Wenhuaxia Energy Network

Qingshan lithium battery company Ruipulanjun (HK:00666) released its first financial report after listing.

Huaxia Energy Network (public number hxny3060) learned that the performance forecast just released by Ruipulanjun shows that the loss in 2023 will be between 1.8 billion yuan and 2 billion yuan.

This has been the fourth consecutive year of losses since 2020 and has gradually expanded. In 2022, Ruipulanjun lost 0.45 billion yuan, but this year, the loss has expanded nearly five times. As a result, Ruipulanjun also surpassed Funeng Technology (SH:688567), which lost 1.77 billion yuan, to become the largest lithium battery listed company in 2023.

However, the company had an early warning of losses this year and put forward an outlook that "the company will be profitable in 2025". In this way, 300 days away from the actual profit, Ruipulanjun may usher in the dawn of a turnaround.

Four years of blood loss, "blood transfusion" is not a long-term solution

Ruipulanjun was established in October 2017. It has been developed for more than 6 years and has experienced a cycle of lithium battery industry from peak to valley. But it has been slow to make a profit.

The prospectus before the IPO shows that from 2020 to 2022, the company's net losses were 53.279 million yuan, 0.804 billion yuan and 0.451 billion yuan respectively, while the losses in 2023 expanded directly to between 1.8 billion yuan and 2 billion yuan. In other words, the total loss for four years is as high as about 3.1 billion yuan -3.3 billion yuan.

2022 is undoubtedly the peak period of the lithium battery industry in this cycle. The upstream and downstream of the industrial chain are prosperous as a whole, and the performance of enterprises in all links has generally soared, especially the lithium salt enterprises in the upstream of the industrial chain and the battery manufacturing enterprises in the middle reaches. Tianqi Lithium Industry (SZ:002466) is a typical representative, with a 10-fold increase in net profit compared with the same period last year.

while the revenue of Ningde era (SZ:300750), the leader of lithium battery, exceeded 300 billion yuan for the first time and the net profit exceeded 30 billion yuan for the first time, setting a historical record. Other lithium battery manufacturers such as Xinwanda (SZ:300207), Yiwei Lithium Energy (SZ:300014), Guoxuan Hi-Tech (SZ:002074) and Panneng Technology (SH:688063) also saw high net profit growth.

Ruipu Lanjun does not seem to have eaten the "dividend" of the rapid development of the industry ". Although the loss in 2022 has narrowed, it is far from profitable.

For the reasons for the loss in 2022, Ruipu Lanjun mainly mentioned two: one is the low capacity utilization rate. That year, its production capacity increased from 4.2GWh in 2021 to 24.5GWh in 2022, but capacity utilization fell from 86.4 percent to 73.9 percent, resulting in higher unit production costs.

Another reason is the pricing strategy. In order to seize the market, Ripple Lanjun adopted a low-price competitive strategy. Data show that in 2022, the price of power batteries in Ningde era is about 0.98 yuan/Wh, and the price of energy storage batteries is about 0.96 yuan/Wh. In the same period, the selling prices of Ruipulanjun are 0.76 yuan/Wh and 0.80 yuan/Wh respectively.

In fact, 2022 is the year with the strongest demand for lithium batteries in the domestic and foreign markets, and the supply was once in short supply. Therefore, it is also a good time for lithium battery companies to report profits. Ruipulanjun obviously missed the opportunity.

By 2023, with the decline in material prices and weak downstream demand, the entire lithium battery manufacturing industry will experience an overall decline in performance. In such a big situation, it is more difficult for Ruipuranjun to be alone.

When Ruipuranjun announced the 2023 performance forecast, he also explained the reasons for the sharp increase in losses. In addition to the reasons for the decline in raw material prices, other reasons include the extension of the payment cycle of some downstream customers, the increase in management expenses, and the increase in new product research and development expenses. Wait.

But by comparison, Ruipuranjun's R & D investment in recent years is not outstanding compared with its peers. In the first half of 2023, its R & D expenditure accounted for about 7.7 per cent, up 6.4 per cent year-on-year, while another battery manufacturer in the industry, for example, accounted for more than 10 per cent of R & D investment year after year.

