Lithium equipment faucets take advantage of the wind under the new cycle of production expansion [institutional review]

Core point of view

Lithium power equipment has basically achieved domestic substitution and the competition pattern is more concentrated. Domestic lithium power equipment has excellent supporting services and outstanding performance-to-price advantages, which has occupied an absolute advantage in the domestic market. According to high-tech lithium power data, the domestic replacement rates of equipment in the first, middle and later stages of 2017 are 88%, 90% and 95%, respectively. The competition pattern in the lithium power equipment industry is relatively concentrated. The domestic share of the front core equipment coating machine has reached 88% in 2018, of which CR5 is more than 60%; the market share of the middle process core equipment winding machine is as high as 90% in 2018 CR5; the domestic equipment share of the core equipment charging and discharging motor in the latter part of the process reached 90% in 2018, of which the market share of CR10 is 60%.

Under the trend of electrification, the transformation of traditional car companies is accelerating, and battery factories are also greatly expanding their capacity. Global automobile electrification has become a trend. According to the New Energy vehicle Industry Development Plan (2021-2035), the penetration rate of China's new energy vehicles will reach about 20%, 40% and 50% respectively in 2025 and 2035, respectively. Under the stimulation of subsidies and tax breaks and other policies, mainstream car companies in Europe and the United States have arranged new energy vehicles one after another. Lithium-ion power battery factories have all launched medium-and long-term production expansion plans, and it is expected that Ningde Times, BYD, AVIC Lithium Power, etc., will accumulate more than 100GWh production capacity in 2021-2023. According to our estimates, the domestic lithium equipment market in 2021, 2022, and 2023 is estimated to be 705.0, 680.2, 57.52 billion yuan respectively, and the average market size in 2021, 2023 is 65.35 billion yuan.

The advantages of leading lithium equipment manufacturers will be expanded, and the market share is expected to further increase. The competition pattern of lithium battery manufacturers is more concentrated. In 2019, Ningde era accounted for half of the domestic lithium-ion power battery market, with a market share of 50.6%. The domestic lithium-ion power battery market tends to be concentrated. According to Sadie Industrial Research Institute, the proportion of installed capacity of CR2/CR5/CR10 in 2019 was 67.9%, 79.1% and 87.9% respectively, which increased from June of 4/1.4/5.3pct.2014 year to June of 2021, respectively. The price of lithium-ion power battery continued to drop from 2.8yuan / Wh to 0.6RMB / Wh, a drop of 78.6%. The decline in profitability and the capacity gap indicate that the second-line battery factory is facing greater operational pressure, while the market share of the head battery factory is expected to continue to expand. Lithium battery equipment is a non-standardized product, generally with downstream battery enterprises for customized design, battery enterprises will not easily change equipment suppliers. With the increasing concentration of competition in the lithium-ion power battery industry, the market share of lithium equipment manufacturers deeply bound to the head battery factory is expected to continue to increase.

Investment suggestion

In the new round of production expansion cycle led by the head lithium battery manufacturers, the leading enterprises of lithium power equipment will be the first to benefit, and the leading edge will be expanded. It is suggested that we should pay attention to the leading intelligence of platform enterprises, Yinghe Technology, etc., as well as Hangke Technology and Liyuan Heng, which have strong lithium special plane strength.

Risk hint

The expansion of lithium-ion battery factories fell short of expectations; the sales of new energy vehicles fell short of expectations; and the profitability of the lithium-ion battery industry declined.