After Ningde Times’ “trillion market value”, can it go further?

After Ningde Times' "trillion market value", can it go further?

“The only competitive advantage is to have the ability to learn faster than your competitors. In the arena of globalization, there is no moment of rest between each round of fighting.” This quote by Jack Welch may explain the “success” of Ningde Times today.

As of June 4 closing, Ningde Times share price is 432.21 yuan / share, the latest total market value of 1.01 trillion yuan, which is after May 31 again exceeded the trillion mark.

Only by 50 billion revenue to support the trillion market value, which makes Ningde Times in the “trillion club” seems some “alternative”. In this circle, the net profit of Life Insurance Co. in 2020 is about equal to the total revenue of Ningde Times. In the face of this “anomaly” phenomenon, it is no wonder that there are institutions “short” Ningde Times, the forecast target price of 60% discount.

Short-selling or bullish. In short, with the market value of the trillion east wind, Ningde Times boss Zeng Yuqun again on the throne of the richest man in Hong Kong, China. According to the real-time list of Forbes Global Rich List, as of 9 a.m. on June 5, Zeng Yuqun and Li Ka-shing ranked 33rd and 40th on the global rich list with $38.8 billion and $34.9 billion respectively.

Looking back on history, we can always see the undertones of a company’s founder in its body. This is true of all large companies, Steve Jobs for Apple, Musk for Tesla, QQ Music for Tencent ……

The growth of Ningde Times is also a path that fits the temperament of its founder. From the youngest technical director of “Hong Kong New Technology” (SAE Magnetics) to one of the richest people in the whole of Hong Kong, it took 22 years for Zeng Yukun.

Yuk Kwan rarely gives interviews, and the most circulated about his character concept are two paintings hanging in his office, one is “Strong in Gambling” and the other is “Pu Bo Yuan Quan”. About the first painting “strong in gambling”, Zeng Yuqun once said, “it is not enough to fight, it is physical work; gambling is mental work”; the second painting “Pu Bo Yuan Quan” means like the sky As vast and boundless as the bottomless abyss as deep and far-reaching.

Technology to fight the world

In 1999, Elon Musk invested $10 million and founded “” (the predecessor of Paypal), an online financial service and email payment business, with two partners from Silicon Valley. In that year, Yuk Kwan Tsang was working as an engineer in a hard disk head foundry in Hong Kong from across the Pacific Ocean.

At that time, their businesses and fields did not intersect much, and naturally they did not expect that 20 years later they would lead the development of electric cars and power batteries respectively, and become important partners of each – in 2020, Musk’s Tesla and Zeng Yukqun’s Ningde Time signed a cooperation agreement, and the latter will supply power batteries for the former’s Model 3, the world’s best-selling electric car model, for two consecutive years.

After Ningde Times' "trillion market value", can it go further?

Later, with the sale of his 11.7% stake in Paypal, Musk got $165 million, and then went further and further in his electric car and rocket business. Soon after, Zeng Yuqun also resigned together with two like-minded colleagues and set up a business called Amperex Technology Limited (ATL), which is mainly engaged in making lithium batteries for MP3 and cell phones.

ATL did not have its own core technology when it was founded, so Yuk Kwan Tsang and his friends had to buy patents. They purchased a license for the battery patent from Bell Labs and solved the problem of bulging Bell lithium batteries. With this technical improvement, ATL then got orders from Apple, Samsung and many other large company customers. 1999 was the year they started their business, and 2002 was the year they became profitable.

This was a successful technical attack by Zeng Yuqun and the ATL company behind him. Tasted the sweetness of having core technology, plus Zeng Yuqun himself is from a technical background, so the company in the next development process will pay more attention to the development and optimization of technology.

In 2012, BMW came to the door and placed an order in front of Zeng Yuqun. A year earlier, he had just led the power battery division to become independent from ATL and set up what is now Ningde Time, referred to as CATL (Contempory Amperex Technology Limited).

BMW’s order was Ningde Times’ first order in real sense. At that time, it was a great opportunity for this company, which was still just lingering at the doorstep of the power battery industry.

Ningde Times finally seized this opportunity. According to media reports, BMW provided Ningde Times with hundreds of pages of German production standard documents at that time. After studying the document, the latter opened up the whole process of power battery R&D, design, development, certification and testing, and successfully installed its own power battery system into BMW Brilliance’s first pure electric SUV “Zeno 1E”.

Now the leading power battery industry, in such a “technology to fight the world” background officially entered the industry.

However, not only the optimization and update of the existing technology, Ningde Times also has precise judgment on the selection of different technology routes. In the early stage of the development of domestic new energy vehicles, most of the electric vehicles are equipped with lithium iron phosphate batteries. Data show that in 2015-2016, new energy vehicles with lithium iron phosphate batteries were able to account for about 70% of the entire domestic market.

However, Ningde Times saw the broad prospects of ternary lithium batteries with higher energy density from the beginning, and focused on this battery technology in the process of research and development.

