The price of lithium carbonate has increased from 50000 / ton at the beginning of 2021 to more than 500000 / ton in March 2022. The profit of the battery industry is under pressure. However, compared with power and consumer electronics (mobile phones, laptops) batteries, the cost of electric tool batteries is not high, so we think the price increase is relatively easy to transmit. At the same time, the products of electric tool batteries are iterating to high capacity and high rate, and China's leading enterprises are expected to usher in accelerated replacement.
1. Electric tools: the proportion of cordless is increased, the momentum is higher & the downstream is extended, and the growth rate of battery is faster than that of downstream
The global market scale of electric tools increased from US $22.8 billion in 2016 to US $29.1 billion in 2020, with an average annual compound growth rate of 6%, and the cordless rate was close to 50% in 2020. The cordless of outdoor power equipment (mostly garden tools), a new market, has increased the demand for lithium battery. At present, its power source is still gasoline engine, and the cordless rate is less than 20%. It is optimistic about the improvement of cordless rate in the future. In addition, taking Samsung SDI product scheme as an example, the number of lithium batteries used in garden tools is generally 10-20, while the number of lithium batteries used in electric tools is 3-10, and the charging capacity of garden tools is higher.
From the perspective of lithium battery penetration, the power of mowing Siasun Robot&Automation Co.Ltd(300024) , riding lawn mower and other products is improved, and the lithium electrification of garden tools is expected to be improved rapidly. From the perspective of product extension, the small cylindrical battery can be extended to vacuum cleaners, electric bicycles, portable energy storage and other tracks. If only electric tools, vacuum cleaners and electric bicycles are considered, we expect that the number of small power batteries will reach 8.2 billion in 2025 (5 billion electric tools + 1.25 billion vacuum cleaners + 1.8 billion electric bicycles), and the CAGR will be about 21% in five years.
2. Product iteration, battery enterprises are expected to open the gap between products and profits
Power batteries have higher requirements for energy density, and energy storage batteries have higher requirements for cycle times. Both power and energy storage batteries need large capacity to improve product performance and reduce cost. Therefore, it is necessary to balance the instantaneous capacity and discharge rate of the battery. In addition, there are many types of tool batteries, with various application scenarios and a higher degree of customization. Pay attention to know how.
Products continue to iterate and develop towards large capacity and high rate:
Capacity: the single cell is raised from 2.0ah to 2.5ah, or upgraded to a larger size (18650 → 21700), which can provide a longer service life for electric tools.
Rate: an indicator of charge and discharge capacity. The higher the rate of charge and discharge, the greater the battery power and the faster the charge and discharge speed. The advantages of high rate battery are: 1) excellent high current discharge performance and sufficient explosive power. 2) High efficiency output and better temperature stability.
From the perspective of product reserves, the performance of some products of Chinese enterprises has been better than that of overseas products. Comparing the products with the same size and capacity of Samsung and Tianpeng power supply, Tianpeng products have higher continuous discharge current. Comparing Samsung 20q and Tianpeng power supply 20sg products, they are 18650, 2.0ah and 3.6V products. Samsung's continuous discharge current is 15a, while Tianpeng power supply reaches 30A. Chinese enterprises are expected to make excess profits in the process of product iteration. Chinese head battery enterprises have improved in product technology, process control and automatic manufacturing, and have cost advantages.
3. The price of upstream materials has increased. Compared with power batteries, the cost of tool batteries is relatively easy to conduct. The price of lithium carbonate has increased from 50000 / ton to 500000 / ton, and the cost of ternary batteries has increased by about 40%. When the price of lithium carbonate is 500000 / ton, we expect the cost of cell materials to be about 773 yuan / kWh, the cost of other materials to be 30 yuan / month and other costs to be 100 yuan / month. The cost of the battery system is 873 yuan / yuan, up 40% from the price of 50000 yuan / ton of lithium carbonate at the beginning of the 21st century.
