Why are you optimistic about Tiannai Technology at this point in time? The country is expected to enter the inflection point of increased penetration rate+the point in time when going overseas is close to release.
Penetration rate: Judging from Tiannai's 24Q1 sales growth rate, the penetration rate is expected to reach an inflection point. We think it may be related to the strengthening of the fast charging trend and the economic efficiency of carbon tubes compared to carbon black
Looking at the past, the growth rate of carbon nanotube composites in 20-23 years clearly outperformed lithium batteries. According to Gaogong lithium battery data, China's carbon nanotube slurry market was 48,000 tons in 2020, growing to 117,000 tons by 2023, with a 3-year compound growth rate of 34%. In 2020, China's lithium battery shipments increased from 143 GWh to 886 GWh by 2023, a 3-year compound growth rate of 84%. The reason for our analysis is that the single consumption of carbon tubes has declined, and lithium batteries have clearly gone out of storage in 23 years.
In 24Q1, Tiannai's sales growth rate reached 43%, clearly outperforming the industry by about 20%. It may be at an inflection point. Tiannai Technology's shipments in the first quarter of 2024 increased by about 43% over the same period last year. According to Gaogong lithium battery data, the shipment volume of 2024Q1 lithium batteries in China was 200 GWh, an increase of 18% over the previous year. Among them, shipments of power and energy storage batteries were 149 GWh and 40 GWh respectively, up 19% and 14% year-on-year respectively.
We believe that the inflection point of carbon tubes is expected. The reason is 1) the trend of fast charging has strengthened; 2) the price of carbon tubes has declined rapidly in recent years, or is more economical than carbon black.
Going overseas: IRA has no restrictions on conductive agents+The company's US factory has entered the plant transformation stage, waiting for overseas customers to release it
IRAs have no restrictions on conductive agents. Batteries are divided into key minerals and battery components, and the constituent materials are defined between key minerals and battery components. In particular, it is stated that “some battery modules can be made entirely of inputs without constituent materials, and inputs used to manufacture battery modules that do not contain any applicable key minerals (such as solvents, conductive additives, etc.) will not be considered constituent materials.”
The company has entered a period of intensive discharge in overseas battery factories. The company has now supplied some Japanese and Korean battery factories in small quantities. Next year, Panasonic's new plant in the US will be put into operation, and the company is expected to be equipped nearby in the future. Furthermore, LG values carbon nanotubes, and we think the company is hopeful that it will be supported in the future.
Investment advice: We expect the company to achieve net profit of 3.2 to 570 million yuan in 24 or 25, and the company's 24Q1 sales level will begin to accelerate. We believe 1) the fast charging trend will begin to materialize, and later, with the advent of Shenxing battery volume+ carbon black economy, we believe the carbon tube penetration rate is expected to increase, thereby driving the company's growth rate; 2) the products supplied by IRA are not restricted by US law. Currently, the company's US factory is under plant construction. In the future, as the customer's battery factory is put into operation, the overseas market is expected to expand. Based on the above optimistic logic, the overseas market is expected to expand.
Risk warning: Electric vehicle sales fall short of expectations, carbon nanotube penetration rate falls short of expectations, company production capacity release falls short of expectations, changes in the international situation, estimates are subjective, and stock price fluctuations are relatively large