Contemporary Amperex Technology's net income in Q3 was 13.136 billion yuan, an increase of 6% compared to the previous quarter. During the performance interpretation meeting held on the night of the earnings release, senior executives of Contemporary Amperex Technology looked forward to the Q4 order situation, saying 'The utilization rate of production capacity was very full in the third quarter, even fuller in the fourth quarter.' Senior executives addressed investor concerns such as the expected resumption of lithium carbonate production in Yichun and factory fires at the Q3 performance interpretation meeting.
On the evening of October 18, Caixin learned that in the third quarter report released by Contemporary Amperex Technology (300750.SZ), revenue declined year-on-year in Q3, while net profit increased.
'The utilization rate of production capacity was very full in the third quarter, even fuller in the fourth quarter.' Senior executives of Contemporary Amperex Technology made this outlook on the Q4 order situation at the performance interpretation meeting held this evening.
Increase in shipments in Q3, 'Fuller production capacity utilization in Q4.'
Contemporary Amperex Technology released the third quarter report, achieving operating income of 259.045 billion yuan in the first three quarters, a year-on-year decrease of 12.09%; net profit was 36.001 billion yuan, an increase of 15.59% year-on-year. In the third quarter alone, operating income was 92.278 billion yuan, down 12.48% year-on-year, while net profit was 13.136 billion yuan, up by 25.97% year-on-year and 6.32% compared to the previous quarter. Similar to the first half of the year, Contemporary Amperex Technology maintained a situation in the third quarter where revenue continued to decline year-on-year while net profit increased.
Caixin reporters learned from capital market sources that Contemporary Amperex Technology's Q3 performance met expectations. According to information obtained by Caixin reporters, as usual, Contemporary Amperex Technology held a third quarter performance interpretation meeting on the evening of the earnings release.
During the exchange meeting, investors inquired about the gross margin and net profit per Wh. According to the third quarter report data, Contemporary Amperex Technology's gross margin in Q3 was 31.17%, an increase of 4.53 percentage points compared to the previous quarter.
Contemporary Amperex Technology's CFO, Zheng Shu, stated during the meeting that one of the reasons for the increase in gross margin was due to further price declines of major materials including lithium carbonate in the third quarter, pushing sales prices further down. On the technological front, the gross margin level was higher due to new technologies and products such as the Prismatic Super Battery and Kirin Battery being recognized by mainstream customers, bringing a premium, which had a positive impact on the gross margin. It is expected that the company's gross margin will remain relatively stable in the future.
It is worth noting that the management of Contemporary Amperex Technology indicated that the penetration rate of the new products in the company is expected to increase from 30% to 70-80% next year, but whether it will have a positive impact on the gross margin still needs to be determined based on market conditions.
"The capacity utilization rate in the third quarter is very high, basically there is no space, and the data for the fourth quarter currently seems to be even fuller than the third quarter." In the interpretation meeting, management of Contemporary Amperex Technology expressed such expectations for the Q4 order situation.
Management of Contemporary Amperex Technology disclosed at the meeting that the company's battery shipments in Q3 were about 125GWh, an increase of around 15% from the previous quarter, with energy storage batteries accounting for less than 25% and approximately 75% being power batteries.
According to SNE data, in January to August 2024, Contemporary Amperex Technology's global power market share was 37.1%, an increase of 1.6 percentage points year-on-year, ranking first. According to the Power Battery Alliance data, in January to September 2024, Contemporary Amperex Technology's domestic power battery installed capacity market share was 45.9%, an increase of 3.1 percentage points year-on-year, ranking first.
Regarding the outlook for the overseas market, Jiangsu Lopal Tech.'s board of directors secretary Jiang Li stated, "The pressure in the European market is quite high this year. Originally expected to increase by 10 percentage points, this year it will remain flat or even slightly decrease." However, he expressed optimism about the European market next year, saying, "The European carbon assessment is quite clear, and with new models launching next year, the outlook for next year will be much better, and the company's market share in Europe will steadily increase."
Responding to hot topics such as Yichun lithium carbonate and factory fires.
It is worth noting that at the exchange meeting, management of Contemporary Amperex Technology revealed that the extent of the decline in lithium carbonate prices was unexpected for Contemporary Amperex Technology.
At the beginning of last month, when lithium carbonate prices fell to nearly 0.07 million yuan/ton, Contemporary Amperex Technology decided to adjust the production arrangement of Yichun lithium carbonate.
Contemporary Amperex Technology's third-quarter report shows that the amount of asset impairment loss increased by 133% year-on-year to 6.652 billion yuan, mainly for intangible assets, fixed assets whose recoverable amount is lower than the carrying amount are provided for impairment, and inventory costs higher than their net realizable value are provided for inventory write-down.
This impairment mainly comes from Canmax Technologies' layout in the Lithium Mica Mine in Yichun, Jiangxi. Zheng Shu stated that in late September, the company made adjustments to the Yichun lithium carbonate business. In accordance with the prudence principle, combined with the company's expectations of business operations and lithium carbonate prices, the assets were tested for impairment, and the part of the assets recoverable amount lower than the carrying amount was impaired, with the impairment mainly coming from this part.
It is understood that Canmax Technologies previously won the exploration rights for lithium-bearing ceramic clay (including lithium) in the Zhenkouli-Fengxinxiawo Mine Area of Yifeng County, Jiangxi Province with a bid of 0.865 billion yuan. The Financial Association reporter learned from the Jiangxi Province Investment Project Online Approval Supervision Platform that Canmax Technologies has invested 12.02 billion yuan in the lithium mica beneficiation project in Yichun, including a total investment of 7 billion yuan for 33 million tons of lithium mica and its supporting projects, and a total investment of 5.02 billion yuan for the 45 million tons per year ceramic clay (including lithium) mining project (information disclosed as of 2022).
In the downstream layout of lithium carbonate smelting, Canmax Technologies has jointly built factories with Jiangsu Lopal Tech, Canmax Technologies, and other enterprises for an annual production of 0.1 million tons of lithium carbonate production risk layout.
Zheng Shu added that this impairment is mainly based on the fluctuation of lithium carbonate prices, and the impairment provision does not represent future value. With the fluctuation of prices, additional value will be recognized in the current period.
Regarding when to restart the mining of the mine and downstream lithium carbonate production, Jiang Li said, 'It depends on the situation.' He explained that from the interim report to now, the lithium carbonate price has continued to decline to 0.07 million, and Canmax Technologies has certain cost advantages due to collective procurement. In terms of resumption of work, Canmax Technologies has also been in communication with the government and is studying cost reduction measures. However, indeed, due to reasons such as the grade of the mine, sharp market decline, etc., some adjustments have been forced.
In addition, regarding the fire incident at Canmax Technologies' Z base in Ningde, Fujian at the end of September, Jiang Li said that relevant departments are currently investigating. The base has already resumed production, with minimal impact on production and customer interaction. 'We have also organized the company's safety and environmental departments to conduct rectification inspections for the entire group on safety hazards, review compliance with the factory's fire prevention system, and prevent such incidents from happening again.'