With the explosion of new energy passenger car demand, the majority of consumers began to be anxious about the range. Obviously, the energy density of ternary lithium batteries are the most likely to make electric vehicles get rid of “mileage anxiety”. At the same time, the government also began to link the subsidy policy with the energy density of the battery, which makes more car companies will focus on ternary lithium batteries.

The successful research and development of the technology and the right choice have made Ningde Times rise to the top. From the data of global battery installed capacity, Ningde Times became the world’s largest power battery company with 34GWh installed capacity in 2020, and its market share reached 24.82%, taking the crown for four consecutive years since 2017. From January to April this year, Ningde Times occupied 32.5% of the global market with 21.4 GWh of capacity, once again consolidating its position as the world’s largest electric vehicle battery manufacturer.

However, from entering the industry in 2012, to occupying the first position in the world for many years in a row, and then to breaking the trillion dollar market value, all this cannot be done by technology alone. In fact, behind the power battery industry is a long and complex industry chain, it is necessary to integrate upstream and downstream resources to ensure the stability of supply and avoid risks. Recognizing this, Zeng Yuqun and Ningde Times have long been highly embedded in the new energy industry.

More than suppliers

As early as 2017, Zeng Yuqun sent an internal letter in the staff group called “Typhoon is coming, will pigs really fly? internal letter, comparing Ningde Times to a “pig” flying in the typhoon of policy subsidies, reminding employees not to sleep on the merit book.

Because of the “white list” policy from 2015 to 2019, some well-known overseas battery companies (such as LG Chem, Panasonic), could not cut into the world’s largest Chinese new energy vehicle market at that time, the domestic power battery industry led by Ningde Time in such a “policy barrier The domestic power battery industry, led by Ningde Times, was given the opportunity to develop rapidly under such “policy barriers”.

The temperament of being prepared for danger makes Zeng Yuqun and Ningde Times keep their nerves tightly tensed. “Have we ever thought, if foreign companies come back in the second half of the year, we can still sleep blindfolded? The country will protect the uncompetitive enterprises? The answer is self-explanatory.” Zeng Yuqun asked this of his staff in that internal letter.

In the fierce business world, the story of the industry leader being caught up, overtaken or even beaten as a backdrop by the upstarts has already appeared too many times. Not to mention that the entire new energy industry is still a new industry, the seat of the change is not normal.

Compared to more mature industries, the risk of power batteries is relatively high, and there is intense and increasing competition in the industry. On May 31, Morgan Stanley downgraded the rating of Ningde Times to “underweight” with a target price of 251 yuan.

Ningde Times has long foreseen the industry’s future fierce competition pattern, not stagnant in their own industry leading position, but actively layout the supply chain upstream and downstream. Today, Ningde Times is not only a battery supplier, but also an energy company, investment company and service company.

After Ningde Times' "trillion market value", can it go further?

On the one hand, Ningde Times overplans its production capacity to seize more markets in the future. According to IFC research report, Ningde Times has planned 8 wholly-owned production bases, with a planned capacity of over 500GWh, plus the joint venture capacity of 95GWh with host manufacturers, with a total planned capacity of 600GWh, ranking first in the world in terms of capacity. If we calculate that the investment in equipment per GWh is around 200 million yuan, this is an investment of 120 billion yuan.

On the other hand, Ningde Times has invested in high-quality listed enterprises upstream and downstream of the industry chain both inside and outside. According to the starting point of lithium big data statistics, since 2018, Ningde Times has invested in more than 45 foreign companies and joint ventures, and established more than 10 wholly-owned subsidiaries.

In addition to the high number of invested companies, Ningde Times has invested in a wide range of fields. Power battery, energy storage, lithium battery materials, lithium battery intelligent equipment manufacturing, charging and switching, automatic driving, new energy vehicles, two-wheeled electric vehicles and even chips, semiconductors, many fields can see the figure of Ningde Times. Counting the investment in various fields of projects, Ningde Times investment empire has smashed into more than 200 billion yuan.

Carefully analyze the investment logic of Ningde Times, it is not difficult to see that it has its own grasp and response strategy for the present and future of the industry. For upstream, the investment is more in raw material enterprises, which is to guarantee the supply and price stability of metal minerals, so as to maintain the security and continuity of the supply chain.

For downstream, we establish cooperation projects with car companies to ensure the order quantity or set up joint ventures and new production bases. Ningde Times has invested in joint venture factories with SAIC, FAW, GAC, Dongfeng, Geely and other car companies, in addition to wholly-owned production bases. From the current planning, after 5 years, the capacity built by Ningde Times will be as much as 10 times of that in 2020.

Such a huge production capacity cannot be achieved by technology alone. A company wants to gain a voice in the industry chain by relying on three elements: technology, scale and management ability. Technology can only guarantee the lead for a period of time, as the industry continues to mature, the scale of production is more important. Large-scale layout investment is an important means for Ningde Times to expand its scale.

The next few days, Ningde Times will usher in a key node. June 10, Ningde Times 952 million shares of the original shareholders of the first issue of restricted shares will be listed. Based on the latest closing price (432.21 yuan/share), the unbundled market value is about 410 billion yuan. As the first trillion market capitalization company in GEM, where will Ningde Times go in the future?

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