Research Report on the Development and Investment Value of Lithium Battery Industry

　　According to data from market research institutions, China’s smartphone shipments have grown rapidly for four consecutive years, and are expected to increase by 11.6% in 2015, a strong growth trend. In particular, the current share of Chinese brands in the world's smart phone market has exceeded 40%, which has stimulated the development of related accessories, such as lithium batteries. Lithium battery manufacturers exceed the demand by more than 60%. The core materials of China's lithium batteries-anode plate, negative plate, electrolyte, and separator also account for a large proportion of the world market. The report pointed out that the reason for the rapid development of China’s lithium battery industry is that the world’s lithium battery manufacturers, including South Korea, have increased their use of low-cost Chinese-made raw materials in order to save costs. With the expansion of China’s IT and automobile markets, the demand for lithium batteries has also increased. Gradually increase.

　　Lithium battery is more efficient and economical than other batteries, so it occupies an important position in the market of new generation electric vehicles and large energy storage systems. With the rapid development of lithium batteries in China, it is expected that South Korea will compete fiercely with China in the future new energy market.

　　Lithium battery industry development and investment value research report We know that the traditional demand for lithium batteries is represented by mobile phones and computers, and its overall trend is steady growth. In addition to new energy vehicles, the industry’s future growth points include the energy storage market, drones, etc. Market demand in emerging areas is gradually rising, and lithium batteries will accelerate the penetration of lead-acid batteries in the market share of electric bicycles.

　　Lithium battery industry development and investment value research report

　　"Lithium battery" is a type of battery that uses lithium metal or lithium alloy as the negative electrode material and uses a non-aqueous electrolyte solution. In 1912, the lithium metal battery was first proposed and studied by Gilbert N. Lewis. In the 1970s, M.S. Whittingham proposed and began to study lithium-ion batteries. Due to the very active chemical properties of lithium metal, the processing, storage and use of lithium metal have very high environmental requirements. Therefore, lithium batteries have not been used for a long time. With the development of science and technology, lithium batteries have now become the mainstream.

　　Lithium batteries can be roughly divided into two categories: lithium metal batteries and lithium ion batteries. Lithium-ion batteries do not contain metallic lithium and are rechargeable. The fifth generation of rechargeable batteries, lithium metal batteries, was born in 1996, and its safety, specific capacity, self-discharge rate, and performance-price ratio are superior to those of lithium-ion batteries. Due to its own high-tech requirements, only a few companies in a few countries are producing such lithium metal batteries.

　　One, traditional demand for mobile phones and other traditional demand has grown steadily

　　The traditional uses of lithium batteries are mainly consumer electronic products such as notebook computers and mobile phones. The overall demand in this field is growing steadily. Specific to my country’s lithium battery shipments: In 2013, it was 4.768 billion units, a year-on-year increase of 13.93%; in 2014, it was 5.387 billion units, a year-on-year increase of 12.97%. Affected by the slowdown in economic growth, shipments from January to April 2015 were 1.508 billion units, a year-on-year decrease of 7.38%. Among mobile consumer electronics products, the penetration rate of smart phones continues to increase, and the capacity of smart phones continues to increase. In 2013, global mobile phone sales were 1.822 billion units, a year-on-year increase of 4.82%, while smartphones were 1.019 billion units, a growth rate of 40.55%, accounting for 55.96%; in 2014, global smartphone shipments were 1.301 billion units, a year-on-year increase An increase of 27.63%, the market share is expected to be more than 65%.

　　At the same time, my country’s smartphone market share has increased significantly. In the fourth quarter of 2014, my country’s Lenovo, Huawei and Xiaomi shipped 64.8 million units in total, an increase of 78.02% year-on-year. The corresponding market share increased from 12.44% in the fourth quarter of 2013. To 17.26% in the fourth quarter of 2014. With the increasing global recognition of domestic brands of smartphones, it is expected that my country's smartphone market share will continue to increase in 15 years. In short, as the economy stabilizes, the demand for lithium batteries in my country's traditional sectors is expected to grow steadily, and the increase in smartphone battery capacity will drive material demand growth.

