On May 8, the Ministry of Industry and Information Technology issued "Lithium Battery Industry Standard conditions (2024)" (draft for soliciting opinions) and "measures for the Administration of Lithium Battery Industry regulations (2024)" (draft for soliciting opinions).
What is the impact of the draft on the lithium battery industry? Lithium plate after a long period of adjustment, the current fundamentals of the industry? Which segments have more investment opportunities? Cun Simin, manager of the climate change responsible investment fund for Chuangjin Hexin, said that as the lithium power industry is still in a state of overcapacity, the draft for soliciting opinionsScratchmakeymakeyThe introduction of the industry will help to restrain the backward production capacity of the disorderly expansion at the end of the industry, and is conducive to the healthy development of the industry in the medium term.
Cun Simin believes that the lithium plate has passed the general rising stage and is optimistic about the subdivided areas with differentiation, cost advantages and competitive links, including batteries and vehicle links.
1. The lithium plate continues to decline from the high point in 2022. How do you view the performance of the lithium plate in recent years? What is the overall valuation situation at present?
Cun Simin: lithium electricity plate is a typical cyclical growth industry. From the growth point of view, new energy vehicles have entered the explosive stage since 2019, with high sales volume, high prosperity and high growth. Cycle point of view, lithium materials in the 2019-2021 demand outbreak cycle due to the lag of the production expansion cycle resulting in supply and demand gap, rising prices, profits in a high position, after 2022, the industrial chain under the support of high profits to enter the peak of capital expenditure, after 2023 new capacity gradually put into production, lithium various links of overcapacity, accompanied by a continuous decline in unit profits, plate PE, EPS double kill.
According to the current situation, it should not be regarded as a plate, the industry as a whole still has overcapacity, but there are differences in each link of lithium electricity, which stems from the extremely high safety requirements of car regulations. the requirements for technological progress, safety, quality, responsiveness and supply chain security are complex and fine.
For the links without differentiation, the cycle adjustment since 2022 is a permanent profit reduction, which is currently in the process of finding the hub of EPS and PB; but for the links with differentiation, it has reflected the differentiation of profits, and PE is in a reasonable valuation in the overall manufacturing industry. For some high-quality manufacturing industries that are globally competitive, there is still some room for valuation, and when the stability of unit earnings continues to verify, such enterprises have the value held in the medium cycle.
2. With the help of the policy, the lithium plate rose sharply last week. What do you think of the future? Which subdivision areas do you like?
Cun Simin: there are nearly 100 million cars sold worldwide, and there is still a lot of room for electrification. In addition to power batteries, the lithium industry has more room for energy storage, consumer electronics, communications, robots, flying cars and so on.
What needs to be clear is that the lithium plate has passed the general rising stage, and there are great differences among various links. The general rise in the lithium industry last week is based on the benign and healthy repair of the supply and demand structure of the plate in the medium term, but after the repair, we still need to do differentiation research on each segment of the industry, and continue to be optimistic about the subdivision opportunities with differentiation, cost advantages and competitive links, such as batteries and vehicle links.
3. What are the uncertainties and risk points in the lithium industry that need to be paid attention to?
Cun Simin: at present, the industry is still in the stage of oversupply. To gradually digest it by slowing down investment and demand growth, we need to pay close attention to whether the future balance of supply and demand will be delayed.
