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PostsCATL: "Power Battery Profits in the Second Half of the Year Will Not Be Worse Than in the Second Quarter" (Telephone Conference Summary)
1. Power Battery and Energy Storage Business
Q: Energy storage battery gross margin: it fell to 6% in the first half of the year, what will be the trend later?
A: The business models and customer structures for energy storage and power are different, the project implementation has time differences, and pricing will be slower. The gross margin will improve in the second half of the year.
Q: Dynamic battery price and gross margin dynamics:
A: The prices of major customers have been linked in the second quarter, some have already started in the first quarter, and the remaining ones will be reflected in the third quarter. The second half of the year will not be worse than the second quarter. Whether the price will rise in the third quarter depends on the price of materials.
Q: How many dynamic battery shipments in the second quarter?
A: Over 100 GWh in the first half of the year, with growth in the second quarter compared to the first quarter.
Q: The amount and profit margin of battery recycling:
A: The gross margin is high, higher than the positive pole material of the battery, but the volume is still very small, and some policies are unclear.
Q: Judgment on the demand for power and energy storage batteries in the industry next year
A: It's hard to judge on the amount, but the overall trend of the industry is clear, the growth rate is fast. The problem is that the resource price is too expensive, which affects the development of the industry.
2. Other Businesses
Q: The income and gross margin contribution of other businesses in the first half of the year are relatively high?
A: It is mainly research and development and service income, such as technology authorization, with relatively low costs. The trend is positively related to total revenue. As we invest more in research and development and achieve more results, the benefits of this part will become better and better.
3. Overseas Situation
Q: Tax reduction issue of building factories in the United States:
A: The US deflation reduction bill is more complicated, and everyone still has some confusion. There is a high threshold and further understanding of the policy is necessary.
Q: Revenue standard in overseas markets:
A: Businesses directly sent to overseas, such as those sent to Tesla, are not included in overseas revenue.
Q: Response to the EU carbon footprint regulations and potential trade barriers:
A: We have been paying attention to it for a long time and have taken action, such as establishing the world's first zero-carbon factory in Sichuan. In the future, we will increase efforts in carbon footprint tracking to ensure we can be certified by the EU.
Q: European order situation:
A: The overall trend will not change, and with the continued decline in energy prices, market demand will rise. Our European order situation is quite good.
4. Financial Indicators
Q: Net investment income was about 1.3 billion in the second quarter, mainly including what, and what is the trend in the future
A: There are two parts: equity sales of affiliated companies and increased profits of affiliated companies. As the industry develops, investment income will continue to maintain a relatively fast growth trend. We sold 400 million in equity.
Q: Operating cash flow: is the 5 billion tax refund cash flow sustainable?
A: With the construction of our factories and subsidies, it will be sustainable for a certain period of time. This more than 5 billion also includes interest, security deposits, etc. This part accounts for 1-2 billion, and there is a detailed explanation in the footnote on page 137 of the report.
Q: The reason for the rise in inventory and future trends
A: It includes raw materials, inventory products and issued products. 1）The customer's delivery and confirmation time have a cycle;
- Generally speaking, the second half of the year is a peak season, and there is more stock at the end of the year.
Trend: In the future, with the growth of the scale, the inventory volume will also increase. However, we will study the improvement of inventory management to improve the utilization efficiency of inventory assets.
V. Production capacity and new business layout
Q: The equipment bidding is relatively slow, but the production capacity and output have improved smoothly. Has this been achieved through technological transformation?
A: The equipment bidding is arranged based on the production capacity, production yield rate, and order situation, and is executed relatively prudently. The early production capacity reserves were relatively sufficient. The construction of the Fuding base, Cheliwan base, Jiangsu base, and Sichuan base progressed smoothly, and the efficiency of existing production lines has also been improved.
Q: The equipment investment is 160 million/GWh, which is much lower than before. Why?
A: The efficiency, superiority, and output of the equipment have all been improved.
Q: The company has established two new subsidiaries, which should be laying out bicycles and household energy storage. Could you please introduce the development ideas in this area?
A: We have partnered with ATL to make bicycles and household energy storage, as well as electric tools, drones, etc. The market for medium-sized batteries has already completed the anti-monopoly investigation last year. At the beginning of this year, the company also made some adjustments, issued notices, and will concentrate on the advantageous resources of both parties to select the best products or models according to the characteristics of the medium-sized battery market to achieve the best results. It has started to operate and is doing well.
Q: What is the latest situation of the Yichun lithium resources?
A: The exploration rights and mining rights for the first phase have been obtained. Follow the industry conventions and regulatory requirements step by step for the subsequent work.
VI. New technology & new products
Q: The competitiveness of high-nickel products compared with Korean peers in the European market:
A: We have advantages in material and processing costs, and we can obtain relatively cheaper materials.
Q: Progress in the development of new products
A: The application of 2.2C fast charging has been put into operation, and the liquid-cooled CTP energy storage has delivered 4GWh. The Kirin battery has been released to support a range of 1000 kilometers.
Q: What is the progress and expected shipment volume of new technologies (sodium-ion and M3P)?
A: The shipment volume and customer discussions are going well, and it takes time for mass production. They will be shipped successively at the beginning of next year. The customer groups for the two are not quite the same.
