In the face of major changes unseen in a century, as the penetration rate of new energy vehicles has increased year by year, the value advantages of upstream enterprises in the new energy vehicle industry chain have become more prominent. On the one hand, high-level executives of auto companies such as GAC Group and Changan Automobile have spoken out about the issue of “expensive electric power”; on the other hand, the revenue and net profit of power battery companies have been rising year after year, and are favored by the capital market.
With the support of power battery technology, the domestic and foreign production and sales of new energy self-owned brands continue to increase, and they pay more attention to the management of the entire industry chain, strengthen their own independent research and development capabilities, and achieve cornering overtaking internationally. At the same time, the relationship between power battery companies and other upstream companies in the industrial chain, investment institutions, and car companies is being reshaped.
“In recent years, new car companies and battery suppliers have growth potential, and only a few suppliers can maintain a strong return on stock. Among them, power battery suppliers are outstanding in creating major value, while traditional suppliers are facing challenges.” A few days ago, at the Future Auto Pioneers Conference, McKinsey Global Managing Partner Guan Mingyu said in an interview with a reporter from China Business Daily.
How to gain more market share in the era of the “new four modernizations” of automobiles and avoid being eliminated by the market is a question that both car companies and upstream and downstream industry chain companies need to think about. In addition, car companies and upstream and downstream industry chain companies are actively expanding overseas markets, opening up a new market competition pattern under the coexistence of challenges and opportunities.
The power battery track is favored by capital
“In the future, power batteries will continue to grow rapidly, and the profitability is very impressive, which represents the direction of industrial development. So naturally, the performance of power battery listed companies’ price-earnings ratios, valuations and other data is even more impressive.” Talking about power battery companies in recent years When creating value, Guan Mingyu said so.
With the rising sales of new energy vehicles, power battery companies are developing strongly. According to incomplete statistics from the reporter, in 2022, more than 10 listed companies involved in the field of power batteries, including Ningde Times, Yiwei Lithium Energy, China Innovation Aviation, and Sunwoda, will achieve both revenue and net profit growth, and the performance of the capital market will also be stable. Remarkable.
In 2022, there will be more than 250 investment and financing incidents involving power battery companies, with an amount exceeding 180 billion yuan. Yuan Feng, general manager of GAC Capital Co., Ltd., said that the first half of the development of the new energy industry was a revolution in the power system, and the domestic power system was truly leading the world. He said: “In terms of power systems, we will work with power battery companies to make judgments from the three dimensions of technological advancement, capacity scarcity, and resource monopoly, and successfully complete investment to obtain benefits.”
In addition, listed power battery companies performed equally well in terms of annual stock returns. Ningde era’s basic earnings per share in 2022 will be about 12.92 yuan, a year-on-year increase of 87.87%; Yiwei Lithium Energy’s 2022 earnings per share will be 1.84%, a year-on-year increase of 19.84%; Sunwoda’s 2022 earnings per share will be 0.62 yuan, a year-on-year increase of 6.90%.
Similarly, the current rolling price-earnings ratio of the above-mentioned power battery companies should not be underestimated. The rolling P/E ratios of Ningde Times, Yiwei Lithium Energy, and Sunwoda are 25.65, 29.74, and 37.59 respectively. On the other hand, at the level of car companies, the rolling P/E ratios of GAC Group, SAIC Motor, and Changan Automobile are 16.64, 12.35, and 12.20, respectively, which are lower than power battery companies. .
As the prosperity of the power battery industry continues to rise, expanding overseas market territory has become the consensus of domestic power battery companies. According to the statistics of the General Administration of Customs of China, the domestic export value of lithium-ion batteries will be close to 342.656 billion yuan in 2022, an increase of 86.7% compared with 183.526 billion yuan in 2021, a record high.
With the advancement of the “new four modernizations” of automobiles, domestic power battery companies “going overseas” face new opportunities and bear new pressures. Yuan Feng said that if a power battery company wants to “go global”, it needs to have the ability to deploy overseas, the ability to control the cost of capital raising, and a good cash flow.
Zhai Jun, head of the automobile team of SDIC China Merchants Investment Management Co., Ltd., believes that domestic power battery companies have absolute advantages at present, but due to factors such as trade restrictions and geographical environment, it is still difficult for power battery companies to set up factories abroad, and power battery companies should be encouraged. Battery companies “go overseas” to seize the foreign car electrification market.
Industrial chain transformation and upgrading
While the investment and financing of the automobile industry chain prefer new energy fields such as power batteries, traditional suppliers are also following the “new four modernizations” of automobiles and embarking on the road of transformation, and the Matthew effect is emerging.
