CATL's annual report is released: battery gross profit margin declines, Hillhouse withdraws from top ten shareholders

CATL achieved impressive performance in both revenue and market share in 2021, but cost pressure was still reflected in gross profit margin. On the evening of April 21, CATL disclosed its annual report, achieving operating revenue of 130.356 billion yuan in 2021, a year-on-year increase of 159%; net profit attributable to shareholders of the parent company was 15.931 billion yuan, a year-on-year increase of 185%.

Looking at the revenue structure specifically, power batteries, lithium battery materials, and energy storage systems contributed 70.19%, 11.86%, and 10.45% of revenue respectively. Among them, the energy storage system grew the fastest, up 601.01% year-on-year; thanks to the rise in metal prices, CATL's Indonesian nickel iron production project was put into production, and the sales revenue of lithium battery materials also increased by 350.74% year-on-year.

Both the power and energy storage battery businesses have grown significantly and occupy a leading position in the market. In 2021, CATL achieved lithium battery sales of 133.41GWh, a year-on-year increase of 184.82%, of which power battery system sales were 116.71GWh, a year-on-year increase of 162.56%.

According to SNE Research, global power battery usage in 2021 was 296.8GWh, a year-on-year increase of 102.3%. CATL's battery installed capacity was 32.6%, ranking first for five consecutive years. According to Xinlang Information data, global energy storage battery production in 2021 was 87.2GWh, a year-on-year increase of 149.14%. CATL ranked first in the global energy storage battery production market share.

However, the gross profit margin of the battery business was eroded by the rising prices of raw materials. In 2021, the gross profit margin of CATL's power battery system was 22%, a year-on-year decline of 4.56 percentage points; the performance of the energy storage system was more obvious, with the gross profit margin falling by 7.51 percentage points to 28.52%. In contrast, the gross profit margin of lithium battery materials increased by 4.66 percentage points to 25.12%.

It is worth mentioning that the overseas market has become an increasingly important source of income for CATL. Revenue from overseas increased by 252.47% year-on-year to 27.872 billion yuan, and the revenue share increased from 15.71% in the same period last year to 21.38%. The overseas gross profit margin is more impressive than that in China, reaching 30.48%. Tesla, Hyundai, Ford, Daimler and other overseas car companies are all customers of CATL, among which Tesla is the largest customer, with sales revenue of 13.039 billion yuan confirmed during the reporting period, accounting for 10% of the total revenue.

CATL has accelerated its expansion since last year. As of the end of the year, CATL's battery system production capacity was 170.39GWh, with a capacity utilization rate of 95%, and 140GWh of capacity under construction. The amount of projects under construction at the end of 2021 reached 30.998 billion yuan, compared with only 5.75 billion yuan in the same period last year. The company stated in its previous reply letter that in order to achieve sales of 455GWh in 2025 (corresponding to a market share of 30%), the capacity layout should reach about 520GWh before 2025.

In addition to expanding production, CATL has also made extensive investments in upstream and downstream companies. As reflected in the annual report, cash flow from investment activities in 2021 increased by 38.729 billion yuan compared with the previous year, a year-on-year increase of 257.29%; long-term equity investment also increased to 10.949 billion yuan, doubling from last year.

In terms of securities investment, CATL currently holds shares in 9 listed companies, which brought a total investment income of 3.89 billion yuan during the reporting period. Among them, domestic companies include Lead Intelligent, Xiaokang Shares, BAIC Blue Valley, Tianhua Super Clean, Zhenhua New Materials, Yongfu Shares and Xingyun Shares, which are basically upstream and downstream partners of CATL; in addition, it also holds shares in two overseas mining companies, Pilbara Minerals in Australia and NEO Lithium in Canada.

In 2021, CATL's R&D expenses were 7.691 billion yuan, a year-on-year increase of 115.48%, but its share of revenue declined from 7.09% in the same period last year to 5.09%. The number of R&D personnel exceeds 10,000, and the main R&D investment projects include sodium-ion batteries, AB battery systems, third-generation CTP technology and heat-free diffusion technology.

Among the top ten shareholders, Ningbo Meishan Free Trade Zone Ruiting Investment, Shenzhen Zhaoyin No. 3, Hubei Changjiang Zhaoyin Power, Tibet Hongshang Capital, and Ningbo Meishan Free Trade Zone Borui Ronghe reduced their holdings by 2 million shares, 11.88 million shares, 11.03 million shares, 13.27 million shares, and 1.26 million shares, respectively, but the overall shareholding ratio did not change much. Hillhouse Capital, the original eighth largest shareholder, withdrew from the top ten shareholders in the annual report. At the end of the third quarter of last year, its holdings were 42.6 million shares, accounting for 1.83% of the shares.

The high cost of raw materials has cast a shadow over the lithium battery industry chain. Coupled with the recent epidemic that has disturbed the supply chain, the industry demand is weak in the short term. CATL's stock price has been sluggish since the beginning of the year, with a cumulative decline of more than 30%. Due to market doubts that its first-quarter performance was lower than expected, the single-day decline on April 20 reached 7%, bidding farewell to the trillion-yuan market value. As of the latest closing, CATL reported 409.11 yuan per share, with a total market value of 953.6 billion yuan.