The profitability of a large number of lithium battery industry chain companies has declined

As the industry gradually enters a cold winter, changes in revenue and net profit can most directly reflect the competitive strength of companies in the lithium battery industry chain.

At present, listed companies in the lithium battery industry chain have basically released their operating data for the first three quarters. Overall, the net profit of more than half of the companies has declined, indicating that the profitability of a large number of lithium battery companies has declined.

In fact, although the production and sales volume of new energy vehicles maintains a growth trend, due to factors such as a sharp decline in subsidies, intensified market competition, and price cuts of upstream raw materials, the lithium battery industry chain as a whole shows a development trend of increased revenue but no increased profits or a slowdown in profit growth.

Specifically, declining product prices and gross profit margins, weakening profitability, high accounts receivable, and industry polarization have become the norm in the lithium battery industry.

This means that lithium battery companies must enhance their ability to withstand cold weather, or further improve their market competitiveness, or actively break through and find new market segments.

According to the latest "Power Battery Monthly Database" released by Gaogong Industry Research Institute (GGII), from January to September 2019, domestic production of new energy vehicles was about 888,000 units, a year-on-year increase of 20.9%; the installed capacity of power batteries was about 42.31GWh, a year-on-year increase of 47%.

Among them, the top ten power battery companies in terms of installed capacity totaled about 37.51GWh, accounting for 88.7% of the total. They are CATL, BYD, Guoxuan High-tech, Lishen Battery, EVE Energy, AVIC Lithium Battery, Farasis Energy, CATL, Penghui Energy and BYD Battery.

Affected by this, the revenue and net profit of listed battery companies such as CATL, BYD, Guoxuan High-tech, Yiwei Lithium Energy, and Penghui Energy all showed an upward trend in the first three quarters.

Among them, Yiwei Lithium Energy achieved a net profit of 1.16 billion yuan, with the largest year-on-year increase of 205.94%. The main reason was that the growth in shipments of ETC lithium batteries and small lithium batteries drove profit growth, as well as the release of power battery production capacity, a significant increase in installed capacity, and improved profitability.

The leading company CATL achieved revenue of 32.86 billion yuan, a year-on-year increase of 71.7%; net profit of 3.46 billion yuan, a year-on-year increase of 45.65%, the highest net profit.

In addition, Xinwangda also benefited from the substantial growth of its power battery business, thereby achieving growth in both the company's revenue and net profit, with a net profit of 500 million yuan, a year-on-year increase of 16.99%.

It is worth noting that the impact of the subsidy reduction exceeded industry expectations. The overall performance of the power battery market in the third quarter was poor, and the installed capacity continued to decline and continued into the fourth quarter. This means that power battery companies are still facing great pressure in the fourth quarter, which will in turn affect the company's full-year performance growth.

According to GGII statistics, my country produced about 83,000 new energy vehicles in October 2019, down 39% year-on-year and up 9% month-on-month; the installed capacity of power batteries was about 4.07GWh, down 31% year-on-year and up 3% month-on-month. This month's new energy vehicle production and power battery installation were both lower than expected, and the year-end tail effect was not prominent.

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