On March 12th, the lithium battery sector continued its upward trend. Haike Xinyuan, Tianji Shares, and Yinglian Shares achieved two consecutive boards, while individual stocks such as Lingpai Technology, Xinde New Materials, Tianci Materials, and Kedali followed suit. On the news side, investment institutions represented by Morgan Stanley have raised the rating of CATL to over matched, and the target price has been raised to 210 yuan. Morgan Stanley stated that it has seen multiple turning points in the fundamentals of CATL, and it is expected that CATL will resume year-on-year growth in the following quarters after slowing down profits in the first quarter through a new generation of large-scale production efficiency improvements. Several interviewees told Securities Daily reporters that although the lithium battery industry chain is still in the stage of clearing production capacity and stabilizing prices, the bottom of the downward trend has gradually become clear, and the turning point of the industry cycle is approaching. Taking the highly competitive electrolyte process as an example, the leading companies have a strong willingness to raise prices. On the evening of March 8th, Tianci Materials disclosed that in accordance with the operating cycle requirements of chemical enterprise production facilities, in order to ensure the normal operation and safe and stable production of liquid lithium hexafluorophosphate production facilities, the company plans to suspend production and maintenance of the annual production line of 30000 tons of liquid lithium hexafluorophosphate starting from March 11th according to the annual plan, with an expected maintenance time of no more than 30 days. The industry's production schedule is also continuing to rebound. According to data from the Lithium Battery Research Institute of Gaogong Industry and Research Institute, after the sluggish production schedule period from January to February this year, lithium battery companies showed a strong rebound in production in March, with some companies even experiencing a month on month increase of over 70% in production. China International Capital Corporation (CICC) predicts that, considering the different execution periods of price reductions for different links and customers, the second quarter of 2024 financial statements will continue to reflect price reductions, but the extent of price reductions is expected to narrow, and the profitability of various links in the industry chain may reach a bottom in mid-2024. "The development trend of the lithium battery industry chain will tend to improve in 2024. The company's performance is expected to continue to be under pressure in the first half of the year. In the second half of the year, with the end of new energy vehicle destocking and a surge in power battery orders, the industry chain is expected to start a replenishment cycle in the fourth quarter. Against this background, going abroad and research and development have become the main development lines of the industry.". With the acceleration of clearance speed, the gap between top enterprises that have formed economies of scale in various tracks and small and medium-sized enterprises will further widen. For example, in February this year, Changzhou Lithium Source, a subsidiary of Longpan Technology Holdings, signed an order for 160000 tons of lithium iron phosphate cathode materials with overseas battery giant LGES from 2024 to 2028; In the same month, BorgWarner announced that it had reached a strategic cooperation agreement with BYD subsidiary FinDreams Battery to jointly produce lithium iron phosphate battery packs for use in the commercial vehicle sector; In March, Duofuduo announced plans to establish a joint venture company for lithium hexafluorophosphate in South Korea, with overseas layout landing. In addition, top companies are also building a strong "moat" for their businesses. For example, Putai recently disclosed that the company's profitability of negative electrode materials continues to improve, and the Sichuan Zichen factory has achieved true integration; In terms of product innovation, CVD silicon carbon products have been recognized by top key customers. Rongbai Technology stated that it is expected to increase its production volume in overseas markets by 2024, further increasing its profit per ton of ternary positive electrodes.
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