Big Expansion Of Ningde Era "Defending": Power Battery Ushered In The Second Round Of Competition

The new crown epidemic did not prevent the expansion of the Ningde era (300750.SZ).

In the evening of April 13th, the power battery leader announced that it would increase the amount of overseas bond issuance to no more than 3 billion U.S. dollars (including) or other equivalent currencies. And only six months ago, the amount was 800 million dollars. That is to say, the grain reserves of overseas expansion in the Ningde era almost quadrupled in the short term.

Behind the upgrading of overseas bond issuance, many overseas projects have been planned in the Ningde era. In addition to cooperation with several foreign brands, the first overseas production and R & D base in Ningde was already under construction. In addition, in order to reduce the constraints of upstream resources, the Ningde era is also actively investing in upstream enterprises, and will further layout in this regard.

In recent years, the Ningde era has been looking overseas. On the one hand, the electric wave of overseas car companies is just rising. On the other hand, with the gradual release of the battery industry in China, the Ningde era will face more competition from peers. As the first power battery company in the world, the expansion of the Ningde era is also a "conservative".

As the global automotive industry is turning to electrification gradually, the advantage area of power battery giants such as Ningde era, LG chemistry and Panasonic is collapsing. In the Ningde era, from deep tillage domestic car enterprises to gradually entering the overseas supply chain, LG chemistry has entered the domestic market from the European and American market with the domestic production of Tesla.

In the domestic market, this trend has achieved initial success. Data show that in the first quarter of this year, China's power battery installed capacity ranked the first three in the LG chemical industry due to supplying Tesla Shanghai plant, and became the number of battery manufacturers in the market under the downward trend. However, the original "double strong" - the Ningde era and BYD - were all down, and the installed capacity dropped by 48.6% and 72% respectively.

The industry has concluded that at present, although the status of the head enterprise is difficult to shake in the short term, the entire domestic power battery industry has changed from the original "28 pattern" to the "37 pattern" now. Under the mess of the "intruders" in the head enterprise, the new head office is also brewing.

Ningde's great expansion

Within six months, the scale of offshore bonds increased from $800 million to US $3 billion in the Ningde era. This sudden increase has attracted the attention of the exchange. In April 15th, the Shenzhen stock exchange sent a letter of inquiry to the Ningde era, asking it to explain the reason and rationality of raising the amount of overseas bond issuance.

From the perspective of public information, raising the amount of overseas bond issuance in the Ningde era is related to the ongoing overseas layout. In order to deepen business expansion in overseas markets, the first Ningde R & D production base was built in Thuringia, Germany. In the reply letter issued in the evening of April 17th, the Ningde era indicated that the company has fully launched and promoted the construction of the above projects, and funds for project construction and operation need to be prepared ahead of schedule.

It is worth mentioning that in June last year, the Ningde era also announced that it would expand the scale of investment in the above projects. According to the preliminary plan adopted by the board of directors in July 2018, the base plan invested 240 million euros, and in June last year, the board reassessed and decided to increase investment. The total investment would not exceed 1 billion 800 million euros.

However, although the above projects were increased investment, in the announcement of last November, the guarantee amount for issuing bonds issued by foreign subsidiaries in the Ningde era was only 800 million US dollars, and it was not until April this year that the amount of overseas issuance was announced. Why do we have such a dislocation? In twenty-first Century April 20th, the business reporter asked the relevant stakeholders of the company's securities department, but the other side did not know the specific circumstances.

The upgrading of offshore bond issuance in Ningde era is related to the expansion of overseas market as a whole. In reply to the inquiry, the company also said that many overseas subsidiaries have been set up to reserve certain operating revolving funds, and the amount of overseas fund-raising needs to be increased.

In addition, a number of overseas assets were acquired in the Ningde era, which also raised requirements for the collection of overseas funds. Last year, Ningde spent 55 million euros to acquire the Pibara 8.5% stake in the Australian head lithium mine. From the reply content, the company will continue to further layout its upstream companies in the future.

It should be pointed out that the layout of overseas markets is only part of the expansion of Ningde's era. In fact, the amount of overseas bonds issued in the Ningde era was 3 billion US dollars, and the domestic issuance amount was 10 billion yuan (currently 4 billion 500 million yuan), and in February this year it plans to refinance 20 billion yuan.

