Incident: On November 21, the company issued an announcement that two electric ships carrying Everweft lithium batteries have recently set sail. “Yuetong Pearl River 001” and “China Airlines Xinneng 1” both use batteries integrated with the LF280K battery cell, an Everweft lithium energy lithium iron phosphate battery product. The ship's lithium battery capacity is 3870 kWh and 7740 kWh, respectively. They can drive dual propulsion motors and provide 420 KW and 660 KW of power respectively.
The electric ship was successfully tested, helping the company accumulate technology. “Guangdong Pearl River 001” is the country's first “oil to electricity” cargo ship and the first electric container ship in the Guangdong-Hong Kong-Macao Greater Bay Area. The ship has a total length of 49.99 meters, a width of 13.00 meters, a depth of 4.40 meters, a speed of 13.2 km/h, and a maximum load of 1,740 tons. It is equipped with 2 containerized power supplies, each with a capacity of 1935 kWh, and the total capacity of the ship's lithium battery is 3870 kWh. It takes into account the two operating modes of charging or power exchange, and has a battery life of about 100 nautical miles. As an inland waterway distribution ship, the “China Airlines Xinneng 1” ship is equipped with a battery-driven dual-propulsion motor. It is 80 meters long and has a maximum design speed of 18 km/h. It is mainly loaded with 20-foot and 40-foot standard containers, and can carry 120 standard containers, as well as bulk cargo such as coal and sand. The stern is equipped with 4 1935 kWh box-type power supplies, with a total battery capacity of 7740 kWh, a one-way range of 175 kilometers, and a self-sustaining power of 5 days.
The company continues to increase investment in R&D and has accumulated technical experience in lithium iron carbonate battery products. In terms of patents, Everweft Lithium Energy's marine power products, from batteries to battery packs to battery systems, have obtained CCS, DNV, ABS and many other classification society certificates. As of October 2023, the cumulative shipment volume of Everweft Lithium Energy reached 447 ships. More than 50% of electric ships nationwide are equipped with Everweft battery solutions, and the cumulative shipment scale exceeds 200 MWh. Everweft Lithium's marine battery systems have been verified by good application in the market.
Meet the diverse needs of customers and expand lithium battery application scenarios. Everweft Lithium's marine power products are centered on customer needs. Battery systems with various power levels and voltages can be configured according to operating conditions to provide customers with customized solutions to meet the diverse needs of customers. The company's power battery application products in electric ships have covered the vast majority of application scenarios, from small cruise ships, cargo ships, marine aquaculture platforms, to large ocean-going hybrid ships. As of October 2023, the cumulative shipment volume of Everweft Lithium Energy reached 447 ships. More than 50% of electric ships nationwide are equipped with Everweft battery solutions, and the cumulative shipment scale exceeds 200 MWh. Everweft Lithium's marine battery systems have been verified by good application in the market.
Domestic and foreign policies are favorable to the development of new energy ships, and market participants accelerate the layout of the domestic market. In terms of international policy, in April 2018, the International Maritime Organization IMO adopted the world's first preliminary strategy to reduce greenhouse gas emissions in the shipping industry — the Maritime Emission Reduction Agreement, which advocates accelerating the application of new energy and alternative energy for ships on a global scale; in September 2022, China's Ministry of Industry and Information Technology and the National Development and Reform Commission jointly announced the “Implementation Opinions on Accelerating the Green and Intelligent Development of Inland Waterway Vessels”, which states that they actively and steadily develop LNG powered ships and accelerate the development of battery-powered ships. In 2022, the Fujian Provincial People's Government issued the “14th Five-Year Plan” for the Construction of an Ecological Province of Fujian Province, which proposes to promote standardization of inland waterway ship types and accelerate the development and promotion and application of offshore and inland river electric vessels.
The driving effect of policy is obvious. According to statistics from the domestic research institute EVtank, in the domestic marine lithium-ion battery sector in 2021, Everweft Lithium Energy and Ningde Era had a combined market share of more than 70%, and battery products were mainly based on lithium iron phosphate routes. At present, electric ships equipped with lithium iron phosphate batteries from the Ningde era have been successfully tested one after another, including “Minjiang Star”, the first electric high-end inland river cruise ship “Minjiang Star” in Fujian Province in 2018, the “Deep Sea 01” marine dangerous goods emergency command ship in 2020, and the world's first oil-electric hybrid dual-power large-scale coastal sightseeing boat “See Shenzhen from the Sea” in Shenzhen in 2020. Furthermore, at the end of 2022, Ningde Times registered and established a wholly-owned subsidiary, Ningde Times Electric Boat Technology Co., Ltd., whose main business direction is the development and application of technologies and products related to marine power battery systems. Power battery companies such as Guoxuan Hi-Tech and Sunwoda have also begun to enter the marine sector. The former acquired 51% of the shares of the former Shanghai Wuyang Shipbuilding Technology Co., Ltd. in December 2019 and received the first batch of orders for 3 boat power lithium battery systems in March 2020; the latter stated on an interactive platform in December 2022 that the company currently has technology for power batteries for ships such as unmanned boats, river cruises, catamarans, yachts, ferries, etc. Among them, power batteries for unmanned boats and inland river cruises have been supplied in batches.
Helping the electrification transformation of global ships, there are still battery life safety issues. Currently, electric ships are subject to technical restrictions and different application scenario requirements, and there are certain difficulties in terms of battery life and safety.
On the technical side, battery life, battery safety, and charging speed need to be further improved. Currently, the range of electric boats is limited by battery energy density and hull space limitations. They are generally mainly used in inland waterways and offshore areas; the safety of battery cells themselves needs to be further improved; the charging time of pure electric boats exceeds refueling time, and charging and switching infrastructure needs to be further built and popularized. Different application scenarios cause ships to move freely to different degrees. These characteristics have different special requirements for charging-related interfaces.
Investment advice: In the context of the dual carbon policy, the ship electrification industry is developing at an accelerated pace, driven by industrial policy support, increased market demand, technological innovation in the field of new energy, and safety upgrades, which is of great significance to the electrification of China's inland waterway scenarios. In June of this year, many provinces joined forces to respond positively to the “electrification of the Yangtze River” development strategy. By promoting the application of new energy technologies such as power batteries in Yangtze River shipping, we will accelerate the clean and low-carbon transformation of the Yangtze River shipping energy structure to help achieve high-quality development in the Yangtze River Economic Belt, and at the same time help China reduce its external energy dependence. From an international perspective, global shipbuilding is rapidly shifting to a cleaner direction. Through electrification to replace the combustion use of diesel and gasoline, significant direct carbon emissions have been reduced, which will help the shipping industry continue to advance its energy saving and emission reduction goals. Currently, electric ships are facing difficulties such as technical safety issues. In the future, it is still necessary to increase investment in research and development, seek technical cooperation opportunities, and continue to improve technical standards in power systems, propulsion power, and charging stability. We predict that the company's net profit from 2023 to 2025 will be 4.90 billion yuan, 7.21 billion yuan, and 9.88 billion yuan, respectively, corresponding to PE 27 times, 19 times, and 14 times, respectively, for the first time.
Risk warning: increased competition in the lithium battery industry, fluctuating battery raw material prices, related policy risks, macroeconomic fluctuations