With fierce industry competition and the reduction of subsidy policies, high-cost and low-quality companies will inevitably face elimination, while companies with real technology, strength, and complete layout will also stand out. After the growth of enterprises and technological progress, leading domestic diaphragm companies began to turn their attention to overseas markets, positioning themselves for globalization, and striving to get a share of the international market.
The era of automobile electrification is unstoppable, and new energy vehicles continue to maintain a high growth trend in production and sales. Affected by this, my country's total installed power battery capacity in 2018 was 56.89GWh, a year-on-year increase of 56.88%, which has also led to a substantial increase in the market demand for lithium battery separators. According to relevant statistics, China's total lithium battery separator shipments in 2018 were 2.02 billion square meters, a year-on-year increase of 39.7%.
As China’s automobile industry “changes lanes and overtakes”, domestic companies have gradually completed the substitution of overseas products in the fields of battery materials, battery separators, electrolytes and other products. At present, domestic companies have controlled the production and sales of the four key raw materials in power batteries necessary for new energy vehicles - positive electrode materials, negative electrode materials, electrolytes and separators. The domestic production rate of individual materials has even reached more than 90%.
Power battery production
Among them, because separator manufacturing involves multiple disciplines, and my country’s power battery separator industry started late, it is the last material among the four major materials for lithium batteries to be domestically produced. . The main reason lies in the technical barriers of the separator - that is, its performance directly affects the discharge capacity, cycle life and safety of the lithium battery. The manufacturing of lithium batteries affects the characteristics of the separator product, such as the size and distribution uniformity of the separator micropores, etc. , especially the consistency requirements are extremely high.
In the past few years, domestic separators have made great progress in production capacity expansion, cost control, technology research and development, etc., and now they have basically achieved localization. It is precisely due to the continued growth in demand in the downstream power battery market that China's lithium battery separators continued to take the first place in the global market share in 2018.
However, while shipments have increased significantly, they have been mired in a "price war". The performance of related companies in 2018 has also been "ice and fire". Some companies have experienced sharp declines in net profits and profitability. Not optimistic.
The market is clearly differentiated and the two-strong pattern has emerged
Behind the continued growth of market demand, lithium battery separator leading companies have benefited the most. So far, many diaphragm companies have released annual reports or performance reports, among which companies represented by Xingyuan Materials (300568) and Enjie Co., Ltd. (002812) have shown stable growth. Taking Xingyuan Materials, the industry leader, as an example, the company achieved a total profit of 246 million yuan in 2018, a year-on-year increase of 123.92%; it achieved a net profit attributable to shareholders of listed companies of 220 million yuan, a year-on-year increase of 106.14%.
In addition, Xingyuan Materials announced not long ago that the company has signed a cooperation agreement with Funeng Technology. The contract amount is expected to be approximately 102 million yuan. The guaranteed supply demand for lithium battery separator products of both parties in 2019 is no less than 4,000 yuan. million square meters, is expected to have a positive impact on Xingyuan Materials’ 2019 operating performance.
The development of doubling revenue and net profit has also allowed another leading diaphragm company, Shanghai Enjie, to successfully complete its first-year performance commitment after being acquired. The 2018 annual performance report disclosed by Enjie shares shows that the company is expected to achieve revenue of 2.4 billion yuan during the reporting period, a year-on-year increase of 96.7%; the net profit attributable to shareholders of the listed company is 536 million yuan, a year-on-year increase of 243.65%.
Among them, Shanghai Enjie’s net profit in 2018 was 658 million yuan. According to the actual purchase ratio, Shanghai Enjie’s net profit attributable to shareholders of listed companies in 2018 was 494 million yuan, accounting for 92% of the total net profit. Paul Xiaoming Lee, chairman of Enjie Co., Ltd., revealed that since 2019, the company's lithium battery separator production has been very good. Production did not take a break during the Spring Festival and was turned on 24 hours a day.
The company's lithium battery separator products shipped 53 million square meters in January 2019, a significant increase compared with 16 million square meters in the same period last year; the company's lithium battery separator product shipments are expected to be 5,000 in February 2019 -53 million square meters. From January to February 2019, the company's lithium battery separator products are expected to ship a total of 103-106 million square meters. The market situation is improving this year, and sales are in short supply.