Public information shows that in October and January this year, the Ningde era issued 1 billion 500 million yuan and 3 billion yuan corporate bonds, respectively, with the purpose of replenish liquidity. In the two tier market, the 20 billion yuan of private placement financing is not only used to supplement the liquidity, but also for the research and development of the frontier technology of electrochemical energy storage and the construction or expansion of the three battery projects. These three projects are: the expansion project of lithium ion battery in the West, the power generation and development of Jiangsu era and the storage and development of lithium ion battery (phase three), and the power generation in Sichuan era. Pool project phase I.

According to the twenty-first Century economic report reporter combing, the investment scale of the domestic project announced last year in Ningde era is about 32 billion yuan (non phase one investment), and if the purchase is calculated, the total investment plan is close to 45 billion yuan. In the reply of Ningde era, the investment budget of the related capacity building projects announced by the company has totaled more than 50 billion yuan.

Power battery second round competition

The massive investment in the Ningde era is to reserve capacity for the next few years. Take the three projects mentioned above as an example, these will increase the capacity of 52GWh for the Ningde era.

The Ningde era has been the champion of the domestic market. In 2019, the market share of the domestic power battery exceeded 50%, and even became the main target of the host plant. Under the anticipation of the continued development of the new energy market in China, there is still plenty of room for development in the Ningde era.

In terms of overseas market development, the supply system of BMW motor was the first to enter the Ningde era. With foreign car companies increasing the layout of electric products, the Ningde era has reached cooperation with Daimler, Honda, Volkswagen, Volvo and other multinational vehicle enterprises, becoming a designated supplier of several important projects.

The most prominent one is the order from BMW, an old partner. In November 2019, BMW's long-term orders in Ningde increased from 4 billion euros to 7 billion 300 million euros (of which 4 billion 500 million euros purchase contract came from BMW group, 2 billion 800 million euros from brilliance BMW China production base), and the procurement contract period to 2031.

In addition, Ningde era has also obtained the order of Tesla, an electric vehicle "Star" enterprise. In February this year, the Ningde era announced that it would supply power batteries to Tesla, with the effective period from July 2020 to June 2022. The scale of the cooperation is very much concerned by the outside world. However, in the Ningde era, the two sides did not make a detailed agreement on the agreement. Previously, some media said that the initial volume agreed by both sides was "no less than 40% of the planned production capacity of Tesla Shanghai super factory (phase I)".

At the operational level, the Ningde era has not yet benefited significantly from Tesla, but its rival LG chemistry has already been in the limelight in China because of Tesla. Some institutions estimate according to the information of the Ministry of industry, the LG chemical in the Chinese market rarely reached the top three in the first quarter of this year, and ranked the top second in the first place, and BYD ranked the second.

LG chemistry is a competitor in the Ningde era. However, due to the invisible restrictions of the policy, it did not participate in the development of China's new energy vehicle market. With the abolition of battery "white list" in June last year, new energy vehicle subsidies were no longer restricted by battery manufacturers, and China's power battery enterprises were re opened to the outside world.

This also means that the power battery industry will usher in the second round of competition. It is obvious that the three or four line battery enterprises that are not up to standard in the domestic market and the market competitiveness is not strong will be hit fiercely. A second tier battery enterprise is also squeezed into some market space. For the Ningde era in the head position, the challenge also exists.

The domestic market has ushered in "spoiler". LG chemistry is also a supplier of Tesla as well as the Ningde era, and has taken the lead in terms of technology and other aspects. From the international market, LG chemistry is also the biggest competitor in the Ningde era.

The report of Hengda Research Institute said that the Ningde era and LG chemistry were the two most active production planning companies. In the Ningde era, the total capacity of 148.9GWh will reach 148.9GWh in the year to 2022, and LG chemistry will reach 127GWh after reaching production in 2022.

In the short term, LG chemistry is even better. According to the research report released by Guosheng securities in late March, it is estimated that the power battery capacity of Ningde will reach 90GWh this year, slightly lower than that of LG chemical 100GWh. The report also said that the mainstream power battery manufacturers expand the pace of production and the size of the order is highly correlated, LG chemistry is expected to be the largest in hand orders, followed by the Ningde era.

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