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With the end of the disclosure period of the 2018 midterm report, several leading domestic power lithium battery enterprises, such as Ningde Times, BYD and Guoxuan Hi Tech, have also handed over their reports in the first half of 2018. According to the situation of several leading enterprises, many companies in the industry have shown the common feature of "increasing income and reducing profits" in the past six months.

On the one hand, new energy vehicles are in a period of great development. According to the national plan of adding 2 million new energy vehicles and maintaining 5 million new energy vehicles in 2020, the annual new increment can bring about a growth rate of about 30% - 40% in the industry. If stock replacement is considered, the actual growth rate will be higher, so that the revenue of each company will increase with the continuous expansion of the industry.

On the other hand, the industry is also at a time of tragic reshuffle. Not only are the seating positions of the leading enterprises changing, but also the enterprises left behind and the new dark horses emerging one after another. With the dramatic change of the industry pattern, the concentration has been significantly improved and the oligopoly situation has become increasingly obvious.

¡¤ It is imperative to clear the industry with capacity three times that of demand

Stimulated by both policies and demand, since 2017, major power lithium battery manufacturers have begun to compete for financing, constantly increase investment in new plants and production lines, and expand capacity to seize the market. As a result, all battery enterprises soon fell into the "prisoner's dilemma" and entered the state of capacity competition, with a serious overcapacity overall.

Take the top listed companies in the industry as an example.

By the end of 2017, the production capacity of Ningde Times had exceeded 17Gwh, and after that, only the part of projects funded through IPO will have additional capacity of 24Gwh. By the end of 2018, the company's total capacity will reach 38Gwh. By the end of 2020, according to the existing capacity planning of Ningde Times, the total capacity will reach 80Gwh. Even if conservatively predicted, the total capacity will be more than 50Gwh.

BYD once said in the record sheet of investor relations activities that, by the end of 2017, the battery capacity was 16Gwh, and it is expected to expand the ternary battery capacity of 10Gwh in Qinghai in 2018, the total capacity will reach 26Gwh by the end of 2018, and the capacity is expected to reach 40Gwh by 2020.

Guoxuan High Tech, another listed company, said that it is expected that the output of power batteries will reach 8-9Gwh in 2018, while the overall capacity will reach 13-14Gwh. By the end of 2020, the capacity is expected to be around 20Gwh.

According to data statistics, the total capacity of the above three leading companies plus other large and medium-sized power battery manufacturers, such as Yiwei Lithium Energy, Bike Power, Tianjin Lishen, Penghui Energy, Beijing Funeng, and Mengshi Technology, will be close to 300 Gwh by 2020. If a new energy vehicle is estimated to be charged 50 degrees (50Kwh) on average, these capacities alone can meet the battery demand of nearly 6 million new energy vehicles.

According to the Medium and Long Term Development Plan for the Automotive Industry jointly issued by the Ministry of Industry and Information Technology, the National Development and Reform Commission and the Ministry of Science and Technology, as well as the relevant "13th Five Year Plan", by 2020, the production and sales volume target of 2 million new energy vehicles in China will be more than three times of the demand, with a serious surplus.

As supply has exceeded demand, especially the overcapacity of middle and low-end products, the price of power batteries, including ternary and lithium iron phosphate, has plummeted from more than 2.8 yuan/wh at the beginning of 2014 to about 1.2 yuan/wh in mid 2018, down 60% in four years, making it imperative for the industry to clear up.

① The signs of severe polarization and monopoly are emerging

According to the data, the installed capacity of domestic power battery in the first half of 2018 was 15.6Gwh, with a growth rate of 168% compared with that in 2017. The main reason is that the installed capacity of new energy buses has increased by 1366.8% due to the rush to install effect of declining subsidies.

Due to the fierce industry competition and reshuffle, it can be seen that compared with the top ten power lithium battery enterprises in 2017, the industry pattern in the first half of 2018 showed a very significant two-level differentiation characteristics.

On the one hand, the domestic first-line echelon orders are abundant and the market share has increased significantly. The top two companies, Ningde Times and BYD, have increased their installed capacity shares from 29% and 15% to 41.6% and 21.4%, respectively, accounting for more than 60% of the total installed capacity in the market. Among them, Ningde Times is far ahead of other competitors, and compared with 2017, the leading range of Ningde Times is still expanding, constantly eroding the market share of competitors.

