(Shanjin Optoelectronics Nanjing Factory, a core subsidiary of Shanshan Co., Ltd., comes from the company's official WeChat)
Only by maintaining development resilience in the face of adversity can we realize stronger performance flexibility in good times, and the real leaders can often pass through the industry cycle. Shanshan Co., Ltd., a double leader in anode materials and polarizers, (600884. SH) latest financial report shows the resilience of spire companies in the adjustment of the industry.
On April 26, Shanshan Co., Ltd. released its annual report, with operating income of 19.070 billion yuan in 2023, a year-on-year decrease of 12.13%, and a net profit attributable to the parent company of 765 million yuan, a year-on-year decrease of 71.56%.
As for the reasons for the decline in performance, the company said that in 2023, in the context of the slowdown in terminal demand growth and the destocking of the lithium battery industry, midstream lithium battery materials will face a phased imbalance in the relationship between supply and demand. The major challenge of product price decline, affected by industry changes, the company's anode material business and the cathode material business in which the company has a stake in the product price and profit have declined year-on-year; the company continues to promote the focus strategy, accelerate the divestment of non-core business and inefficient assets, non-core business losses and impairment of related assets have a certain impact on the company's performance.
However, in the context of the slowdown in downstream demand and the narrowing of profit margins in the two main businesses, Shanshan's anode materials and polarizer businesses have achieved year-on-year sales growth, and the growth rate is higher than the industry average, and the global market share continues to lead. Behind this is the result of its active insight into market structural opportunities, timely adjustment of business strategies, cost reduction and efficiency improvement, and firm R&D and innovation.
The sales volume of anode materials increased by 44.55% against the trend
In recent years, with the rapid development of new energy vehicles around the world, anode materials, as a key part of the lithium battery industry chain, have soared. However, with the influx of capital, the expansion of production capacity and the slowdown of downstream demand, there has been overcapacity and rapid decline in prices in various links, including anode materials.
According to Shanghai Ganglian data, in 2023, the production capacity of anode materials will be 2.56 million tons, the production output will be 1.21 million tons, the shipment volume will be about 1.43 million tons, and the global downstream demand will be about 1.36 million tons.
The direct result of the imbalance between supply and demand is the sharp decline in the price of anode materials. Baichuan Yingfu data shows that at the end of December 2022, the mainstream price of domestic high-end lithium battery anode was 6.8-75,000 yuan/ton, the mid-end anode was 4.8-58,000 yuan/ton, and the low-end negative electrode was 3.2-25,000 yuan/ton. By December 2023, the average market price of domestic lithium battery anode materials will only be 35,298 yuan/ton, the mainstream price of high-end anode will drop to 5.4-65,000 yuan/ton, the mid-end anode will be 26,000-30,000 yuan/ton, and the low-end anode will be 15,000-20,000 yuan/ton.
(Anode material price chart, source: Baichuan Yingfu)
Prices have plummeted, profit margins have narrowed or even lost money, and the operating rate of anode material manufacturers has dropped sharply. According to the data of Gaogong Lithium Battery, in 2023, the total capacity utilization rate of the TOP6 anode enterprises will exceed 70%, but the average total capacity utilization rate of the TOP7 and subsequent enterprises will be less than 30%.
However, the adjustment of the industry is both a challenge and an opportunity for leading enterprises. They can often occupy more market share by virtue of cost, scale, technology and other advantages, and the industry concentration will continue to increase in the reshuffle.
In the face of market changes, Shanshan Co., Ltd. adjusted its business strategy in a timely manner, thickened the customer interface, continued to strengthen the depth and breadth of cooperation with the world's leading battery companies, and achieved significant growth in sales to major head customers. In 2023, the production and sales volume of anode materials of Shanshan Co., Ltd. will increase by 43.22% and 44.55% year-on-year, contributing 7.267 billion yuan in revenue.
At the same time as the increase in production and sales, the market share of Shanshan shares has further increased. According to the statistics of Xinchun Information, the company's output of artificial graphite anode materials in China in 2023 will account for 19%, ranking first in the industry.
Of course, the basis for consolidating the leading position in the industry is the matching production capacity. Shanshan Co., Ltd. said that at present, the company has completed the medium-term production capacity strategic layout of graphite anode materials, including three integrated bases in Inner Mongolia, Sichuan and Yunnan, of which the first phase of Inner Mongolia and Sichuan has been put into production, and the first phase of Yunnan has been put into trial production, and the company has steadily promoted the construction and release of production capacity according to market demand.
In order to meet the needs of overseas markets, the company also plans to build a 100,000-ton anode production capacity in Finland, which is currently in the preliminary formalities stage.
In addition, in order to further meet the needs of downstream customers and actively seize the opportunity of increasing the demand for silicon-based anode market, the company has taken the lead in laying out a 40,000-ton integrated silicon-based anode production capacity base in Ningbo, of which the first phase of the production capacity is under construction and is expected to be put into trial production in mid-2024.
Polarizers further consolidate the leading position
In 2023, affected by multiple factors such as global high inflation, geopolitical conflicts and US dollar interest rate hikes, the global economic growth will slow down, and the consumer electronics market as a whole will show a weak trend. However, driven by the development of large-size display products, the demand for ultra-large polarizers has maintained rapid growth.