　　2. Tesla "Energy Wall" and the Blue Ocean of Energy Storage

　　In November last year, the "Energy Development Strategic Action Plan (2014-2020)" issued by the State Council introduced energy storage into the national energy plan for the first time, and it was clearly necessary to strengthen the overall planning of power and power grids, and scientifically arrange peak shaving, frequency modulation, and energy storage. Ability to effectively solve the problems of abandoning wind and water. We believe that power grid peak shaving and new energy storage will add a blue ocean to lithium batteries.

　　In addition, the sales of ModelS launched by Tesla in April 2013 exceeded expectations and caused a whirlwind of new energy vehicles around the world, and the household energy storage products launched by Tesla on April 30, 2015 are also expected to be another whirlwind. Gradually detonate the global energy storage market. Specifically: Tesla’s announced energy storage battery products include energy walls and energy packs. The downstream products are suitable for households, enterprises, and public utilities. The launch of this series of products will promote Tesla’s mission as a "polluting-free energy company". .

　　The Powerwall is a rechargeable 18650 lithium-ion battery, the product capacity includes 70 million hours and 100 million hours, the unit price is 3000 and 3,500 US dollars, and the energy pack can provide more than 100 kWh through series and parallel connection. Capacity. As of May 8, Tesla claimed to have received orders for 38,000 energy walls and 2,500 energy packs, of which one energy pack has about 10 energy walls. According to estimates, the total order value of the two is about 800 million US dollars, which exceeds the market. expected.

　　In addition, the market capacity of emerging fields such as drones cannot be ignored. According to EvTank research, global UAV sales in 2014 were approximately 390,000 UAVs, of which military UAVs accounted for 4%, civilian UAVs accounted for 96%, professional UAV sales approximately 126,000, consumer UAVs The sales volume of aircraft is approximately 255,000, and it is expected to maintain a 50% growth in 2015. At present, consumer drones have a battery life of about 1 hour. The power is mainly polymer lithium batteries, with a monomer capacity of 5-10Ah. In 14 years, global consumer drones will drive the demand for polymer lithium batteries by about 4.7MWh. It is expected to be 2020 Global drone sales are expected to reach 4.33 million in the year.

　　3. Lithium battery accelerates penetration of the electric bicycle market　　Traditional electric bicycle power batteries are mainly lead-acid batteries. In recent years, greening and portability have become the main trends in the development of electric bicycles. For this reason, lithium batteries are gradually penetrating the lead-acid battery market. In order to adapt to the development of the industry, on January 26, 2015, the Ministry of Finance announced the "Notice on the Collection of Consumption Tax on Batteries and Coatings." The notice is clear:

　　(1) Since February 1, 2015, a consumption tax on batteries and coatings will be levied, specifically in the production, commissioned processing and import links, and the applicable tax rate is 4%;

　　(2) Exemption from consumption tax on mercury-free primary batteries, metal hydride nickel batteries, lithium primary batteries, lithium ion batteries, solar cells, fuel cells and all-vanadium flow batteries; 　　 (3) Lead storage batteries before December 31, 2015 The consumption tax will be postponed. Starting from January 1, 2016, a consumption tax will be levied on lead-acid batteries at a rate of 4%.　　 Affected by the aforementioned policies and with the gradual reduction in the cost of lithium batteries per watt-hour in my country, the price advantage of lead-acid batteries in the field of electric bicycles will be further reduced, and lithium batteries will undoubtedly accelerate their replacement of the market. In 2014, my country's output of electric bicycles was 29.04 million, a year-on-year increase of 14.86%. The penetration rate of lithium batteries is expected to be about 13%. According to forecasts, my country's lithium battery electric bicycle production will reach 12 million in 2017, accounting for 30% of the market.

