Is the era of King Ning's rapid growth coming to an end?

erex Technology2023Contemporary Amperex Technology222.6GWh38.08%31.56% (2) 2023Contemporary Amperex Technology5577.47%96.915.03%202370% (3) Contemporary Amperex Technology202344635.75%43.738.94% (4) 2023Contemporary Amperex Technology15324.54%19.231.78%Contemporary Amperex Technology 3 2024Contemporary Amperex TechnologyContemporary Amperex Technology Contemporary Amperex TechnologyConsequently, as the profit growth of Contemporary Amperex Technology slows down, it has become inevitable. The fierce competition in the domestic market has forced Contemporary Amperex Technology to focus on overseas markets. On the evening of March 15, the power battery giant Contemporary Amperex Technology released its annual performance report for 2023. Throughout 2023, Contemporary Amperex Technology's operating income exceeded RMB 400 billion, reaching RMB 400.9 billion, a year-on-year increase of 22%; the net profit attributable to the mother was RMB 44.12 billion, a year-on-year increase of 43.58%; the gross profit margin was 22.91%, a year-on-year increase of 0.99 percentage points; and the net cash flow from operating activities was RMB 92.83 billion, a year-on-year increase of 51.65%. However, it is worth noting that in the fourth quarter, the revenue and profit of Contemporary Amperex Technology both experienced a year-on-year decrease. The company achieved operating income of RMB 106.2 billion, a decrease of 10.16% year-on-year, and the net profit attributable to the mother was RMB 12.98 billion, a decrease of 1.23% year-on-year. 1. The end of the era of high profit growth for Contemporary Amperex Technology In the fourth quarter of 2023, Contemporary Amperex Technology experienced a simultaneous negative growth in revenue and profit, ending its trend of continuous growth. In 2023, the intensity of the price war in the power battery market deepened further. The average price of lithium iron phosphate cells (power type) dropped from 0.99 yuan/Wh to 0.44 yuan/Wh, and the average price of ternary lithium cells (power type) dropped from 1.1 yuan/Wh to 0.5 yuan/Wh, a decrease of about 55%. This downward trend in prices is expected to continue in 2024. In the fierce price war in the power battery market, second and third-tier power battery manufacturers have been significantly impacted and face situations of shutdown or forced sale. Even if they manage to maintain market share, they are likely to face losses. The pressure on power battery prices due to the price war comes from two main aspects: 1. Continual price competition among new energy vehicle companies, such as Tesla lowering the prices of Model 3 and Model Y to historic lows in 2023, further passing on cost pressures to corresponding power battery manufacturers. 2. The decline in raw material prices has reached its limit, especially the drop in lithium carbonate prices in the first three quarters of 2023 has been fully realized, with the subsequent decline slowing down, limiting the possibility of alleviating cost pressures by reducing raw material costs. The decrease in the profit growth rate of Contemporary Amperex Technology in the fourth quarter of 2023 was partially due to the diminishing marginal effect of declining raw material prices. As lithium prices fell below RMB 100,000/ton at the beginning of the year, the limited space for profit improvement resulting from lower raw material costs was reflected in the declining proportion of material costs in Contemporary Amperex Technology's operating costs in 2023. While avoiding being drawn into a low-level price war, Contemporary Amperex Technology is maintaining its market advantage by providing high-quality and high-tech battery products. In 2023, Contemporary Amperex Technology introduced a variety of innovative battery products including solid-state batteries, shenxing batteries, sodium-ion batteries, M3P batteries, and kirin batteries, and collaborated with several mainstream new energy vehicle companies to achieve mass production of these high-end battery products. Therefore, investments in research and development and sales at Contemporary Amperex Technology are expected to continue to grow at a high rate. In 2023, the company's research and development expenses reached RMB 18.356 billion, an increase of 18.35% year-on-year; sales expenses were RMB 17.95 billion, an increase of 61.76% year-on-year. 2. Analysis of the Four Major Business Segments Contemporary Amperex Technology's four major businesses listed by revenue from highest to lowest are power battery system business, energy storage system business, battery materials and recycling business, and battery mineral resource business. 1. Power battery system business Benefiting from the growth in product sales and overseas business, in 2023, Contemporary Amperex Technology's power battery system business achieved an operating income of RMB 285.3 billion, a year-on-year increase of 20.57%, with a profit of RMB 63.54 billion, a year-on-year increase of 56.4%. In 2023, Contemporary Amperex Technology's battery system capacity, production, and sales all experienced growth, but faced a decrease in capacity utilization rate and intentional control of capacity expansion. The actual capacity of the battery system reached 552 GWh, with a year-on-year growth rate of 41.5%; while the under-construction capacity decreased to 100 GWh, a decline of 35%; the annual output was 389 GWh, an increase of 19.7%, with sales reaching 390 GWh, a year-on-year growth rate of 34.95%. The rapid expansion of capacity and intensified market competition led to a decrease in capacity utilization rate from 83.4% to 70.47% in Contemporary Amperex Technology. However, in terms of installed capacity, Contemporary Amperex Technology still maintains a leading position in the industry. In 2023, the installed capacity of the power battery system of Contemporary Amperex Technology was 222.6 GWh, a year-on-year increase of 38.08%, with a market share of 31.56%, still ranking first globally. 2. Energy storage system business In 2023, Contemporary Amperex Technology's energy storage system business achieved an operating income of RMB 55.7 billion, a year-on-year increase of 7.47%, with a profit of RMB 9.69 billion, a year-on-year increase of 15.03%. In comparison, the growth rates of sales volume and revenue of energy storage products in 2023 both showed a significant decline, and the capacity utilization rate also dropped to over 70%. 3. Battery materials and recycling business Contemporary Amperex Technology's battery materials and recycling business achieved significant growth in 2023, with operating income of RMB 44.6 billion, a year-on-year increase of 35.75%, and a profit of RMB 4.37 billion, a year-on-year increase of 38.94%. 4. Battery mineral resource business In 2023, Contemporary Amperex Technology's battery mineral resource business reported an operating income of RMB 15.3 billion, a year-on-year increase of 24.54%, with a profit of RMB 1.92 billion, a year-on-year increase of 31.78%. Contemporary Amperex Technology continues to focus on battery mineral resources through diversified investment layouts to ensure a stable supply chain of raw materials. 3. Future Outlook In 2024, Contemporary Amperex Technology will continue to promote product innovation, improve product quality and technological level, expand and serve overseas markets, further optimize global supply chains and capacity structures, strengthen research and development and sales capabilities, and enhance integration capacities in different business areas. At the same time, Contemporary Amperex Technology will continue to monitor fluctuations in raw material prices and market competition, adjust business strategies flexibly, and maintain its competitive advantage in the market. In the positive overall environment of the power battery market, Contemporary Amperex Technology will continue to leverage its innovative advantage and technological strength, steadily advance business development, and lay a solid foundation for the company's future growth.The domestic market share of Ex Technology's power battery installations continues to decline, now standing at only 43.11%.mporary Amperex TechnologyContemporary Amperex TechnologyContemporary Amperex Technology brings new growth points, opening a new era of high-profit growth.This article is reprinted from Wall Street News, edited by GMTEight: Chen Wenfang.