Warburg Securities: battery expansion VS midstream supply tight lithium material manufacturers are expected to accelerate production expansion

Divine material issued a production expansion plan in June to deal with the capacity shortage. On the evening of June 17, electrolyte leader 002709.SZ released a series of production expansion plans. The company plans to invest more than 2 billion yuan in three projects, including lithium hexafluorophosphate. The output data of power battery in May showed that LFP exceeded ternary for the first time, expanding the production of ferric phosphate to meet the rapidly growing demand of passenger cars and energy storage, lithium hexafluorophosphate restraining electrolyte production and actively arranging lithium hexafluorophosphate production to meet the order needs of downstream leading enterprises. The market share of the next generation electrolyte lithium salt LiFSI, is expected to further increase under the high nickel trend, and the company will accelerate production expansion and layout of intermediates, which is expected to become a new growth point of the company's performance.

Leading battery manufacturers expand production and mid-stream deep binding long single lock to meet the demand of production expansion. In the environment of the sustained prosperity of the whole market, lithium battery manufacturers have increased the layout of new capacity expansion, in order to cope with the rapid development of the market. However, at present, there is a sharp contrast between the accelerated expansion of battery manufacturers and the shortage of mid-stream materials. We believe that with the continuous improvement of the prosperity of downstream new energy vehicles and lithium batteries, for battery manufacturers, the construction of a solid material supply chain to ensure the security of material supply will contribute to their long-term and stable development. For the mid-stream lithium materials enterprises, through strategic cooperation with leading enterprises and long order supply to obtain a stable source of product shipments, entering the supply chain of leading enterprises will also have more advantages in the following industry competition.

Investment suggestion: the influence of industry subsidy almost completely fades. With the electric layout of traditional automobile enterprises, the industry has officially entered the era of high prosperity, and is optimistic about the industrial chain opportunities of joint ventures (Volkswagen MEB), new domestic forces (Weilai Xiaopeng) and domestic joint venture traditional giants (Changan). Pay attention to Tesla industrial chain and Volkswagen MEB industrial chain enterprises continue to release orders for production and sales growth in the second half of the year, pay attention to sales growth and lay out intelligent domestic traditional car companies with Internet giants such as Huawei. Under the high magnanimity of the new energy vehicle industry, the continuous expansion of the production capacity of battery manufacturers brings the growth opportunities of the lithium industry chain. With the capacity expansion of mainstream battery manufacturers (Ningde Times, LG, Guoxuan Tech, Yiwei Lithium Energy), the demand and order locking of mid-stream battery materials are becoming increasingly important. From the fact that Ningde Times and Tianzi signed a large electrolyte order to lock 55% of their production capacity, we can see that the promotion of downstream demand has also led to a strong order demand of mid-stream battery materials manufacturers. We can pay attention to the leading manufacturers with obvious advantages of cost and economies of scale in the field of electrolyte and diaphragm with low technical barriers and the integrated layout of upstream and downstream, pay attention to the leading cathode material manufacturers with deep layout of high nickel ternary technology in cathode materials and obvious advantages in overseas business expansion.

Risk hint: the production and sales of new energy vehicles are not as expected, competition in the lithium industry intensifies, the price of raw materials in the industrial chain fluctuates sharply, and the policy of the new energy industry is not as expected.