The Zhitong Finance App learned that Dongwu Securities released a research report saying that lithium battery equipment vendors have a high customer concentration, making downstream customers have greater bargaining power and influence when cooperating with equipment manufacturers, raising the entry threshold for the lithium battery equipment industry. Past equipment business performance is under pressure in the short term, but domestic NEV stimulus and overseas production expansion are expected to support future order growth. Tendering from leading domestic customers is expected to resume, and overseas focus is on automakers' production expansion. Follow the progress of industrialization of new technologies such as solid-state batteries, composite fluid collectors, and 4680.

The main views of Dongwu Securities are as follows:

There are many types of equipment in the front, middle and back stages of lithium batteries, and the concentration of downstream customers is high.

The manufacturing process is divided into the front stage (electrode manufacturing), middle stage (cell assembly), and back stage (cell packaging and inspection). The manufacturing process requires strict accuracy and stability, and slight deviations may cause product performance or safety to fall short of standards. The high customer concentration of lithium battery equipment companies makes downstream customers have greater bargaining power and influence when cooperating with equipment manufacturers. However, high customer concentration also has positive aspects for lithium battery equipment vendors, helping to establish long-term cooperative relationships with customers, thereby raising the entry threshold for the lithium battery equipment industry.

Equipment business performance is under pressure in the short term, and new orders are expected to bottom up.

In terms of gross margin, the average gross margin of the 2024Q1-Q3 industry is about 31%. The net profit margin of the industry is mainly affected by inventory depreciation losses and credit impairment losses. The average value of the 2024Q1-Q3 industry is around 4%. 2019-2021 was the peak of production expansion in the lithium battery industry. Since 2022, in particular, domestic power battery production capacity is overcapacity and capacity utilization is low, and orders from lithium battery equipment vendors are under pressure. Although the growth rate of new orders from lithium battery equipment vendors continues to decline in 2024Q1-Q3, domestic NEV stimulus and overseas production expansion are expected to support future order growth.

Tendering from leading domestic customers is expected to restart, and overseas will focus on expanding production by automakers.

(1) Overseas: One of the highlights of the future is the large-scale expansion of overseas battery factories. In the past, overseas battery manufacturers were slow to expand production due to the impact of the epidemic. With the gradual improvement of the epidemic, these battery manufacturers have begun to restart and expand production. At the same time, automakers such as Volkswagen and India's Tata have begun to build their own production capacity one after another, so the overseas layout of lithium battery equipment companies is expected to fully benefit.

(2) Domestic: Leading companies such as Ningde Era and BYD are actively expanding production, and second-tier cutting-edge battery manufacturers such as Everweft Lithium Energy are also expanding production.

Focus on new technologies such as solid-state batteries, composite fluid collectors, and 4680.

(1) Solid-state batteries: The main demand of OEMs is shifting from safety to energy density. Currently, semi-solid state batteries that can be mass-produced are a transition form of oxide solid electrolyte. The mainstream route for solid-state battery iteration before 2028 is oxide, and after 2030, they are optimistic about all-solid sulfide. There is not much difference between semi-solid state battery equipment and traditional liquid batteries. All-solid-state batteries are in the early stages of process equipment and have not yet been finalized.

(2) Composite fluid collector: Composite fluid collector has advantages in terms of performance and cost. Composite aluminum foil uses a one-step evaporation method, and progress has been made in the two-step and one-step methods for composite copper foil.

(3) 4680: Compared to previous cylindrical batteries, the biggest structural innovation of the 4680 battery is omnipolar ear. After Tesla released 4,680 large cylindrical batteries, companies such as BMW, Ningde Era, and Everweft Lithium Energy have deployed large cylindrical batteries. Among them, Samsung and LG have already begun mass production of 4,680 large cylindrical batteries, and China Everweft Lithium already has a large cylindrical production capacity of 20 GWh.

Investment suggestions: Focus on recommending Pilot Intelligence (300450.SZ), Hangke Technology (688006.SH), Dongwei Technology (688700.SH), and Hongtian Co., Ltd. (603800.SH).

Risk warning: New energy vehicle sales are lower than expected, and downstream battery factory production expansion is lower than expected.