　　Fourth, overall performance analysis

　　With the growth of industry demand, the overall performance of listed companies related to lithium batteries, lithium battery materials and lithium battery equipment in my country has continued to grow. Taking lithium battery materials as an example, in order to further show the development of the industry, we extracted and calculated the business of lithium battery materials in related listed companies. The performance growth rate, combined with industry characteristics and competitive landscape, can draw the following main conclusions:

　　(1) Since 11 years, the performance of lithium carbonate upstream of the positive electrode has continued to grow, and the growth rate has increased significantly in 14 years; (2) The positive electrode material has resumed growth; (3) The negative electrode material has continued to grow, while the price is still under downward pressure; (4) Electrolyte Growth will be fully restored in 2014, and growth is expected to continue; (6) The diaphragm field will continue to grow at a high rate, but prices will face certain downward pressure in the future. In general, the performance of the lithium battery industry continues to grow, indicating that the industry's prosperity continues to rise.

　　Statistics show that the performance of lithium battery materials accounted for more than 50% of the total revenue of listed companies: Shanshan shares and Dangsheng Technology accounted for more than 50%, and Tianqi Lithium, Xinzhoubang, Tianci Materials, Ganfeng Lithium, and China Baoan accounted for more than 50%. Between 20-40%, while Jiangsu Guotai, Cangzhou Mingzhu, Jiujiu Jiu, etc. accounted for a relatively low proportion, of which Ganfeng Lithium, Shanshan shares, Xinzhoubang, and Tianci materials are still increasing. 5. The overall level of profitability is the same and the differences in segmented areas are obviously corresponding to the profitability of the sector. The profitability of the sector has shown: The gross profit margin of the sector has been steadily rising since the bottom in 2012, 17.07% in 2014 and 17.17% in the first quarter of 2015; and the net sales margin From 2.71% in 2012 to 3.69% in the first quarter of 2015. In light of industry demand, we generally believe that the profitability of the industry will maintain a steady and slightly upward trend, but there are significant differences in subdivisions. Specifically:

　　The price of upstream raw materials for the positive electrode has increased significantly. Lithium carbonate is one of the key raw materials for cathode materials and lithium hexafluorophosphate. Its price changes are closely related to the prosperity of the industry. The price curve of lithium carbonate shows that since the second half of 2013, the price of lithium carbonate has continued to fall, from a high of 44,000 yuan/ton. 38,500 yuan/ton, and the price has continued to rise since the fourth quarter of 2014. On May 15, 2015, the price of battery-grade lithium carbonate was 45,100 yuan/ton, an increase of 12.47% from 40,100 yuan/ton at the beginning of 2015. The increase was mainly driven by the dual factors of rising raw material prices and rising downstream demand. With the price increase, the gross profit margin of lithium carbonate may rebound in 15 years.

　　There is a significant difference in the gross profit margin of key materials for lithium batteries. Comparing the gross profit margin of key lithium battery materials, it can be concluded that the gross profit margin of traditional cathode materials is still bottoming out, but the downside is limited. In 2014, the gross profit margin of Dangsheng Technology's cathode materials was 2.43%; the anode materials remained at a relatively high level. Baoan Hi-Tech's gross profit margin was 32.01%, an increase of 0.32% year-on-year; the overall electrolyte level remained at a relatively high level, of which Jiangsu Cathay Pacific was 37.03%, which is expected to remain unchanged; affected by the increase in production capacity, the price of lithium hexafluorophosphate continued to fall, such as for a long time. The corresponding product gross profit margin is 3.19%, which is expected to stabilize; lithium battery separators still maintain high added value. Cangzhou Pearl's 14-year gross profit margin was 64.62%, and it is expected to face certain downward pressure in the future.

　　VI. Benefit from the development of new energy vehicles and energy storage industries

　　With the gradual rise of the electric vehicle and energy storage market, the global demand for lithium batteries is expected to maintain a growth of more than 25%.

　　According to SNE's forecast: the total global lithium battery output in 2014 was 59.1 billion Wh, a year-on-year increase of 27.37%, and it is expected to be 75.6 billion Wh in 2015, with a growth rate of 27.92%. At the same time, the proportion of electric vehicles/energy storage in the lithium battery market has continued to increase significantly, from 7.91% in 2011 to 20.98% in 2014, and it is expected that the proportion will reach 33.89% in 2016.　　 In view of the improvement of China's strategic positioning of new energy vehicles, the advantages of my country's new energy vehicle industry chain and the extraordinary emphasis on new energy, it is expected that the growth rate of my country's lithium battery demand will be higher than the global level.