According to Omdia data, shipments of ultra-large TFT-LCD panels (including LCD TV panels and commercial display panels) of 75 inches and above increased by 41.3% year-on-year in 2023 and are expected to grow by 28.2% in 2024.
As the world's leading polarizer leader, Shanshan Co., Ltd. has responded to the weak demand of the industry through stable production and supply, rich product system, active sales strategy and other measures, and the sales volume of polarizer business has also achieved continuous and steady growth.
According to the annual report, in 2023, the company's polarizer production and sales will increase by 10.65% and 10.18% year-on-year, achieving revenue of 10.297 billion yuan.
According to CINNO Research data, the company's shipment area share of large-size (including TFT-LCD/TV/monitor/laptop) polarizers will increase from 30% in 2022 to 33% in 2023, continuing to maintain the world's No. 1 position. From the perspective of main product application fields, the company's LCD TV polarizer business and LCD display polarizer business market share ranked first in the world.
During the period of industry adjustment, it is often the most test of the enterprise, which can not only test the real strength of the enterprise, but also test the ability of the enterprise to predict and control the industry trend in a period of time. Shanshan's ability to achieve sales growth in 2023 when polarizer demand is weak depends to some extent on its previous insight into the trend of global panel production capacity transfer to Chinese mainland, and its early domestic layout of production capacity.
At present, factories in Nanjing, Guangzhou, Zhangjiagang and other places have achieved mass production, and the construction of factories in Mianyang and Yangzhou is also steadily advancing. With the successive commissioning of new production lines, Shanjin Optoelectronics will have 15 world-leading polarizer production lines, with a total production capacity of more than 300 million square meters.
At the same time, the company has industry-leading RTP production lines in many cities across the country, RTP production lines are generally set up in customer factories, which can realize laser cutting, automatic inspection and polarizer and glass substrate integration of polarizers to coils, with the advantages of being close to customers and convenient supply, and can reasonably control transportation and packaging costs while meeting the needs of customer production line characteristics, improve production efficiency and improve product yield. As of the end of December 2023, the company has installed nearly 30 RTP production lines.
Continue R&D and innovation, reduce costs and increase efficiency
The foundation of stable development lies in technology and products, and resilience lies in continuous R&D and innovation.
In 2023, Shanshan's R&D expenses will reach 868 million yuan. As of the end of last year, the company has applied for more than 1,000 patents related to LCD polarizers in South Korea, China, Japan, the United States and other countries around the world, including 1,149 authorized patents (including 901 overseas patents), and 279 authorized patents for anode materials.
(R&D and patent situation of Shanshan shares, source: Shanshan shares' official WeChat)
Years of R&D investment and independent R&D capabilities have cultivated a perfect R&D and innovation system, and Shanshan Co., Ltd. can often keep up with the forefront of technology and achieve rapid mass production of products.
In terms of anode materials, the company has broken through the bottleneck of high energy density fast charging technology, and fast charging products have been continuously iteratively upgraded. Consumer fast charging products continue to maintain a leading market share, and have achieved mass shipment of 5C products and tonnage supply of 6C products, while the shipment of power fast charging products has grown rapidly, and the large-scale supply of 4C and 5C products has been realized, and 6C products have been finalized by customers and are undergoing batch stability verification.
The company's silicon-based anode products continue to achieve technological breakthroughs, continue to be recognized by customers at home and abroad, and achieve batch supply. Silicon and oxygen products have been supplied to overseas head customers in batches, and have been loaded, and at the same time overcome the problem of the second generation of silicon oxygen low temperature cycle, related products have been introduced into overseas head power tool enterprises, silicon carbon products continue to iterate, the new generation of silicon carbon products in the head customer test to maintain a leading position, related core technology has been authorized by the United States, Japan.
The company's hard carbon anode products are leading in capacity, high temperature and processing performance, and the self-designed 1,000-ton hard carbon production line has been completed and put into operation, which has been applied in batches in the fields of sodium battery, lithium battery (including semi-solid-state battery) and supercapacitor.
In terms of polarizers, the company's self-developed polarizers for OLED TV and OLED mobile phones have been mass-produced and shipped, and the polarizers for OLED IT are in the customer certification stage; the company's automotive polarizers have completed the technical and patent reserves and are in the internal testing stage; the company's polarizers for VR display have completed independent development and are currently in the customer certification stage.
In addition, the company plans to acquire LG Chem's OLED polarizers, automotive polarizers and other businesses to accelerate the increase of high-end polarizer market share, and the acquisition is currently progressing steadily. After the completion of the acquisition, Shanshan Co., Ltd. will have a market share of about 25% for automotive polarizers and about 40% for OLED TV polarizers.
Of course, innovation can also directly lead to cost reduction and efficiency increase. In 2023, the company will dig deep into the path of cost reduction, on the one hand, expand the cost reduction space through technological innovation, including the development of low-cost and high-quality raw materials, improve the production process to reduce energy consumption, improve the level of intelligent manufacturing to improve production efficiency, and on the other hand, further reduce operating costs by optimizing the capacity structure, improving the level of graphitization self-supply rate, and strengthening supply chain management.
It is foreseeable that Shanshan Co., Ltd. will continue to promote the research and development and application of new products and technologies, promote cost reduction and efficiency increase, and the company's long-term competitive advantage will continue to be strengthened. (This article was first published on Titanium Media APP)