Author | Yang Qiao
Editor | Sun Chunfang
Original title | Backed by “Nickel King”, it wants to take food from Ningde era
The world’s “Nickel King” is about to usher in its first IPO.
Recently, Ruipu Lanjun Energy Co., Ltd. (hereinafter referred to as “Ruipu Lanjun”) submitted a listing prospectus to the Hong Kong Stock Exchange, with Morgan Stanley and CITIC Securities as joint sponsors.
Behind Ruipu Lanjun is the world’s top 500 Tsingshan Holding Group, which is the world’s largest stainless steel and nickel producer.
Relying on its strong backing, Ruipu Lanjun has rushed into the top ten of domestic battery installed capacity in less than 5 years since its establishment, becoming a well-deserved dark horse.
In just a few years, Ruipu Lanjun has completed 3 rounds of financing. In February of this year, SAIC Motor also led the industrial round financing of Ruipu Lanjun with 2.2 billion yuan, becoming the largest external strategic investor. As of the eve of the IPO, Ruipu Lanjun’s valuation has reached 24.8 billion yuan, ranking among the ranks of unicorn companies.
In the power battery industry, the head effect is becoming more and more obvious. CATL and BYD alone account for more than three-quarters of the market, and the market has become accustomed to focusing on the giants. Many other players share the rest of the market together. Although Ruipu Lanjun’s installed capacity reached the tenth place in the industry in the first 11 months of 2022, its market share was only 1.56%.
However, the second- and third-tier manufacturers represented by Ruipu Lanjun are not willing to be at the bottom. Amid the changes in the industry structure and the uneasiness of many car companies on the battery supply chain, they are trying to overtake at a corner and rise against the trend.
Last year’s battery shortage, the market’s attention focused on more second- and third-tier power battery companies. Ruipu Lanjun received orders from car companies. In order to expand scale benefits, leading companies and Ruipu Lanjun are implementing a A huge capacity expansion plan.
Relying on the “Nickel King”, it has become a dark horse in the industry
The rise of Ruipu Lanjun is due to the fact that the price of power batteries has soared in recent years because of the good times;
Among the upstream raw materials, nickel plays an important role. Even Tesla founder Musk also declared that “nickel is our biggest bottleneck.” Nickel accounts for nearly 30% of the total cost of batteries, and high-nickel and ultra-high-nickel batteries account for a higher proportion. In short, companies with low-priced nickel resources can take advantage of the cost of producing batteries.
Source: Visual China
Ruipu Lanjun has nickel resources in its hands, mainly from its parent company Tsingshan Holding Group, which is one of the world’s largest ferronickel producers. In 2021, the global nickel production will be 2.7 million tons, and Tsingshan Holdings’ nickel production will account for a quarter of it, becoming a leading company in the international nickel mining field.
The actual controller behind Tsingshan Group, the 64-year-old “Nickel King” Xiang Guangda, relied on his mines to make it onto the 2021 Hurun Global Rich List with a personal net worth of 21 billion yuan, becoming a veritable “Nickel King” “. Because of his low-key behavior, he rarely shows up in the market. It is rumored that he is “the most mysterious rich man”.
Until March 2022, a “demon nickel” incident on the London Stock Exchange (LME) made Tsingshan Group the focus of market attention.
From March 7th to 8th, LME nickel futures soared by nearly 250% in two days, reaching a historical high of 101,400 US dollars per ton. Tsingshan Group, which held more than ten tons of nickel empty orders, was unable to deliver, which in turn triggered the explosion of Tsingshan Group. warehouse risk. According to media reports, Tsingshan Group was forced to short, resulting in a floating loss of US$8 billion (about 50.5 billion yuan).
Regarding being cornered by international bulls, Xiang Guangda said bluntly to the media: “Foreigners do have some actions, and they are actively coordinating.” Fortunately, through reaching an agreement with the counterparty and financial institutions, Tsingshan Group’s liquidation crisis was finally resolved. was resolved smoothly.
This nickel financial war has also let the market understand how rich the mineral resources of Tsingshan Group are.
In this context, it is natural for Tsingshan Group to enter the field of power batteries.
Source: Visual China
How strong is Ruipu Lanjun, the son of “Nickel King”? It was just established in 2017, and the second phase of the production base has not yet been fully completed. More than 20 new energy vehicles such as GAC and Geely are rushing to place supply orders.
