"Science and Technology Innovation Board Daily" (Zheng Yuanfang, Zeng Le) news, closely following the Ningde era, the world's other lithium battery leader LG New Energy (LG Energy Solution) recently increased its weight again, entering the energy storage system integration market, with practical actions to prove its ambition to "surpass the Ningde era and become the world's first".
Behind the escalation of the tug-of-war between the Ningde era and LG new energy, the competition between the two sides has a long history: in addition to the performance performance and market share that are the focus of the boundary, the two sides are "chasing after me" in terms of capacity expansion and technological progress.
The market value performance highlights the fierceness of this competition - even in the ningde era in the past two months, the stock price has been relatively depressed, and this week's slight rebound, its market value has exceeded LG new energy by nearly 90%.
Is the valuation of "Ning Wang" really too high? A thousand investors may have a thousand Ningde eras in their hearts. In this regard, the Science and Technology Innovation Board Daily has comprehensively sorted out LG new energy and ningde era, compared from multiple angles, or provided some references for your judgment.
▍Performance: LG new energy performance fluctuates, and the profitability of the Ningde era is stronger
In terms of revenue, in Q1-Q3 of 2021, the cumulative revenue volume of Ningde Times and LG New Energy is roughly similar. Among them, the revenue performance of CATL in the first half of the year lagged behind LG New Energy, but Q3 significantly exceeded the latter by 37%. (Note: CATL did not predict / announced Q4 revenue)
In terms of net profit, the advantages of the Cataline era are more significant. Except for Q2, the net profit of CATL in the remaining quarters of 2021 surpassed LG New Energy; and the company's net profit increased steadily quarter by quarter during the year. In contrast, LG New Energy achieved profitability for the first time last year, of which Q3 suffered a large loss and Q4 net profit was small.
In terms of gross profit margin, in the first three quarters of 2021, the Ningde era was stable above 27%; the average gross profit margin of LG new energy was about 23.5%, which was at least 3.5 percentage points lower than that of the Ningde era.
Why are the financial performance of the two parties so different? CITIC Securities believes that compared with LG New Energy, CATL has more advantages in cost control and therefore stronger profitability. Among them, in terms of material purchase costs, the procurement cost of CATL in diaphragms, electrolytes and other links is significantly lower than that of LG New Energy; and labor costs also have certain advantages.
▍Market share: Ningde era leads the domestic lead, LG new energy overseas dominant
Judging from the ranking of global power battery installed capacity in 2021, NINGDE era still firmly controls the world's top seat, and far away from the second place LG new energy in terms of installed capacity and its year-on-year growth and market share.
Figure | 2021 CATL era, LG new energy global installed capacity and market share (data source: SNE Research)
Among them, in the domestic market, GGII data shows that in 2021, the installed capacity of the Ningde era will reach 69.33GWh, with a market share of nearly half; in contrast, the installed capacity of LG new energy is only 6.25GWh, and the market share is less than 5%. According to the latest data from the China Automobile Association, in January this year, CATL accounted for more than half of the mainland market, with an installed capacity of 8.13 GWh; while LG New Energy ranked only 12th, with an installed capacity of 0.11 GWh, with a market share of 0.7%.
However, if calculated on this basis, the overseas competition pattern will be completely reversed - in 2021, the installed capacity of the Ningde era will be 27.37GWh, and the LG new energy will be 53.95GWh, which is nearly twice as much as the former.
It can also be seen that the global high market share of "Ningwang" power batteries relies more on the support of the Chinese market. This is also reflected in the list of customers in the NINGD era. In addition to Tesla, the largest customer, the installed capacity of catheter era is mostly domestic new forces or joint venture brands, including Wei Xiaoli, SAIC Volkswagen, BMW Brilliance and so on.
However, the research minutes disclosed by CATL on the 15th show that the company interacted more with American customers, and the two sides jointly discussed various possible supply and cooperation solutions and localized production possibilities; in the future, it is planned to strengthen the layout of overseas bases.
LG new energy revenue is mainly from Europe and the Americas, including GM, Volkswagen, Renault and other car companies.
▍Capacity competition: In the future, the gap between production capacity and scale still exists, and the expansion methods are very different
Cataline Era, with Fujian Ningde as the center, currently has five major R&D centers and ten production bases. As of the end of last year, the company's production capacity (wholly owned + joint venture) was about 235GWh. Soochow Securities expects its production capacity to exceed 750GWh in 2025.