“Although traditional suppliers also create value, the industry will survive the survival of the fittest. When the industry chain is completely shifted to new suppliers, the demand for suppliers in traditional categories will decrease, resulting in mergers and acquisitions, and even on the verge of bankruptcy.” Guan Ming Yu believes that after the above-mentioned mergers and acquisitions, bankruptcy, etc., the profit level of the remaining few suppliers and their overall market share will undergo new changes, so traditional suppliers still have a way to survive.
In McKinsey’s special issue on CEOs of China’s auto industry, one of the transformation methods of traditional suppliers is mergers and acquisitions. Among them, “gradual integration” is suggested as the best strategy for mergers and acquisitions integration of domestic traditional suppliers, that is, integration starts from one functional field or business line and gradually expands to other fields.
At the same time, at present, the traditional core areas of the industrial chain, including braking systems, sensors, and transmissions, still have high and stable cash flows, and are regarded as “cash cows” by the industry and are also favored by investors. Zhai Jun said: “It is also our industrial mission to improve the traditional core areas of the domestic industrial chain. It is not necessarily necessary to focus on new areas. I told the team that new areas must be watched and followed, but investment in traditional core areas should not be forgotten. “
In addition, at present, major institutions’ investment in the automotive industry chain focuses on chips. “Semiconductor is the field that has spent the most time researching recently, and it is indeed a bit stuck. Because the increase in the number of chips is not in the same dimension as the expansion of automotive-grade semiconductors.” Yuan Feng said that automotive-grade semiconductors will be the future development of the semiconductor industry. An important supporting factor, the current number of semiconductors in cars is 5 to 6 times that of the past, but the localization of car-grade semiconductors is still insufficient, and there are still more than 200 car-grade semiconductor chips that need to be further sought for domestic replacement.
Based on this, new changes have taken place in the relationship between car companies, investment institutions, and industrial chain suppliers, and the relationship has become closer. Taking the layout of the above-mentioned car-grade semiconductors as an example, in order to strengthen the layout of the car-grade semiconductors, GAC Group has invested in semiconductor industry chain companies such as Yuexin Semiconductor and Simmai Semiconductor through GAC Capital, and has made further progress with GAC’s huge industrial advantages. Improve the influence of the invested companies in the industry, consolidate the position of the invested companies as the chain leader, and promote investment in the industrial chain.
“In the second half of development, we are working together on our needs and defining things at the software application layer together, but they do it for us and entrust first-tier suppliers to do OEM manufacturing. After the relationship changes, the capital of car companies becomes special. A good bond binds companies that really want to cooperate together, and uses this bond to collaborate with industrial chain companies to innovate, deploy core technologies, and incubate, etc.” Yuan Feng said.
Yuan Feng further explained that, specifically, GAC Capital empowers its partners with investment, empowers the invested companies with GAC’s industrial chain, and accompanies the growth of the companies. There are two main ways to invest in the industrial chain. One is to support the development of the supply chain through investment. Find immature parts companies and let GAC’s industry help and empower them. The second is to make up for the needs of the transformation and development of car companies with investment and make up for shortcomings.
New energy vehicle market structure reshaping
According to the China Auto Industry CEO Special Issue issued by McKinsey, the product development model of suppliers in the auto industry chain needs to be adjusted urgently. Suppliers in the automotive industry chain need to conduct in-depth communication with OEMs around product technology research and development and end users, and intervene in the early stages of research and development as soon as possible to shorten the response time; fully share user and product data, and jointly respond to rapidly changing market demand and technology trends.
At the same time, suppliers in the automotive industry chain can establish a variety of partnerships on the basis of a clear positioning to create an industrial chain ecosystem, including establishing strategic partnerships with OEMs and joint investment; Establish innovation incubators or cooperation platforms to achieve disruptive innovations in technology or products; cooperate with multiple vehicle manufacturers and parts companies to obtain development opportunities in key areas, etc.
With the transformation and upgrading of industrial chain suppliers, the structure of the automobile market has also changed. Especially in the second half of the competition in the intelligent network, the advantages of independent brands of new energy have become more prominent. Recently, the 2023 (27th) Guangdong-Hong Kong-Macao Greater Bay Area International Automobile Expo and New Energy Automobile Expo was held in Shenzhen Convention and Exhibition Center. The new energy self-owned brand booth once again attracted a large number of visitors and continued to boost the automobile consumption market.
As for the competition between foreign brands and self-owned brands in the new energy era, Guan Mingyu believes: “If foreign car companies do not adapt to the development of the industry, they will not do well in the product cycle: brand building, consumer understanding, and cooperation with partners. It may face a bad ending. On the contrary, if the products of foreign brands continue to iterate, superimposed on the blessing of local partners, brand building adapts to domestic consumers, brand effects and other factors, then it will still have a place in the domestic market.”
(Article source: China Business Network)
Article source: China Business Network
Article author: Huang Lin Zhao Yi
Original Title: Power Batteries Lead the Industry’s Value Rise
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