At the end of 2018, Ruipu Lanjun’s first lithium iron phosphate product was mass-produced. Since 2020, Ruipu Lanjun has supplied SAIC-GM-Wuling E100 and E200. In 2020, Ruipu’s installed capacity will be 0.99Gwh, and SAIC-GM-Wuling will account for 73%. In 2021, Ruipu Lanjun will supply Hongguang MINI EV.
In October 2020, when CATL, LG Chem, Panasonic and other global battery giants are in full swing, Ruipu Lanjun has entered the top ten of China’s lithium battery installed capacity in one fell swoop.
In April this year, Ruipu Energy completed the joint-stock reform and changed its name to Ruipu Lanjun at the same time. Among them, Evergreen Technology holds 50.42% of the shares of Ruipu Lanjun, while Tsingshan Group holds 51% of the shares of Evergreen Technology, the actual controller Xiang Guangda holds 62.6% of the shares, and Jiaxing SAIC holds 8.7% of the shares.
At present, Tsingshan Group does not have any listed companies. If Ruipu Lanjun is successfully listed on the Hong Kong Stock Exchange, Xiang Guangda will be the first listed company.
Backed by Nickel King, it doesn’t make money
Relying on Nickel King, Ruipu Lanjun has reached cooperation with many car manufacturers.
Ruipu Lanjun’s product structure mainly includes power batteries, energy storage batteries, etc.
In terms of power batteries, Ruipu Lanjun has become the designated supplier of power batteries for new energy vehicle models of domestic OEMs such as SAIC Passenger Car, FAW Besturn, Dongfeng Nissan (Vucchen), Hezhong Automobile, and Hechuang Automobile; energy storage In terms of batteries, we have cooperated with many major domestic energy storage integrators such as Sunshine Energy Storage, Kelu Smart Energy, and Ronghe Yuanstorage.
What cannot be ignored is that Ruipu Lanjun has not yet achieved profitability.
Among the upstream raw materials, as a main material of lithium iron phosphate cathode, the fluctuation of lithium carbonate also affects the hearts of power battery and car companies.
In the past two years, how outrageous is the price increase of lithium carbonate? In 2 years, lithium carbonate has risen nearly ten times.
The Frost & Sullivan report shows that in 2019, the average price of lithium carbonate was 71,200 yuan per ton. In 2020, lithium carbonate was oversupplied and the price dropped sharply by 47,100 yuan per ton.
Starting in the second half of 2021, the price of lithium carbonate has started to soar again. As of the first half of 2022, the price per ton has reached 461,200 yuan. According to the latest data from Shanghai Steel Union, as of December 20, 2022, the price of battery-grade lithium carbonate is 550,000 yuan/ton.
Source: Visual China
Ruipu Lanjun said that as a new entrant in the industry, he has no bargaining power. In the past three and a half years, Ruipu Lanjun has lost nearly 1.7 billion yuan. The main reason for the loss is that the cost of raw materials has increased year by year. In the first half of 2022, this cost has already accounted for 74.3% of the sales cost in the same period.
From 2019 to 2021, Ruipu Lanjun’s revenues were 233 million, 907 million, and 2.109 billion yuan, respectively, and the losses during the same period were 112 million, 53 million, and 804 million respectively.
It was not until after November 2021 that Ruipu Lanjun began to sign supplementary agreements with customers to adjust pricing. And in the second quarter of 2022, a price adjustment mechanism will be introduced in contracts with customers to deal with fluctuations in raw material prices.
In the first half of 2022, the average selling price of Ruipu Lanjun’s power battery was as high as 0.76 yuan/Wh, a year-on-year increase of 55.10%; the average selling price of energy storage batteries in the same period was 0.75 yuan/Wh, a year-on-year increase of 27.12% .
In the first half of the year, Ruipu Lanjun’s revenue rose sharply to 4.017 billion yuan, and its losses narrowed to 705 million yuan.
Ruipu Lanjun has signed a framework agreement with Yongqing Technology, a subsidiary of Tsingshan Group, to ensure long-term stable and predictable raw material supply. One is that Tsingshan Group will supply raw materials on preferential terms during the three-year agreement period, and the other is that in the next three years, the purchase amount of Ruipu Lanjun can reach up to 3.825 billion yuan, 11.125 billion yuan and 16.642 billion yuan respectively.
