 2023, the global demand for power batteries for electric vehicles will reach 406GWh, but the power battery production capacity is only 335GWh, and there is a huge gap of about 70GWh between supply and demand.

Changjiang Securities predicted in an earlier auto industry report that the sales of new energy vehicles in the United States will reach 700,000 and 1.3 million in 2021 and 2022, respectively, nearly doubling. Among them, Tesla and many traditional car companies in the United States new energy vehicle sales are continuing to rise, in addition to Tesla's current self-produced batteries, other car companies have to rely on third-party battery suppliers.

The rapid rise of new energy vehicles has made power batteries a key part of the competition, because relying on "battery foreign aid" is one of the main business strategies of new energy startups.

In the face of such a huge market, the entrants are not only large companies such as Ningde Times and LG New Energy. It is worth noting that in the domestic market, power batteries have become a lively entrepreneurial track.

Companies such as BYD, Guoxuan Hi-Tech, Zhongxin Aviation, Hive Energy and Ewell Lithium Energy are currently racing in the power battery track. Query the data, as early as a few years ago, Great Wall Motors, Volkswagen and other traditional car companies laid out their own power battery industry.

Competitors in the NINGD era may not just be LG New Energy. According to market data, Great Wall Motor's Hive Energy currently has a production capacity of 297GWh under construction and plans to reach 600GWh by 2025. In contrast, the 2025 production capacity target of the Ningde era is only 592GWh.

In addition, the momentum of China's new airlines, which are about to go to Hong Kong for IPO, is also fierce. In November last year, the chairman Liu Jingyu disclosed that The battery capacity of China Innovation Airlines will exceed 500GWh by 2025 and is expected to reach 1000GWh by 2030.

"Fueling" production expansion through IPO

In the context of the global new energy vehicle "thirst" for power batteries, LG New Energy is adding full horsepower to expand production, and the amount of funds raised by this IPO will also "refuel" it.

LG New Energy is a young company but also "experienced". In December 2020, LG Chem conducted an asset divestiture and established LG New Energy. The official website shows that the company has begun lithium battery research as early as 1992.

This time, the IPO received a warm response from the market. LG New Energy's prospectus range is 257,000 to 300,000 won (about 1,372-1,601 yuan) per share, but due to the enthusiasm for subscription, LG New Energy was finally able to price 300,000 won per share at the upper limit of the prospectus range.

LG New Energy's capacity planning will increase from 150 GWh in 2021 to 430 GWh in 2025. According to the data, LG New Energy already has battery production bases in the United States, China, South Korea, Poland, Indonesia and other places, on this basis, LG New Energy is constantly building factories around the world and purchasing ore in advance.

On January 12, LG New Energy signed a five-year purchase order with Australian lithium miner Liontown Resources. According to the contract signed by the two parties, starting in 2024, Liontown will supply LG with 100,000 dry tons/year of spodumene concentrate, which will be gradually increased to 150,000 dry tons/year. Market estimates indicate that the contract' total of 700,000 dry tons of spodumene concentrate is enough to produce batteries for 2.5 million electric vehicles.

According to market news, LG New Energy also has a lot of investment and factory plans, or will establish battery joint ventures with General Motors, Stellantis, Honda Motors and so on. This way of connecting alliances will allow the company's capacity to grow more rapidly.

Editor of this issue: Li Yutong Intern Zhang Ke