Shulou(Shulou.com)11/24 Report--

Recently,"King Ning" has once again been pushed to the forefront.

According to the annual performance forecast released by Ningde Times, the company expects net profit to reach 29.1 billion-31.5 billion yuan in 2022, with a year-on-year growth of 82.7% to 97.7%.

According to the data disassembly, in the first three quarters of 2022, Ningde Times realized a net profit of 17.6 billion yuan. Based on this calculation, the net profit of Ningde Times in the fourth quarter was 11.51 billion-13.91 billion yuan. This means that Ningde era's quarterly profit exceeded 10 billion yuan for the first time.

This figure far exceeded expectations. The stock price of Ningde era rose in response, and many doubts followed.

Shortly before the earnings report was released, economist Ren Zeping wrote that the new energy industry was "suffering for a long time." He questioned the coercion of automobile enterprises in Ningde era, squeezing upstream and downstream profits, from early innovators and contributors to industry monopolists and even destroyers of fair competition ecology in the market.

There are also supporters who believe that new energy vehicles need such "new flag-bearers" as Ningde era. In order to build a strong intelligent new energy automobile industry chain and break the monopoly of foreign parts giants, China must have more leading automobile parts enterprises with international competitiveness and the right to speak in the industry chain.

In response to this topic, this article attempts to answer the following three questions:

1. What are the reasons behind the high growth of net profit in Ningde era?

Why does the auto parts industry need economies of scale?

3. Does China need Ningde-style enterprises?

1ONE, water big fish in the new energy automobile industry chain, Ningde era is in the middle reaches, the upper part of the raw material factory, the lower part of the whole vehicle factory, is the core of the industrial chain, but also the storm center.

Zeng Qinghong, chairman of GAC Group, once questioned that the price of power battery was too high, allowing price pressure to be transmitted directly to the whole vehicle factory. He also half-jokingly said,"I am working for Ningde era."

On this side, Ningde era is also complaining, saying that "it is only struggling on the edge of a little profit". Zeng Yuqun, chairman of Ningde Times, said that the reason for the battery price increase was the result of capital speculation of upstream raw materials.

One proof is that in 2022, lithium, cobalt and nickel, the main raw materials of power batteries, rose sharply, and lithium prices continued to hit record highs.

You say you're right, you say you're right. For Ningde era, car enterprises quite some love hate interwoven taste.

On the one hand, a large number of car factories "escape Ningde" by investing in battery factories and looking for "two supplies" and "three supplies" respectively: the Great Wall hatched honeycomb energy, Volkswagen selected Guoxuan High-tech, Weilai, Ideal, Xiaopeng capital injection Xinwangda... There are also car enterprises that have simply developed their own batteries with the intention of "going to Ningde era."

On the other hand, there are also many choices to "advance and retreat together" with Ningde era. Since 2021, Polar Krypton, Avita, Nezha, Chery, Aichi, Beiqi Langu, etc. have accepted the investment of Ningde era, and Ningde era has also locked the long-term orders of automobile enterprises.

Is it true that "King Ku Ning has been here for a long time"? Different people have different opinions. However, many disputes point to the same signal-the uneven distribution of profits in the middle and lower reaches of the new energy automobile industry.

Gross profit margin is a key indicator of where the new energy car industry's money is going.

From 2019 to 2021, the gross profit margin of Ningde Times was 29.06%, 27.76% and 26.28% respectively. Among them, the gross profit margin of power battery section is 28.45%, 26.56% and 22% respectively, which is in a downward trend.

In terms of horizontal comparison, in the first three quarters of 2022, the gross profit rate of Ningde Times was 18.95%, while the gross profit rates of Yiwei Lithium Energy, Guoxuan Gaoke and Xinwangda in the first three quarters were 15.86%, 14.12% and 13.23% respectively. From this point of view, Ningde era gross profit rate is relatively high, but not far beyond the industry average level.

In sharp contrast, the lithium price of "Heaven" makes the upstream enterprises of the industrial chain earn a lot of money.

In the first three quarters of 2022, the gross profit margin of Tianqi lithium industry in the upstream of power battery industry chain was 85.53%, and that of Ganfeng lithium industry was 55.92%. More exaggerated is, according to Tianqi lithium industry announcement, estimated net profit in 2022 23.1 billion yuan-25.6 billion yuan, Year-on-year growth of more than 10 times, Let many industry insiders surprised chin.