Under the loss of Ruipu Lanjun, shipments in the energy storage battery and power battery market are still considerable. Can achieve the loss of the rush, or can not be separated from the Castle Peak Group behind the "blood transfusion" support.

Huaxia energy network has previously reported (see "left-handed light storage, right-handed lithium battery: this low-key Wenzhou tycoon has found a new business") that since the establishment of ruipu lanjun, qingshan group has "transfused" as much as 8 billion yuan to it. But at present, Castle Peak Group is also facing its own difficulties, profits have fallen sharply.

"Blood transfusion" is definitely not a long-term solution. It is urgent for Ruipulanjun to achieve profitability and "hematopoiesis.

The road to profitability needs to cross the reality of the industry

Ripple Lanjun, which has been losing money for years, landed on the Hong Kong Stock Exchange in December 2023, mainly due to the market's optimism about its prospects.

For how to achieve profitability, Ruipuranjun proposed several key strategies-improving production efficiency, enhancing the ability to respond to fluctuations in raw material costs, increasing sales revenue and creating economies of scale. "Our business growth depends to a large extent on our ability to effectively implement our capacity expansion plan," Ruipulanjun said."

Based on this assumption, Ruipu Lanjun has been soaring in capacity expansion in the past two years.

Before the IPO, Ruipuranjun had successively deployed production and R & D bases in Zhejiang, Guangdong, Guangxi and other places. After the listing, the money raised was mainly used to expand the production capacity of Wenzhou, Foshan, and Chongqing factories. According to its plan, by the end of 2025, the design capacity of more than 150GWh will be realized.

Adequate production capacity makes Ruipuranjun "ammunition" sufficient, providing a guarantee for it to seize the market. But the core issue depends on capacity utilization. Insufficient capacity utilization caused its loss in 2022. By the first half of 2023, capacity utilization had not improved, but had fallen to 49.4 per cent. If this situation continues this year, the scale effect will be out of the question.

This year's market environment is different from previous years, and the energy storage and power battery industries have entered a new industrial cycle.

Whether it is the energy storage market or the power battery market, it will enter the knockout stage in 2024, which is the consensus of the industry, and the "price war" will become more intense.

in the domestic power battery market, ruipulanjun's market share is very small, ranking 10th, with its market share falling from 1.7 per cent in 2022 to 1.2 per cent in the first half of 2023. Especially as more and more vehicle manufacturers begin to make their own batteries, their market size will face great challenges in the future. Although Ruipulanjun is in the fourth place in the global energy storage battery cell market, however, the market share has fallen from 8.8 per cent in 2022 to 5.7 per cent in 2023.

With the further improvement of the market concentration of the industry, it will be a great test whether the market share of the two major markets can be maintained and expanded in the future.

For the future profit target, Ruipuranjun's response strategy is to "set more competitive product prices in the short term", in other words-still continue the price war strategy. As far as the current market situation is concerned, manufacturers who have previously seized the market with low-price strategies will face a more cruel reality.

in terms of product strategy, Huaxia energy network noted that as early as August 2022, ruipu lanjun released the "ask top" battery technology, which can be applied to both power batteries and energy storage products. In October 2023, it achieved the official mass production of the 320Ah energy storage battery.

it is said that this technology can effectively increase the utilization rate of the internal space of the battery core by more than 7%, while the actual capacity of the 320Ah energy storage battery can reach 335Ah, the cycle life exceeds 10000 times, and the energy efficiency reaches 95.4.

At present, energy storage batteries are moving rapidly in the direction of large-capacity batteries, and energy storage battery manufacturers have increased their research and development efforts. Right now, the competitive advantage of the "ask the top" energy storage battery core is still relatively obvious, whether it is expected to become the "fist" of Ruipuranjun, in the new year of market competition to help it open a world? Profitability can be expected, this year's competition will be the key battle of Ruipuranjun.