LG New Energy, the global champion in production capacity, revealed at a press conference on January 10 that its backlog of orders has reached 260 trillion won (about 1.4 trillion yuan). The company disclosed in the prospectus that the "five-legged Dingli" global delivery system covering China, South Korea, the United States, Europe and Indonesia is expected to have a production capacity of about 430GWh in 2025, which is less than 40% of the Ningde era.
It is worth noting that the two are very different in the way they are expanded.
The Ningde era mainly relies on self-construction to expand production capacity; most of LG New Energy's recent expansion actions are cooperation with car companies, including GM, Honda, Stellantis and so on.
▍Technology and products: Both sides have their own routes, and the research and development efforts of the Ningde era are slightly better
In the face of competitors' radical expansion actions, CATL said bluntly: "The expansion of friendly business does not mean that competition will increase, and products with innovative material systems and structural systems are worthy of competition." ”
Overall, in the battery material system route, catheter era has been one step ahead of LG new energy in lithium iron phosphate (LFP) batteries; and in terms of technical routes, the two have their own advantages.
Divided by the battery material system, the Ningde era is dominated by ternary and LFP batteries; while LG new energy's previous long-term layout is basically around ternary batteries, and it was finally finalized in the second half of last year that it entered the LFP battery.
In terms of technical route, the Ningde era chose "multi-line parallel" - high-nickel battery shipments increased significantly; sodium-ion batteries are expected to form a basic industrial chain next year; and lithium manganese iron phosphate has long been laid out, which is expected to replace lithium iron phosphate.
LG New Energy's chosen technology route is slightly different from the CATL era, which is the world's first manufacturer to develop NCMA batteries, and its products have achieved mass production last year; at the same time, it is also continuing to promote the development process of silicon oxide (SiO) anode materials and safety reinforced diaphragms (SRS).
In addition, energy storage and solid-state batteries are in the development blueprint of both sides. The revenue and gross profit margin of the energy storage business of the Ningde era have gradually risen, and have become the "second growth carriage" that the outside world is optimistic about; at the same time, LG New Energy has also clinged to it, and this week has completed the acquisition of 100% of the shares of NEC energy storage system manufacturer NEC Energy Solutions in the United States, and will try to find a new person "LG New Energy Vertech" to enter the energy storage system integration market.
In terms of R&D investment, the leading margin of the CATL era has continued to increase in recent years. In the first three quarters of last year, CATL invested 4.6 billion yuan in R&D, 84% higher than LG New Energy; R&D investment accounted for 2.6 percentage points higher than revenue.
Figure| Comparison of R&D investment in recent years between Ningde Times and LG New Energy (100 million yuan, source: CITIC Securities)
It is worth mentioning that unlike LG New Energy, the business map of the Ningde era has long been extended farther. Recently, CATL has launched the power exchange brand EVOGO, and is more optimistic that the "chocolate power exchange block" product "will become the ultimate solution for models in the range of 80,000-12 million yuan"; in addition, the new product of CATL era can also achieve 9 minutes fast charging.
▍ The dilemma of giants: LG new energy is frequently caught in battery security storms, and customers in the Ningde era are quietly losing
Under the current "duopoly era" of power batteries, the total market share of Ningde era and LG new energy has occupied half of the country, but the two are still "each with its own suffering".
LG New Energy has previously been deeply involved in battery safety issues. In the second half of last year, GM twice announced the recall of Bolt electric vehicles due to the risk of battery fire. As a battery supplier, LG New Energy's IPO process has also been overshadowed. The industry's estimated total recall cost is about $2 billion, affected by this, LG new energy revenue increased by 28% year-on-year, net profit loss, parent company LG Chemical Q3 revenue increased by 41% year-on-year, net profit fell 20%.
This week, another customer, Stellantis, announced a recall of nearly 20,000 plug-in hybrid Pacifica minivans. The company said an internal investigation found 12 fires in the 2017/2018 model, with 8 of the accident cars being charged at the time of the fire, and the company is still confirming the cause of the fire. The recalled models are also equipped with LG new energy batteries.
On the other hand, the customers of the Ningde era are quietly losing, and the market share is being "cannibalized" by peers.
