Lithium power industry releases new energy vehicles

1. The sales and sales volume of new energy vehicles in the 14th consecutive year were 78,500 vehicles/74,800 vehicles, which were 3.5 times and 3.2 times more than the same period of last year respectively. However, according to the “Notice on Continuing the Promotion and Application of New Energy Vehicles” issued by the Ministry of Finance in September 2013, it is planned that the number of products to be promoted will exceed 330,000 in 13-15 years. Actually, only 92,000 vehicles were promoted nationwide in 13-14 years. In February 15th, the Ministry of Science and Technology promulgated the "National Key R&D Plan for New Energy Vehicle Key Special Implementation Plan (Draft for Soliciting Opinions)", emphasizing the 2020 ownership of 5 million vehicles. We believe that this means that the long-term development goal of China's new energy vehicles will remain unchanged, and cities that do not reach the target will face a list of subsidies that have been kicked out of the central government, and even more severe accountability measures. The 15 years away from the promotion target is currently at least 250,000 vehicles or so, which means that 15 years will be the year in which new energy vehicles will truly erupt.

2. Looking at the orders/supply/industry concentration/market share/performance release rate of each link in the current new energy industry chain, the performance of lithium-powered battery, lithium-electric equipment and motor drive will be the first to be released.

1) Under the assumption of 250,000 vehicles in 15 years, the annual demand for lithium-ion batteries is expected to be 14.1 Gwh, an increase of 220% over the same period of last year, and the capacity utilization rate will reach 101%. In the first half of this year, the supply will continue to be in short supply, and it may turn for the better in the second half of the year.

2) It is estimated that the total investment of China's lithium battery cell equipment will reach 12.1 billion yuan in 15 years, an increase of 152% year-on-year; of which domestic equipment sales are expected to be 7.8 billion yuan, an increase of more than 100%.

3) It is estimated that 250,000 sets of electrical and electronic control systems will be required for the entire year in 2015, an increase of 220% over the same period of last year.

3. Lithium-ion battery links and non-ferrous metals related companies We highly recommend Yifeng Lithium Industry: Global Lithium Deep Processing Leading, ternary lithium-ion battery domestic leading "shadow shares." In November 2014, the company signed a memorandum with Boston Battery Co., Ltd. to purchase Boston Battery’s preferred stock at a purchase price of US$0.445/share through a capital increase of US$30-60 million. The Boston battery is the domestic leader of the ternary lithium-ion battery: the current production capacity is 1GWh, and the total production capacity of the project to be built in Tianjin is 8GWh. Company customers include: BAIC New Energy, Beiqi Foton, Taiwan Yulon, Dongfeng, Jinlong, Ankai, Hangzhou Power Grid, Wuzhoulong, etc.

Yu Feng Li is planning to steadily move into the ternary system of lithium battery power + synergy + improve the industrial chain layout. If the company eventually involved in Boston's battery, it will basically complete the lithium battery industry chain layout, becoming the first domestic real full-chain enterprise from lithium resources to power batteries. Should continue to configure for a long period of time, it is expected that the company's 2014-2016 EPS will be 0.34/0.44/0.60 yuan, respectively, and maintain the "strongly recommended" rating.

4. Lithium-Ion and non-ferrous metals related companies We focus on Luxiang's shares: The rare lithium-ion power equipment supplies listed companies and holds 65% of Dongguan Derui, which is expected to share the benefits of high-growth lithium-electric equipment.