On the other hand, most small and medium-sized enterprises are seriously homogenized, unable to meet high-end demand, with orders plummeting, insufficient capacity utilization, and the market being severely squeezed. Faced with a precarious survival problem, existing enterprises have begun to fall behind. Among them, Waterma, which ranked the third in 2017, has been eliminated due to the fracture. Other smaller enterprises, such as Tianjin Lishen, Beijing Guoneng, Jiangsu Zhihang, have further reduced their already low market share, while the survival situation of smaller battery enterprises that have not been listed is more predictable.

From the perspective of market concentration, the market share of CR3 (the top three enterprises in business scale) has increased significantly from 50% to 70% in half a year, and CR10 (the top ten enterprises in business scale) has increased from 72% to 84% in half a year. The monopoly pattern of large enterprises, even the oligopoly pattern, has initially emerged.

Oligarchs are also experiencing difficult times

In the power lithium battery industry, the situation of a few oligarchs is gradually taking shape. So, what changes have taken place in these oligarchs and how are the days of several oligarchs?

Since the power battery businesses of Ningde Times and Guoxuan Hi Tech are relatively pure, Sina Finance and Economics selected the third company and the third company. Through the comparison of the battery price, battery cost, gross profit rate, market share, R&D investment, accounts receivable (cash flow), period expenses and other indicators, we may see some clues about the operation of leading companies.

Based on the relevant financial reports of Ningde Times and Guoxuan Hi Tech, as well as the research reports of securities companies, the general data of the main indicators are given, and the following conclusions can be clearly drawn from the above table.

1. From the sales price of power lithium battery, the sales price of products with similar performance in the market is almost the same, and the overall power battery price drops by about 30% annually. The falling price is a great pressure and challenge for all companies. The competition in the industry focuses on cost and performance;

2. From the perspective of cost competition, as cost is the core information and secret of each company, it is not easy to obtain accurate data. However, based on the comprehensive analysis of various materials and gross profit rate, Ningde Times reduced costs faster, and its gross profit rate changed from lower than Guoxuan High Tech in 2017 to more than its counterpart, which has obvious advantages in the entire industry;

3. From the perspective of R&D investment, we can see the competitiveness of product performance. In 2017, Ningde Times spent 1.63 billion on R&D, only 334 million on Guoxuan Hi Tech, 718 million and 133 million in the first half of 2018, respectively. The gap in technology reserves should be obvious;

4. In terms of market share, Ningde Times is not only far ahead of Guoxuan High Tech, but also faster than its competitors to seize the market. Nearly half of the market share can be said to have formed a preliminary monopoly in the entire industry;

5. Among the indicators of turnover rate of accounts receivable, the two companies have deviated from each other. The indicator of Ningde Times rose in the first half of 2018 compared with the first half of 2017, indicating that the company's collection of accounts receivable has improved, while Guoxuan Hi Tech has declined in the same period, indicating that the collection and cash flow are further deteriorating.

6. In terms of period costs, Ningde Times has dropped from being significantly higher than Guoxuan High Tech to being basically equal to its competitors. At present, there is little difference between the two companies in terms of cost control.

We can see that, compared with the Ningde era, Guoxuan High Tech lags behind in almost all indicators. Although it is in the third place in the industry, in such a period of fierce competition in the industry, only a single digit market share, there is a risk of being squeezed out at any time, which is by no means a worry.

For Ningde Times, although the company is temporarily in the market and is ahead of other competitors in many indicators, it is still facing a declining gross profit rate and an increasing R&D investment after a dual approach of "increasing revenue and reducing expenditure", which is certainly not a comfortable day.

Another industry giant, BYD, can't directly compare in the battery field alone because its business involves power batteries, traditional fuel vehicles, new energy vehicles and daily electronic products. However, in the first half of the year, the company's operating income increased by 20% year on year, while its net profit fell by more than 70% year on year, and the deduction of non net profits was even more from profit to loss. Like most enterprises in the industry, BYD is also experiencing a difficult time.

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