From this point of view, behind the high growth of net profit in Ningde era, more is the scale dividend brought by the explosive development of new energy vehicles.

According to the statistical data of China Automobile Power Battery Industry Innovation Alliance, in 2022, the cumulative loading volume of power battery in China was 294.6GWh, with a cumulative year-on-year growth of 90.7%. Among them, the total domestic loading volume of Ningde era power battery is 142.02GWh, and the market share is 48.2%.

There will be great fish in the midst of great waters. If the concept of economist Zhou Qiren is applied to explain, it is the new energy automobile market that raises the "King Ning", a big fish belonging to the "Times."

2TWO, economies of scale To understand the logic of competition in the power battery industry, economies of scale are a good entry point.

In 1959, British scholars Maxey and Silberstone published a book entitled The Automobile Industry. According to the production technology and process level at that time, the book put forward the concept and curve of Minimum Efficient Scale to describe the scale economy problem in the development process of automobile industry.

Maxi and Silberstone analyzed and studied the British automobile industry in the 1960s. They observed that unit costs decreased by 40 percent when annual vehicle production increased to 50,000 vehicles, by 15 percent when annual vehicle production increased from 50,000 to 100,000 vehicles, by 10 percent when annual vehicle production increased from 100,000 to 200,000 vehicles, and by 5 percent when annual vehicle production increased from 200,000 to 400,000 vehicles.

From this, Maxey and Silberstone described a curve in which the cost of automobile production decreased with output, which became known as the "Maxey-Silberstone curve." In short, the Maxxi-Silberstone curve points out that mass production is characterized by economies of scale, which is also the origin of the concept of economies of scale.

Because of heavy assets and heavy research and development, automobile industry is considered to be one of the most typical economies of scale industries. The huge capital investment in production equipment and technology development of automobile industry inevitably requires that manufacturing enterprises have sufficient scale to realize the benefits of production.

On the other hand, scattered production, too small scale and low industrial concentration are one of the constraints hindering the automobile industry from becoming bigger and stronger. Without economies of scale, it is difficult to expand the overall advantages of the industry, which leads to insufficient investment in product research and development, backward technical means, and problems such as low-end overcapacity and idle assets.

Bosch, as a reference object for crossing the river, is already a stone that has been explored.

In November 1886, Robert Bosch, only in his early twenties, used his father's legacy of 10,000 German marks to set up a small company in Stuttgart under the name of "Minecraft and Electrical Engineering Technology."

At first, the company did not run smoothly. It wasn't until 1902 that Robert Bosch's first engineer, Gottorb Hornold, invented the high-voltage electromagnetic ignition system, which changed the industrial landscape of engine technology and allowed Bosch to truly enter the ranks of international automotive industry suppliers.

Since then, Bosch's development has been out of control. In 1913 Bosch had a global market share of over 90% for high-voltage electromagnetic ignition systems and two years later increased production to 2 million units.

Subsequently, from diesel high-pressure common rail to ECU, ESP, etc., Bosch continuously copied the success of high-voltage electromagnetic ignition system, all the way to the city, becoming a technology platform company all over the world.

The reason is that Bosch has built strong technical barriers under the background of huge investment in R & D funds in the early stage, and reduced product costs and improved product competitiveness by virtue of scale advantages, which made competitors almost unable to fight back. It is no wonder that some people lament,"Bosch does not build cars, but it can affect the entire automobile industry."

3THREE, accelerating integration In fact, Bosch's development process is a microcosm of the transformation of the automotive parts industry.

At the beginning of the development of automobile industry, automobile parts production was mainly regarded as an auxiliary industry of automobile manufacturing, which was completed by subordinate departments or branches of automobile factories, which also led to the dispersion of automobile parts production and low economic benefits.

Since the 1990s, in order to cope with the increasingly fierce competition in the automobile industry, many enterprises in the automobile parts industry have separated from the automobile manufacturers, and the automobile parts industry has gradually separated from the automobile manufacturers and moved towards independent and professional development.

At present, the automobile parts industry has formed the characteristics of large scale, strong technical force and sufficient capital strength, and the economy of scale promotes the concentration of global parts enterprises to be higher and higher.