In addition, the low gross profit margin is also due to the fact that Ruipu Lanjun’s production capacity is in the climbing stage.
By the end of the third quarter of 2022, Ruipu Lanjun’s designed annual production capacity has reached 32.7GWh. However, in terms of installed capacity, the total production capacity of “power + energy storage” batteries in the first three quarters of 2022 is only 9.5GWh.
Zhang Xiang, a visiting professor at the Yellow River Institute of Science and Technology, also told the market circles that it is difficult for power battery manufacturers to achieve economies of scale because of the small number of orders from their suppliers. The production line needs to be running at full capacity if it is to be profitable.
Source: Visual China
Unavoidable overcapacity, facing survival of the fittest
In 2021, the explosive growth of the new energy vehicle market will bring a huge demand for upstream power batteries in a short period of time, and a “battery shortage” will appear for a while.
Although the Ningde era and BYD have always maintained their leading positions in the industry relying on their early financial strength and technological advantages, head battery manufacturers are still unable to satisfy.
From the perspective of supply chain security, car companies also got rid of the tying of leading companies and began to support more second-tier power battery manufacturers to achieve controllable battery costs.
The prosperity of the downstream market has brought better opportunities for second-tier battery manufacturers, and directly stimulated the willingness of power battery manufacturers to expand production.
Battery manufacturers have also ushered in a capital upsurge. Among the top ten companies in terms of installed capacity of power batteries in China, Zhongxinhang has been listed on the main board of the Hong Kong Stock Exchange in October this year, becoming the first power battery company in Hong Kong stocks. Guoxuan Hi-Tech and Sunwoda have also achieved secondary listings in overseas markets.
The remaining Honeycomb Energy and Ruipu Lanjun also submitted prospectuses respectively, and the IPO application of Honeycomb Energy has been accepted.
However, for these second-tier battery manufacturers, the barriers to entry are also very high.
Enterprises need strong financial strength. The Guohai Securities report also shows that power batteries are an asset-heavy industry. High investment in the early stage can form a scale advantage in production capacity. Generally, a 1GWh battery production line requires an investment of 300-400 million yuan.
Qi Haishen, president of Beijing Teyi Sunshine New Energy, told the market circles that the power battery industry has the characteristics of capital-intensive and technology-intensive industries. Original enterprises have their own capital strength, and the verification of R&D investment also needs to be reflected in the capital market.
He also mentioned that although Ruipu Lanjun can rely on Tsingshan Group to obtain cost advantages, it still needs to rely on advanced technology, energy density and advanced products to win the market. “Material cost is only a temporary structural advantage, and it is necessary to return to the capital market. Through capital investment, expand R&D investment to improve the advanced nature of products. Relying solely on material cost is not a long-term solution.”
In order to seize the opportunity to stand out, the second-tier power battery manufacturers have formulated aggressive plans to expand production capacity. In 2025, the production capacity of China Innovation Aviation is planned to be 500GWh, and the production capacity of Honeycomb Energy is planned to be 600GWh.
Ruipu Lanjun also regards expanding production capacity as the key to increasing income.
By the end of 2023, Ruipu Lanjun’s goal is to achieve a design capacity of more than 70GWh, and to achieve a capacity of more than 150GWh by the end of 2025. If the current 1GWh battery is worth about 1 billion yuan, 150GWh corresponds to an annual income of 150 billion yuan. Ruipu Lanjun also mentioned that the sales revenue will reach 100 billion yuan in 2027.
However, the expansion plan also brings the hidden danger of “overcapacity”.
Zhang Xiang also said to the market circles that manufacturers in disadvantaged positions will face elimination due to fierce competition in the market, differences in technical routes, and advanced technology. These factors will lead to overcapacity.
He believes that next, the industry will face a situation of survival of the fittest.
Qi Haishen also said that advanced production capacity and high-quality products may give priority to fierce competition in high-priced new energy vehicles. Second-line power batteries in the middle and low-end prices do not have high requirements for advanced products and can still maintain a certain level. competitive advantage. In the end, it is necessary to return to the essence of power batteries, continuous capital investment, technological advancement, and product iterations.
The overcapacity of power batteries, the industry began to reshuffle, and the second and third tier manufacturers were gradually eliminated or even died out. This battle for power battery slots has just begun.
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