Looking at the production side of the lithium battery industry chain, production schedules recovered strongly in March, and the utilization rate of leading production capacity recovered to 70-80%, and sustainability can be expected.
The Zhitong Finance App learned that Dongwu Securities released its March 2024 strategy for the electric vehicle industry, stating that from the perspective of the production side of the lithium battery industry chain, production schedules recovered strongly in March, and the utilization rate of leading production capacity recovered to 70-80%, and sustainability can be expected. Comparing the historical low valuation of lithium batteries horizontally, it is currently less than 15-20x in 24 years, 10-15x in 25, and PB1.8-4.5 times. Fundamentals and stock prices are double bottoming. They are beginning to be fully optimistic about the leaders, the first target with high certainty in Q1 performance, and at the same time optimistic about the leaders whose profits have bottomed out, as well as those related to lithium where prices have rebounded in the short term.
Related targets:
Targets with high certainty in Q1 performance include Ningde Era (300750.SZ), Everweft Lithium Energy (300014.SZ), Kodali (002850.SZ), Putailai (603659.SH), Zhongwei Co., Ltd. (300919.SZ), Tiannai Technology (688116.SH), WMS (688612.SH), etc.;
Profit-bottoming leaders: Tianci Materials (002709.SZ), Hunan Yuneng (301358.SZ), Huayou Cobalt (603799.SH), Rongbai Technology (688005.SH), Shangtai Technology (001301.SZ), Enjie Co., Ltd. (002812.SZ), Xingyuan Materials (300568.SZ), etc.
Lithium-related targets for short-term price rebounds: Yongxing Materials (002756.SZ), China Mining Resources (002738.SZ), Tianqi Lithium (002466.SZ), Ganfeng Lithium (002460.SZ), etc.
The main views of Dongwu Securities are as follows:
Domestic oil and electricity prices, combined with policy incentives, continued to increase the penetration rate, and overseas relays supported global growth of 20% + in 25-26 years. Domestic electric vehicle sales in February were 477,000 units, -9%/-35% year-on-month, with a penetration rate of 30.1%. Car companies' price cuts continued. Combined with new car releases, sales are expected to return to 850,000 units+ in March. Q1 is expected to return to 2 million units+, an increase of 26% over the previous year, and an increase of 25% to 11.85 million units for the whole year. Nine mainstream European countries sold 147,000 vehicles in February, +9%/+7% year-on-month, with a penetration rate of 19.8%; the annual growth rate is expected to increase 8% to 3.11 million units; the US will sell 125,000 vehicles in February, +17.6%/+8.0% compared to the same period, the penetration rate is 9.9%, and the annual increase is expected to increase 25% to 1.83 million units; short-term sales growth in Europe and the US have slowed, but the trend of electrification has not changed. Combined with stricter carbon emissions assessments, the 25-year growth rate will return to 30% +.
Looking at the production side of the lithium battery industry chain, production schedules recovered strongly in March, and the utilization rate of leading production capacity recovered to 70-80%, and sustainability can be expected. In March, the industry's production schedule increased 50-80% month-on-month, up 10-30% from January. It has recovered to a 23-year high of 90%. Some manufacturers have higher rankings. Mainstream companies have a higher Q1 production schedule of -20%-0% month-on-month, an increase of 10%-30% over the previous year. Production is expected to increase slightly further in April, and is expected to increase 30% month-on-month in Q2. Due to the slowdown in production expansion by manufacturers since 23H2, the current capacity utilization rate of mainstream manufacturers has reached 70-80%, and Q2 will further increase.
The profits of leading players in the battery and structural parts sector are still impressive, while profits in the rest of the sectors have basically bottomed out. The actual supply of upstream lithium carbonate is lower than the original forecast, and the bottom price may be 90,000/ton, which is better than previously expected; prices for batteries and structural components have basically bottomed out, while leading profits are strong; prices of lithium iron and electrolyte hexafluoride are close to losses throughout the industry. Prices are bottoming out, and there is extremely limited room for negative electrode and diaphragm prices. It is expected to bottom out in the second quarter.
Risk Warning: Risk Warning: Sales fall short of expectations, competition intensifies.