Take the turbocharger market as an example. At present, the top five turbocharger manufacturers in annual output are Honeywell, BorgWarner, Mitsubishi Heavy Industries, Ishikawa Island Harima and Bosch Mahler. They are all from Germany and Japan and account for more than 90% of the global market share.

Such oligopolistic competition patterns are numerous in the auto parts market.

According to the ranking of global Top100 auto parts suppliers released by Autonomtive News in 2021, the top ten auto parts suppliers are Bosch, Denso, ZF, Magna International, Aixin Precision Machinery, Hyundai Mobis, Freia, Daliu, BASF and Lear respectively.

One noteworthy detail is that in 2021, the total operating income of the top ten enterprises was US $321.5 billion, up 10% year-on-year from 2020, and the industrial concentration increased further.

The magic of economies of scale also applies to the battery industry.

The energy density of power battery is getting higher and higher, the battery capacity is getting larger and larger, the range is steadily increasing, and the market acceptance of new energy vehicles is also getting higher and higher, which brings about rapid growth of industrial scale.

At the same time, with the maturity of battery technology and the improvement of intelligent manufacturing process level, scale effect is becoming an important means to reduce costs. The cost reduction brought about by technological progress and economies of scale has offset the increased resource cost of electricity, which has led to the birth of more and more long-range models in recent years.

Today, in the power battery industry, the scripts obtained by the "Ningde era" are similar to those of Bosch at the beginning.

At that time, the traditional fuel vehicle supply chain dominated by key components such as engines was basically dominated by European, American and Japanese enterprises. With the development of new energy vehicles, the automobile supply chain structure has undergone subjective changes, and the electric and intelligent supply chain is gradually becoming the dominant supply chain of the automobile industry.

If Bosch seizes the golden opportunity period for European and American fuel vehicles from scratch, then in the new battlefield of intelligent new energy vehicles, competitors also welcome the excellent track for lane change and overtaking.

Throughout the global new energy vehicle market, many international power battery giants are scrambling to invest heavily in technology research and development, while desperately expanding production capacity, seizing market share, enhancing product competitiveness in various ways and widening the gap with competitors. In the long run, the power battery industry will also move towards oligopoly competition like the automobile industry.

Therefore, there is no need to fear the Ningde era. For China's automobile supply chain, in the competition with global automobile giants, only by giving full play to the role of the market, encouraging enterprises to continuously strengthen technological innovation, accelerating integration and forming scale effect can we create a brand with real international competitiveness and promote China's transformation from a big country to a powerful country of new energy vehicles.

4FOUR, the end of "key parts rely on imports, middle and low-end parts rely on domestic production," which forms a huge contrast with the rapid growth of vehicle sales volume. The industrial foundation in the field of automobile core parts is poor, the overall investment is small, the R & D strength of enterprises is scattered, and the development process and effect are much more difficult than expected.

In the era of traditional fuel vehicles, the problem of hollowing parts is pending, and parts giants are racing around in China's automobile market, which has made China's automobile industry suffer enough.

Zhang Yongwei, vice president and secretary general of China Electric Vehicle 100 Committee, once said at the 100-member supply chain conference that from the perspective of global layout, China will become an important new center in the transformation of automobile supply chain. At the same time, a number of competitive supply chain enterprises and even new auto parts suppliers with global influence will emerge in this transformation.

The key to a strong automobile country is a strong spare parts country. It is hoped that China's automobile industry can give birth to its own "Bosch," and China's automobile industry will certainly give birth to its own "Bosch."

[Full text reference]

[1]Apocalypse of German Bosch Hundred Years of Wind and Rain, Shopkeeper Zhou, Song Xin, Gu Si Cade

[2]"Building international competitiveness is not equal to monopoly," People's Automobile, Xiang Xin

[3]Who has the courage to destroy Bosch without fear of antitrust? China Youth Daily, Wang Chao

[4]"Fulfilling investor expectations, Ningde era earns 30 billion yuan annually," Lishi Business Review, Li Ping

[5]"Power battery three quarterly reports close: a number of revenue record high, fourth quarter gross profit or further improvement," Beijing News Shell Finance, Wang Linlin

This article comes from Weixin Official Accounts: Chebai Think Tank (ID: EV100_Plus), Author: Cheng Honghe

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