Batteries account for only 10% - 20% of the cost of electric tools. Take glibo as an example. From 2018 to 2020, lithium battery cells accounted for 24%, 24% and 19% of the purchase amount of raw materials respectively, while raw materials accounted for about 80% of the overall cost. We expect that lithium batteries account for less than 20% of the overall cost. Assuming that the battery cost increases by 40%, the overall cost of tools increases by 4% - 8%. Due to the low proportion of batteries in the cost of electric tools, we believe that the downstream is also less sensitive to the cost of batteries.
The downstream market of electric tools is mainly in Europe and America. In 2020, the downstream market of electric tools in North America and Europe accounted for 40% and 36% respectively, and that in Europe and America reached 76%. In addition, power tools have the attribute of consumer goods, and the purchase frequency is low. We believe that consumers are relatively easy to accept the transmission of raw material price rise, and the price sensitivity is low.
Related objects: Jiangsu Azure Corporation(002245) , Eve Energy Co.Ltd(300014)
\u3000\u3 Tcl Technology Group Corporation(000100) 2245
Focusing on consumer small power batteries, the global market share increased from 6.5% in 2017 to 8.8% in 2020. With excellent customer structure, the company has entered into high-end products of tool enterprises such as TTI, Bosch and Stanley Agriculture Group Co.Ltd(002588) baide, and signed long-term contracts with Bosch and Stanley Agriculture Group Co.Ltd(002588) baide. Blue sees capacity expansion + product structure upgrading in the short term and downstream extension in the long term.
From the perspective of products, the company's products cover electric tools, industrial electric tools and garden tools. The company has some 21700 battery products with a maximum capacity of 4.0ah. The company is developing 217005.0ah high-energy, high magnification cylindrical battery. A number of R & D projects have been closed, including 217004.0ah high nickel silicon negative pole high magnification cylindrical battery, 217003.0ah low temperature fast charging ultra-high magnification battery, etc.
It is estimated that the production capacity of blue 21-23 will reach 400, 1.25 and 1.8 billion by the end of the year, and the output of lithium batteries in 21-23 will be 390, 700 and 1.2 billion respectively. From the profit side, the price of a single lithium battery from 2019 to 2021 is 6.7, 6.1 and 6.8 yuan, and the net profit of a single battery is 0.8, 1.1 and 1.4 yuan. Due to the rise in the price of raw materials and the lag in price transmission, the profit is expected to decline in the first and second quarters of 22 years. With the gradual transmission of price rise and the increase in the proportion of high-capacity products, the profitability is expected to recover.
\u3000\u30 Fujian Nanping Sun Cable Co.Ltd(002300) 014
From electronic cigarette to etc, TWS and power battery, Eve Energy Co.Ltd(300014) has a comprehensive layout in the battery field. Yiwei entered the field of electric tools in 2018 and conquered the international major customer TTI within one year. Compared with Tianpeng, haisida and other battery enterprises, Eve Energy Co.Ltd(300014) entered the field of tool battery late, but the market share increased rapidly. In 2020, the global market share reached 7.9%, second only to Samsung SDI, accounting for 36.1% and Tianpeng power supply, accounting for 8.8%.
In terms of products, the company's small cylindrical products are mainly used in electric tools and two wheeled vehicles. The company's products support up to 8A charging, up to 50A continuous discharge and 100A pulse discharge current.
Eve Energy Co.Ltd(300014) the expansion of the capacity of small cylindrical batteries is relatively radical. We expect the capacity to reach 680, 1 and 1.8 billion by the end of 20212023, and the shipment volume from 20212023 will be 580, 1 and 1.8 billion respectively. The unit price of the small cylinder is expected to be 7 yuan / piece in 2021, with a net profit of 0.84 yuan per piece.
Risk tips: the overseas epidemic has intensified, the rise in battery prices is less than expected, the domestic substitution of high-capacity batteries is less than expected, the sales volume of electric tools has declined, and the industry competition has intensified.