It is understood that separator prices have continued to decline rapidly since 2014, and at the beginning of 2018, leading domestic wet-process separator companies even offered to reduce prices by 20%. This is also related to the decline in subsidies for new energy vehicles. Power battery companies are forced to seek cost reductions, and materials companies are the first to bear the brunt.
As an important part of lithium batteries, the proportion of separators in battery cost was originally about 20-30%, but currently it has dropped to about 5-10%. Under the influence of price competition, not all diaphragm companies are in such a favorable situation, and the trend of performance differentiation is obvious.
Changyuan Group (600525) released a performance forecast on January 30. It is expected that the net profit attributable to shareholders of listed companies in 2018 will decrease by 625 million yuan to 1.079 billion yuan year-on-year, a year-on-year decrease of 55 to 95 yuan. Changyuan Group stated that its subsidiary China Lithium New Materials' performance in 2018 dropped significantly due to factors such as drag from its original major customer Shenzhen Waterma, adjustments to the national new energy vehicle subsidy policy, and intensified competition in the lithium battery separator industry.
Another well-established diaphragm company, Newmi Technology, released its 2018 annual performance report, which showed that the company expects a net profit loss of 133 million to 109 million attributable to the parent company in 2018, turning from a profit to a loss compared with the previous year. Niumi Technology stated that the main reason for the decline in total profits was that product prices dropped significantly, resulting in a decline in the profitability of the company's products, and the provision for bad debts for accounts receivable in accordance with regulations increased compared with the same period last year.
Lithium battery separators are generally divided into dry process and wet process according to the process. Therefore, separator products are also divided into dry process separators and wet process separators. Enjie Co., Ltd. and Xingyuan Materials are currently the core contenders in the domestic separator industry. They respectively represent the two major process routes of wet process and dry process, and their market share is the first in their respective process routes.
As the proportion of ternary power batteries increases, the proportion of wet separator production has also steadily increased. The latest data shows that the shipment volume of wet separators last year was 1.31 billion square meters, a year-on-year increase of 66.4%. At present, the wet process separator market has a clear trend of concentration, while the dry process separator market is relatively fragmented. As the leading company in the domestic lithium battery separator industry, Xingyuan Materials is rapidly putting into production wet process production capacity in order to share the pie, and the competition between the two leaders is becoming increasingly obvious.
Xingyuan Materials
Xingyuan Materials’ dry process separator production capacity in 2018 was approximately 180 million square meters, and its wet process production capacity was approximately 100 million square meters. In the future, with the gradual release of Changzhou Xingyuan's 8 wet-process separator production lines with a production capacity of 360 million square meters, Jiangsu Xingyuan's 8 dry-process separator production lines with a production capacity of 400 million square meters, and 50 coated separator production lines with a production capacity of 1 billion square meters. With the upgrade, the company's overall profitability will be greatly improved, and its leading position in the diaphragm industry will also be effectively defended.
At present, the competitive landscape of separator companies is also showing a differentiation trend like that of power batteries. The market share of the top five companies continues to increase, reaching 54.3, an increase of 4.3 percentage points from 2017. Competition among diaphragm companies has been reflected in aspects such as cost control and performance, quality stability, and corporate financial strength.
With the expansion of production capacity of leading diaphragm companies, the emergence of scale effects, and investment in new product development, the gap between third- and fourth-tier companies and leading companies will further widen. Diaphragms are a capital-intensive industry in the materials industry. Only high gross profits can support industrial development. As differentiation among companies intensifies, the operating pressure faced by the latter echelon companies has increased sharply. The industry expects that some diaphragm companies will close down or stop production in 2019.
With fierce industry competition and the reduction of subsidy policies, high-cost and low-quality companies will inevitably face elimination, while companies with real technology, strength, and complete layout will also stand out. This is a "self-cleaning" reshuffle for the current mixed diaphragm industry landscape. After the growth of enterprises and technological advancement, leading domestic diaphragm companies began to turn their attention to overseas markets, positioning themselves for globalization, and striving to get a share of the international market.
Positioning global competition for diaphragm exports
In the long run, global electrification is the general trend in the future, and the new energy automobile industry is still a new blue ocean. In the context of global electrification, many domestic diaphragm companies have taken the lead in launching global strategic layouts and entering the supply chains of foreign companies. As the localization process of Tesla, LG Chem, Samsung SDI, Panasonic, etc. accelerates, domestic separator companies have greater opportunities to enter their supply chains.