　　In general, the demand for lithium batteries and lithium battery materials in my country will significantly benefit from the high growth of new energy vehicles and energy storage industries. At the same time, the profitability of the combined sectors will generally increase steadily, and the segmented areas will still have high added value, such as negative electrodes. Materials, electrolytes and diaphragms, etc. To this end, combined with the overall industry demand and profitability, we expect that the overall industry boom in 15 years will continue to rise.

　　Seven, investment main line

　　(1) Investment rating

　　In recent years, the overall valuation of the lithium battery sector has been at a relatively high level. Specifically: Affected by the Tesla effect, the valuation of the lithium battery sector has increased significantly in 2013, with an average value of 64.21 times in 2013 and 46.97 times in the GEM; 2014 is the first year of the launch of new energy vehicles in my country, and the estimated value of the lithium battery sector The value continues to increase, with the 14-year average value being 78.64 times, while the GEM is 57.91 times; in the past 15 years, based on the continuous introduction of support policies, the high growth of new energy vehicle sales and the promising industry development prospects, the average value of the lithium battery sector from 15 years to the present is 97.76 times. , Correspondingly, the GEM is 90.76 times; and since May, the valuation of lithium batteries and the GEM are on the same level. As of June 16, their PEs were 130.54 times and 131.64 times, respectively.

　　Considering the development prospects of new energy vehicles, as well as the gradual opening of the lithium battery market in energy storage and other fields, and the overall profitability of the sector is increasing steadily, we generally believe that the prosperity of the lithium battery industry will continue to rise, and maintain the lithium battery industry’s City" investment rating.　　 (2) Investment main line 　　 2014 was the first year of the launch of new energy vehicles in my country, and the annual output of new energy vehicles was 84,000. my country's new energy vehicles are still expected to double growth in 15 years. The main logic lies in the continuous and gradual implementation of new energy vehicle policies. Technological progress and policy implementation will promote the improvement of charging infrastructure. At the same time, the rise of brands will drive the development of the industry, especially new energy vehicles. Take the lead in large-scale operations in the public utility sector represented by buses.

　　In view of the development prospects of new energy vehicles, the new energy vehicle industry chain such as lithium battery materials, lithium batteries, charging piles, new energy vehicle motors, new energy vehicle manufacturing and operation and other sub-sectors are ushering in a new round of investment feast. At the same time, emerging markets such as energy storage and drones are gradually opening up. It is expected that the proportion of lithium batteries used in new energy vehicle power batteries and energy storage fields will increase significantly, thereby increasing the demand for lithium batteries, lithium battery materials and lithium battery equipment.

　　In general, with the substantial increase in my country’s new energy vehicle base, my country’s new energy vehicle demand for lithium batteries and lithium battery materials will greatly increase; the performance of the lithium battery sector continues to grow, combined with the profitability of the sector and sub-sectors, we expect the industry’s boom Keep going up. At the same time, taking into account the characteristics of the industry, our main lines of investment in the lithium battery-related industry chain are: 1) Leading companies in the field of lithium batteries and lithium battery materials, whose performance will greatly benefit from the high volume of new energy vehicles; 2) Rare earths for new energy vehicle motors Permanent magnet materials; 3) Upstarts entering the lithium battery industry through fixed increase or mergers and acquisitions; 4) Thematic investment opportunities driven by events and policies.

　　8. Risk warning

　　1. Systematic risks; 2. The domestic and foreign macroeconomic decline exceeds expectations; 3. The progress of new energy vehicles and policy support are lower than expected; 4. The price of rare earths has fallen more than expected, and the regulation of the rare earth industry is lower than expected; 5. Competition in the industry is intensified .

　　The main companies in the current industrial chain: Shanshan Co., Ltd., Jiangsu Cathay Pacific, Dongyuan Electric, Xinzhoubang, Desai Battery, BYD, Xinwangda, Yiwei Lithium Energy, Tianci Materials, Ningbo Yunsheng, Sanhuan, Zhenghai Magnetic Materials.