Previously, the market has repeatedly rumored that BYD, one of its largest domestic competitors, has been favored by Tesla and Weilai; Zhongxin Airlines (AVIC Lithium Battery) has replaced ningde era as the first battery supplier of GAC; Xiaopeng Automobile also plans to reduce the supply share of Ningde era, and among the new main suppliers, in addition to Zhongxin Airlines, there is another Korean battery giant SK innovation; a major boost to the rise of the Ningde era BMW, and the supply chain has introduced Ewell lithium energy.
▍ Market value competition: With LG new energy benchmarking, is the Ningde era "expensive"?
LG New Energy went public on January 27 and rose nearly 99% in intraday on its first day. However, after hitting a new high on the 7th of this month, its stock price has gone all the way down. As of press time, the stock price is reported at 451,000 won, and the market value is 106.35 trillion won (about 563.9 billion yuan).
On the other hand, the A-share "Ning Wang" has already stood on the trillion market value. Even in the recent downturn, the market value is nearly 90% more than LG New Energy.
However, a number of industry insiders have analyzed to the "Science and Technology Innovation Board Daily" that "the valuation of the Ningde era is artificially high." ”
Among them, a secondary market analyst told the Science and Technology Innovation Board Daily, "I think the valuation of 'Ning Wang' is too high and there is a certain bubble." On the one hand, whether the market penetration rate of new energy vehicles can be achieved as expected and how it develops, it takes time to verify; on the other hand, once the market share of battery manufacturers exceeds 50%, there is a risk of being accelerated by other companies. In the same way, for the reasonable valuation of battery manufacturers, it is necessary to consider market penetration and market share. ”
According to data from the China Association of Automobile Manufacturers, in 2021, the penetration rate of China's new energy vehicle market reached 13.4%, an increase of 8 percentage points year-on-year (that is, the penetration rate in 2020 was only 5.4%); it is expected that in 2022, the market penetration rate of new energy vehicles will exceed 15%. According to the forecast of the Association of Passenger Vehicles, the market penetration rate of new energy passenger vehicles will reach about 25% in 2022.
"The higher the market penetration rate, the lower the valuation level of the company." The above-mentioned secondary market analysts told the "Science and Technology Innovation Board Daily" analysis, "after the market penetration rate increases, the performance of relevant industrial chain enterprises will increase significantly, which can stabilize the stock price; if the performance growth of the enterprise is lower than expected, the decline in valuation is mainly manifested as a decline in stock prices." Among them, once the valuation level of the enterprise is too high, at 200 times or even 300 times, then the decline in the valuation of the enterprise may be very fast. ”
In addition, some investors in the field of new energy told the "Science and Technology Innovation Board Daily", "The more the head of the enterprise, the more it needs continuous innovation." The same is true of the Ningde era, and the time left for its innovation is very limited, and the development momentum of other battery manufacturers is very rapid. ”
In the view of Du Meng, deputy general manager and investment director of Shanghai Investment Morgan, "the rise in the price of lithium carbonate in the entire upstream will indeed have a certain impact on the profitability of battery companies." But if companies can really launch more and more consumer goods that consumers are willing to pay, even if the mark-up consumers are willing to buy, this is also the core issue that promotes the continuous improvement of the penetration rate of the entire industry. ”
Capital Securities Research believes that from the perspective of short-term market sentiment, the future rise and fall of the Ningde era can be analyzed, and the stock price trend of Guizhou Moutai in 2021 can be referred to. Judging through fitting, the adjustment of the Ningde era may not be over, and there may still be 20% downside in the future.
In the long run, Guizhou Moutai is different from the industry in the Ningde era. The Ningde era is in a highly growing, technologically transformed new energy industry, with more opportunities, greater risks, and more unstable moats, and the long-term trend may depend on the fundamental changes of the company and the industry.
Under the background of double carbon, at present, the prosperity of the new energy industry still exists. The latest news shows that the new product M3P planned to be launched by CATL is "not lithium ferromanganese phosphate to be precise, but also contains other metal elements, which the company calls the ternary of the phosphate system, and the cost is lower than that of the ternary." And this may open up a greater imagination space for "King Ning".
As Du Meng, deputy general manager and investment director of Shanghai Investment Morgan, said: "In the entire evolution process of new energy vehicles, technology is constantly iteratively improving, and many new battery technology directions, or some directions of materials, are our key and very promising areas." I believe that there should be some new progress in new technologies in 2022. ”