Lithium battery demand is strong, cylindrical battery is in decline, 4680 mass production is expected to rise soon? Lithium batteries are in great demand, and 4680 is expected to reverse the decline of cylindrical batteries. We estimate global lithium battery demand for 2487 GWh,22-25 CAGR 39.46% in 2025. Shipments of cylindrical lithium batteries fell 1.8% to 11.96 billion in 2022, cylindrical batteries are in trouble, and 4680 is expected to reverse the decline because of its better electrical performance.
4680 mass production is imminent, large cylindrical batteries are expected to rise, and we expect 4680 batteries to be installed at 252.2 GWh in 25 years. The 4680 battery has the advantages of high energy density, high output power, high mileage and low cost, but the development progress continues to be lower than expected because of the difficulty of tackling key problems with new technologies. In June 2023, Tesla, Inc. announced that the Texas factory had produced a total of 10 million 4680 batteries and 4680 columns had entered the "inflection point" of large-scale production expansion. We estimate that the global installed capacity of 4680 large cylindrical batteries in 2023 will be 15.1 GWh,23. In 2025, the installed capacity will reach 252.2 GWh,23-25 CAGR will be 308.68%.
Revenue and profits are under short-term pressure, and from a long-term perspective, the rich technology reserve is expected to help the company quickly seize the cylindrical battery structure market.
Revenue and earnings are under short-term pressure. In 2022, the company achieved revenue of 1.229 billion yuan, year-on-year + 3.96%, return to the mother net profit of 108 million yuan, year-on-year-28.48% politics 23Q1 revenue 225 million yuan, year-on-year-27.91%, return mother net profit 14 million yuan, year-on-year-44.44%. The main reason is the slowdown in battery demand downstream of 23Q1.
The investment in R & D remains high and the technology reserve is rich. 2020-2023Q1, the company's R & D expenses are 0.34, 0.48, 0.48, 0.09 million, respectively, and the corresponding R & D rate is 4.46%, 4.03, 3.92, 4.12%. As of December 31, 2022, the company has 29 invention patents and 112 utility model patents, which have outstanding technical advantages in the field of cylindrical battery precision structures. The company has mastered six core self-research technologies, such as lithium battery power-off and pressure relief triple protection structure technology, low-resistance and high-current lithium safety valve technology, high-capacity lithium battery packaging shell technology, mirror corrosion-resistant lithium battery packaging shell technology.
The company enjoys a high market share in the domestic cylindrical battery structure market and is expected to fully benefit from cylindrical battery shipments.
4680 the value of structural parts is high, which is expected to help the company increase its volume and profit. A single 4680 battery shell + cap is about 8 yuan, which is about 8 times that of 2170. We assume that a bicycle uses 4680 batteries or 4416 2170 batteries, then the value of the corresponding bicycle structure is 7680 yuan, and the value of 4680 structure is significantly higher.
The company is bound to mainstream cylindrical battery manufacturers, and large customers are expected to support the demand for structural components. As of Q4 in 22, the top five customers sold by the company are Lishen Battery, Yiwei Lithium Energy, Bike Battery, Hengdian East Magnetic and LG Chemistry. The company's major customers enjoy a high market share in the field of cylindrical batteries, which is expected to support the demand for structural components of the company.
The rhythm of production expansion coincides with the 4680 production cycle. After the completion of the company's IPO investment project, the annual production capacity of cylindrical packaging shell 2 billion, safety valve 1 billion / year and square package shell 5000 million / year will be added every year. It is estimated that after the company's total production capacity is fully released, the packaging shell production capacity will reach 4.68 billion / year, and the safety valve production capacity will achieve 1.906 billion / year. The 4680 cylindrical batteries of the company's downstream customers are on the eve of mass production, and the company's production capacity will be released to better meet customer needs.
The first echelon in the field of nickel-based conductors to explore high-quality customer resources
The market of nickel-based conductor materials is small and beautiful, and there are few competitors. Nickel-based conductor materials are mainly used in the manufacture of electrode ears and connecting plates of lithium batteries. According to GGII data, China's polar ear market is more than 2 billion yuan in 2022, and the growth is mainly due to the increase in soft bags and square battery shipments. China's polar ear market is expected to exceed 6 billion yuan in 2025.
Relying on high-quality products to accumulate rich customer resources, the company is the first echelon enterprise of nickel-based conductor materials.
The company's nickel-based conductor material products have been supplied to Samsung SDI, ATL (Ningde New Energy), LG Chemistry, Sanyo Energy, Yiwei Lithium Energy, Wanxiang Technology, Blue Lithium Core, Fanglin Technology, Xinpu Technology and other well-known customers.
Investment suggestion: the company enjoys a high market share in the domestic cylindrical battery structure market, and its customers include most of the mainstream cylindrical battery manufacturers. 4680 battery production is imminent, the company is expected to fully benefit from the rise of cylindrical batteries. We estimate that the 23-25 year net profit of the company will be 333 million yuan respectively. With reference to the comparable company valuation, the company is given 15x PE in 2024, corresponding to the target price of 52.1yuan, covering for the first time and given a "recommended" rating.
Risk hint: cylindrical battery demand is not as expected, capacity release is not as expected, industry competition is intensified, new energy vehicle sales are not as expected, energy storage battery sales are not as expected, and measurement errors.