Lithium iron phosphate raw material enterprises will continue to be high revenue and net profit in 2023

The performance of lithium iron phosphate material manufacturers continues to be popular with the high prosperity of the industry.

Recently, a number of lithium iron phosphate material companies such as Shenzhen Dynanonic Co., Ltd. (stock code: 300769, hereinafter referred to as Dynanonic) and Hubei WanRun New Energy Technology Co., Ltd. (stock code: 688275,hereinafter referred to as WanRun) disclosed their third quarter reports.

Overall, benefiting from the high prosperity of the lithium iron phosphate industry, as well as the expansion of its own lithium iron phosphate production capacity and the substantial increase in production, the operating performance of related companies has generally achieved a substantial increase.

Both revenue and net profit increased in Lithium iron phosphate Production

The reporter combed and found that many domestic manufacturers of lithium iron phosphate materials achieved double increases in revenue and net profit in the first three quarters. Among them, the operating income and net profit of Dynanonic, the leading lithium iron phosphate manufacturer, in the first three quarters were 14.416 billion yuan and 1.828 billion yuan, a year-on-year increase of 519.79% and 628.20% respectively; the third quarter revenue and net profit were 6.859 billion yuan and 548 million yuan, a year-on-year increase of 552.41% and 372.60% respectively. In this regard, Dynanonic stated in the report that the growth of the company’s operating income was mainly due to the increase in sales volume and price during the reporting period.

WanRun achieved operating income of 7.44 billion yuan in the first three quarters, a year-on-year increase of 549.59%; net profit was 792 million yuan, a year-on-year increase of 332.93%. Among them, the operating income in the third quarter was 4.045 billion yuan, an increase of 803.66% year-on-year; the net profit was 298 million yuan, a year-on-year increase of 600.24%.

WanRun said that the change in the company’s net profit in the third quarter was mainly due to the rapid growth of the new energy vehicle market and the expansion of power battery companies, which led to strong demand from downstream companies, an increase in the company’s sales scale, and continuous improvement in profitability.

The operating income and net profit of Mianyang Fulin Precision Machining Co.,Ltd. (stock code:300432, hereinafter referred to as Fulin) in the first three quarters were 4.724 billion yuan and 600 million yuan, a year-on-year increase of 177.52% and 151.35% respectively; the third quarter revenue and net profit were 2.026 billion yuan and 246 million yuan respectively, a year-on-year increase They are 220.46% and 214.27% respectively. “The company’s revenue in the third quarter increased significantly, mainly due to the continuous optimization of the company’s operating structure and product structure, the continuous batch delivery of new products such as the intelligent thermal management system and new energy electric drive system business of the intelligent electronic control industry, and the effective production capacity of lithium iron phosphate cathode materials has been put into production one after another.” Fulin said.

Continue to expand Lithium iron phosphate production capacity

In addition, while achieving high growth in operating performance, in order to further enhance sustainable profitability and comprehensive competitiveness, the above-mentioned companies have recently thrown out large-scale investment plans to continue to expand the scale of lithium iron phosphate production capacity.

In October, Fulin announced that its subsidiary Jiangxi Shenghua intends to sign the “Investment Contract” with the Management Committee of Yichun Economic Development Zone on the basis of the above-mentioned “Cooperation Framework Agreement”, and plans to invest in the construction of “an annual output of 200,000 tons of new high-pressure compacted lithium iron phosphate and supporting main materials integration project” in Yichun Economic and Technological Development Zone.

WanRun announced that it plans to use part of the over-raised funds of 2.049 billion yuan to increase the capital of its subsidiaries and invest in a new project of 240,000 tons/year of lithium iron phosphate co-production of 240,000 tons/year of iron phosphate. For the future development plan, WanRun once described in the prospectus: “In the future, the company will still stick to its main business, fully grasp the good opportunities for the development of domestic new energy vehicles, energy storage and other terminal application fields, and rely on major products such as lithium iron phosphate as the support, within 3-5 years, WanRun strives to become one of the domestic new energy vehicle power battery material production bases”

It is worth noting that while lithium iron phosphate material companies are scrambling to expand capacity, many phosphorus chemical companies have also extended downstream and entered the field of lithium iron phosphate across borders. For example, Kunming Chuanjinnuo Chemical Co., Ltd. (stock code:300505, hereinafter referred to as CJN), a phosphorus chemical company, announced in October that it plans to raise no more than 1.5 billion yuan for 50,000 tons/year of battery-grade lithium iron phosphate cathode material precursor material iron phosphate and supporting 600,000 tons/year of sulfur Acid production project, Guangxi Chuanjinnuo New Energy Co., Ltd. 100,000 tons/year battery-grade lithium iron phosphate cathode material project Phase I project, supplementary working capital.

“Because most of the raw materials of lithium iron phosphate are chemical raw materials, chemical companies have made full use of their own advantages in raw material supply when entering the lithium iron phosphate track. At the same time, crossing the border into the new energy field is also a transformation and upgrading for chemical companies direction.” Wu Hui, general manager of the Research Department of China YiWei Institute of Economics, believes.

However, the multi-party investment plan has also raised concerns about overcapacity in the market. The record sheet of investor relations activities disclosed by Dynanonic in September shows that with a large number of companies entering the lithium iron phosphate industry across borders, the company believes that the industry will form structural overcapacity in the future, with insufficient mid-to-high-end capacity and low-end overcapacity.

Popular Investment Sectors in Lithium iron phosphate industry

At present, lithium iron phosphate has become one of the most popular investment sectors in the lithium battery industry chain. As the global lithium price continues to rise, lithium iron phosphate batteries have benefited from their cost-effective advantages, and their penetration rate in terminals has increased rapidly and become the mainstream of the market.

At present, the loading of LFP batteries is showing a rapid growth trend. According to the latest data recently released by the China Association of Automobile Manufacturers, in September, the installed capacity of power batteries in my country was 31.6 GWh, a year-on-year increase of 101.6% and a month-on-month increase of 14%. Among them, the installed capacity of LFP batteries was 20.4 GWh, accounting for 64.5% of the total installed capacity, an increase of 113.8% year-on-year and an increase of 18.5% month-on-month.

Cao Guangping, an independent researcher of new energy and intelligent networking, believes that compared with NCM batteries, LFP are lower in cost and better in safety, which is more in line with the cost reduction needs of car companies & custom lithium battery manufacturers. “With the increasingly fierce competition in the new energy vehicle market, most car companies are also cutting prices, so car companies are bound to purchase lower-cost LFP batteries.”

The rapid development of the new energy lithium battery industry has driven the rapid growth of demand for Lithium iron phosphate battery materials, and the competition in the industry has become increasingly fierce. According to the incomplete statistics of GG-lb.com, the domestic planned projects of lithium iron phosphate in 2021 have exceeded 3 million tons. Superimposed on the planned projects in the first half of this year, it means that the total planned production capacity has exceeded 9.72 million tons.