The country has taken lead governance, and “policy continued + product price increases†will push the industry into the mid- to long-term inflection point. The recent incidents of lead poisoning and lead pollution have reinforced the government’s determination to control the lead-acid battery industry for a long time. The policy will continue to help the lead-acid battery industry enter the mid- to long-term inflection point. We believe that the industry's reshuffle will exceed expectations, lead-acid battery manufacturing industry will enter a longer period of improvement, and the potential of leading price increases will lead to an increase in performance.
The policy will continue to promote a long-term supply and demand transition, and short-term price increases will drive performance beyond expectations. Due to lack of government supervision, lead-acid batteries have been in a slight oversupply for a long time, local small brands and counterfeit brands have flooded the after-sales market, and the competitive environment has deteriorated; if policy governance continues and relevant regulations are implemented forcefully, the backward small capacity faces a full exit (capacity reduction is expected More than 30%), within two years, the market will face a shortage of supply; at the same time, the degree of industry concentration will increase, and the bargaining power of the upper and lower reaches will be enhanced. The price increase of products in the aftermarket is expected to be strong (>15%).
The means of government integration will be implemented in three areas: 1. Capacity barriers: 300,000 kVah and 500,000 production capacity barriers will result in the failure of at least 1,000 companies in more than 3,000 lead storage battery factories across the country; 2. Technical capital barriers: production The purchase of environmental protection equipment in the link will result in the increase of capital and technical barriers by more than 200%. 3. Site selection barriers: The civil defense distance of lead-acid battery companies exceeds 500 meters, which will cause difficulties for medium and small-scale enterprises to resume production and expand production.
Lead-acid battery faucet will benefit from the industry's economic climate and its profit will exceed expectations. The industry is facing the dual expansion of support and after-sales, to withstand the decline in the growth rate of the automotive industry this year: the aftermarket market growth is stable at about 20%, the growth rate of the supporting market does not change the industry climate; the company's business model: supporting the market (~40%) establish a brand , Aftermarket (~60%)
Earning profits; we expect that industry leaders rely on technology, management, and brand advantages, and that sales growth and product price increase after the release of production capacity will drive earnings to exceed expectations.
Investment advice: We recommend that we take advantage of the lead-acid battery industry's integration opportunities, with a focus on recommending camel shares and Fengfan shares. Due to the industry's unique business model, the after-market price is more flexible to the company's earnings. Theoretical calculation: The performance elasticity of the 5%, 10%, and 15% increase in the wholesale price of the camel's after-market is 0.17, 0.35, and 0.52, and the 5%, 10%, and 15% increase in the wholesale price of the sail after-sales market is the driving elasticity of performance. For 0.22, 0.45, and 0.67, the performance of the two companies exceeded expectations.
The policy will continue to promote a long-term supply and demand transition, and short-term price increases will drive performance beyond expectations. Due to lack of government supervision, lead-acid batteries have been in a slight oversupply for a long time, local small brands and counterfeit brands have flooded the after-sales market, and the competitive environment has deteriorated; if policy governance continues and relevant regulations are implemented forcefully, the backward small capacity faces a full exit (capacity reduction is expected More than 30%), within two years, the market will face a shortage of supply; at the same time, the degree of industry concentration will increase, and the bargaining power of the upper and lower reaches will be enhanced. The price increase of products in the aftermarket is expected to be strong (>15%).
The means of government integration will be implemented in three areas: 1. Capacity barriers: 300,000 kVah and 500,000 production capacity barriers will result in the failure of at least 1,000 companies in more than 3,000 lead storage battery factories across the country; 2. Technical capital barriers: production The purchase of environmental protection equipment in the link will result in the increase of capital and technical barriers by more than 200%. 3. Site selection barriers: The civil defense distance of lead-acid battery companies exceeds 500 meters, which will cause difficulties for medium and small-scale enterprises to resume production and expand production.
Lead-acid battery faucet will benefit from the industry's economic climate and its profit will exceed expectations. The industry is facing the dual expansion of support and after-sales, to withstand the decline in the growth rate of the automotive industry this year: the aftermarket market growth is stable at about 20%, the growth rate of the supporting market does not change the industry climate; the company's business model: supporting the market (~40%) establish a brand , Aftermarket (~60%)
Earning profits; we expect that industry leaders rely on technology, management, and brand advantages, and that sales growth and product price increase after the release of production capacity will drive earnings to exceed expectations.
Investment advice: We recommend that we take advantage of the lead-acid battery industry's integration opportunities, with a focus on recommending camel shares and Fengfan shares. Due to the industry's unique business model, the after-market price is more flexible to the company's earnings. Theoretical calculation: The performance elasticity of the 5%, 10%, and 15% increase in the wholesale price of the camel's after-market is 0.17, 0.35, and 0.52, and the 5%, 10%, and 15% increase in the wholesale price of the sail after-sales market is the driving elasticity of performance. For 0.22, 0.45, and 0.67, the performance of the two companies exceeded expectations.
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