Lithium battery separator
Xingyuan Materials is currently one of the few companies in my country that has entered the international market in advance and provides separator products in batches to internationally renowned lithium electronic battery manufacturers. Since overseas markets tend to favor mid-to-high-end diaphragm products, they have higher requirements for technical thresholds and product quality, and price fluctuations have been relatively flat. This coincides with Xingyuan Materials' strategy of early deployment of high-end diaphragm business.
In July 2018, Xingyuan Materials announced that the company signed a strategic cooperation agreement with Murata Manufacturing Co., Ltd. Both parties will use their respective advantages in the development and sales of lithium-ion battery separators to conduct comprehensive cooperate. Murata regards the company as its preferred supplier of lithium-ion battery separators. On the premise that the company's separator products meet Murata's requirements, Murata will give priority to purchasing lithium-ion battery separators from the company.
Industry analysts believe that after subsidies are reduced, my country's new energy automobile industry will usher in a situation of complete competition. In the post-subsidy era, the new energy automobile industry will still develop rapidly, the opportunities for leading enterprises in the industry chain will outweigh the challenges, and a pattern of the strong and always strong will gradually take shape.
Chen Xiufeng, chairman of Xingyuan Materials, once said that the reduction of subsidies is good for us. Without subsidies, many foreign automobile giants will come in. Our products currently account for 50% of overseas exports, and my goal is to achieve more than 70% of exports by 2020. We don’t fight price wars, we fight value wars. I want to do a good job in overseas markets, first satisfy exports and then develop domestic sales, because the requirements of foreign markets are quality first and cost second, while domestic demand currently emphasizes cost. For overseas markets, the company has established good business relationships with Mercedes-Benz, BMW, Volkswagen, and Bosch. We are very optimistic about the high-end automobile market.
While consolidating the domestic market, Shanghai Enjie is also exploring overseas customers. In 2018, the company cooperated with an overseas customer to develop a product, which is mainly used in the power batteries of Hyundai and Volkswagen. As the company's product quality continues to improve and the production capacity can meet customer needs, the customer continues to require the company to increase shipments and The company and the company have reached a consensus on increasing cooperation in 2019 and the next five years. This customer will significantly increase the demand for this product.
In addition, the company has begun cooperation with a well-known overseas customer. The customer has completed the certification of Zhuhai Enjie's four asynchronous production lines. Zhuhai Enjie is currently producing in an orderly manner according to the order and will deliver it to Zhuhai Enjie in early March. The customer ships.
According to Paul Xiaoming Lee, the company’s lithium battery separator shipment target in 2019 is 1 billion square meters, including 230-250 million square meters for overseas customers and 750-770 million square meters for domestic customers. Overseas customers who currently have orders in hand include but are not limited to Samsung, A123 in the United States, and customer groups in France. The price and repayment situation for overseas customers are good. The company's estimated shipment volume target for overseas customers in 2019 is 230-250 million square meters.
Shanghai Enjie
At present, Shanghai Enjie, which has a profound technical background, has begun to deploy its global business and has planned two production bases in Europe and the United States. The construction projects in the entire overseas market are expected to be completed in 2022. The total base film production capacity of the two places will reach 1.5 billion square meters, and the total coating film production capacity will reach 1.2 billion square meters.
In China, Shanghai Enjie has built production bases in Wuxi, Jiangsu and Gao'an, Jiangxi in accordance with the company's strategic plan. It is expected that preliminary products will be put on the market in the first half of 2019, plus the existing With its Shanghai and Zhuhai bases, Shanghai Enjie's annual production capacity is very considerable, and each production base coordinates to serve the domestic and global markets.
In 2018, the homogeneous competition in the diaphragm industry was fierce. Looking forward to 2019, diaphragm prices will still show a downward adjustment trend. Different companies face different choices. By 2020, the diaphragm industry will show a clear pattern. Chen Xiufeng once said that now is the stage for masters to compete. In the future, the diaphragm industry will definitely lose a number of companies, and a number of companies will die. In the end, the market must belong to companies that carefully make products. This is an inevitable market law.