EVE Energy (300014.SZ) has released its financial report for the first half of 2024. The report indicates that EVE Energy achieved a total revenue of 21.659 billion yuan, a year-on-year decrease of 5.73%; net profit was 2.137 billion yuan, a year-on-year decrease of 0.64%. However, the net profit excluding non-recurring gains saw a year-on-year increase of 19.32%.
Journalists have noted that this marks the first time since EVE Energy's listing in 2009 that both revenue and net profit have experienced a year-on-year decline.
Despite this, EVE Energy continues to raise funds for expansion. In July 2024, EVE Energy plans to raise funds through the issuance of convertible bonds to unspecified objects, with the intended fundraising amount not exceeding 5 billion yuan, to be used for the implementation of the "23GWh Cylindrical Lithium Iron Phosphate Energy Storage and Power Battery Project" and the "21GWh Large Cylindrical Passenger Car Power Battery Project".
Revenue and Profit Decline
Regarding the first-ever decline in both revenue and net profit since its listing, EVE Energy did not provide a clear response in its financial report. However, insights can be gleaned from its business composition and the current competitive landscape of the lithium battery market.
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Journalists have observed that EVE Energy's current business includes consumer batteries, power batteries, energy storage batteries, and other segments. Among the battery-related businesses, power batteries achieved revenue of 8.994 billion yuan, accounting for the highest proportion of its revenue at 41.52%. The power battery business saw a year-on-year revenue decline of 25.79% in the first half of this year, with a gross margin decline of 2.66% year-on-year.
Research data from the High-tech Industrial Research Institute (GGII) shows that in the first half of 2024, China's lithium battery shipments reached 459GWh, a year-on-year increase of 21%. In terms of segmented fields, China's shipments of power, energy storage, and digital lithium batteries in the first half of 2024 were 320 GWh, 116 GWh, and 23GWh, respectively.
The financial report shows that in the first half of this year, EVE Energy's power battery shipments were 13.54GWh, a year-on-year increase of 7.03%, and energy storage battery shipments were 20.95GWh, a year-on-year increase of 133.18%.
However, statistics from the China Automotive Power Battery Industry Innovation Alliance show that EVE Energy ranked seventh in the new energy passenger car installation volume in the first seven months of 2024, with a cumulative installation volume of 6.32GWh, accounting for 2.92% of the market, a year-on-year decline of 1.04%.
Journalists contacted EVE Energy regarding this matter, but had not received a response by the time of publication.In fact, facing fierce market competition, in the first half of 2024, apart from a decline in revenue in the power battery sector, EVE Energy's consumer battery and energy storage battery businesses have achieved growth to varying degrees.
Financial report data shows that consumer batteries achieved revenue of 4.849 billion yuan, a year-on-year increase of 29.75%, with a gross margin increase of 7.01% year-on-year; energy storage batteries achieved revenue of 7.774 billion yuan in the first half of the year, a year-on-year increase of 9.93%, but the gross margin decreased by 1.25% year-on-year.
According to InfoLink data, in the first half of 2024, EVE Energy's energy storage cell shipments ranked second globally, rising one place from 2023.
A research report from Guojin Securities pointed out that EVE Energy's battery energy storage and consumer industry capacity utilization rates remain high, with ample orders on hand for energy storage, a steady increase in market share, and the proportion of overseas and pack (battery packaging) is expected to gradually increase, leading to improved profitability.
Multiple fundraising for expansion
According to incomplete statistics, in the first half of this year, power battery companies have invested in more than 50 new projects domestically and abroad, with a total investment amount exceeding 190.2 billion yuan, and planned power battery capacity exceeding 626GWh. There were as many as six billion-level power battery projects laid out in the first half of the year, including EVE Energy.
According to EVE Energy's estimation, it is expected that by 2025, the company's production projects will release a capacity of 126GWh, and the sum of existing capacity and newly released capacity will reach 210GWh, doubling the capacity in 2 years. It is expected that by 2027, the sum of existing capacity and newly released capacity will reach 328GWh, tripling the capacity in 4 years.
The reporter noticed that in July 2024, EVE Energy once again launched a fundraising plan. According to EVE Energy, against the backdrop of the vigorous development of the new energy industry, it plans to raise funds by issuing convertible bonds to unspecified objects, with the proposed fundraising amount not exceeding 5 billion yuan, to implement the "23GWh cylindrical phosphate iron lithium energy storage power battery project" and the "21GWh large cylindrical passenger car power battery project".
EVE Energy stated that as of the end of 2023, its cylindrical phosphate iron lithium batteries have obtained a total of about 88GWh in customer intended demand for the next 5 years; after the completion of the fundraising investment project "21GWh large cylindrical passenger car power battery project", it is expected to add about 21GWh of large cylindrical battery capacity, mainly used in the passenger car field. As of the end of 2023, EVE Energy's ternary large cylindrical batteries have obtained a total of about 486GWh in customer intended demand for the next 5 years.
The reporter noticed that in recent years, EVE Energy has raised funds multiple times, including a private placement of 2.5 billion yuan in April 2019, a private placement of 2.5 billion yuan in October 2020, and a private placement of 9 billion yuan in November 2022.Financial reports indicate that by the end of 2023, Eve Energy had raised a total of 14 billion yuan, with 10.857 billion yuan utilized. Regarding the aforementioned 5 billion yuan fundraising plan, the journalist contacted Eve Energy for an interview, but had not received a response by the time of publication.
The frequent fundraising for expansion has also attracted the attention of regulatory authorities. The Shenzhen Stock Exchange clearly requires the issuer to supplement an explanation on the necessity and rationality of conducting financing and expansion again in the short term, especially when the previous fundraising projects have not been fully implemented, the product gross margin continues to decline, and the company holds a significant amount of cash and financial assets. The exchange also inquired whether there is a situation of excessive and frequent financing.
In response to the Shenzhen Stock Exchange's inquiry, Eve Energy stated that the company's gross margin declined in 2022, while the industry average gross margin showed an upward trend. This was mainly due to differences in product structure and operating scale among listed companies in the same industry, with significant fluctuations in gross margins of individual companies having a substantial impact.
Regarding the further funding needs, Eve Energy mentioned that the company's cash and financial assets are substantial, primarily due to the funds raised from the issuance of shares to specific objects in 2022. The raised funds have corresponding uses. By the end of December 2023, after deducting funds with restricted purposes, previously raised funds with fixed uses, repayments of bank loans due within one year, and the need to supplement operational funds for the next year, the remaining proprietary funds amounted to 2.957 billion yuan. By the end of 2023, the company's main projects for power storage and consumer lithium-ion batteries require funds from various channels for construction, with a total investment demand exceeding 30 billion yuan. By the end of 2024, more than 10 billion yuan still needs to be invested, and the existing remaining funds cannot meet the company's project construction funding needs.
Furthermore, Eve Energy mentioned that currently, with the increasing environmental protection requirements of the industry and the continuous improvement of market demands for product technology and quality, the survival space for small and medium-sized enterprises in the industry is gradually being squeezed, and market concentration is further improved. Leading enterprises with advantages in technology, quality, scale, capital, and environmental management will gain a larger market share. Faced with the market environment where the total volume of the energy storage industry and the new energy vehicle industry is determined to expand and customer demand is rapidly increasing, leading enterprises in the industry continue to expand production to seize the golden development period and achieve rapid global delivery. From the publicly disclosed information, domestic first and second-tier new energy companies such as Contemporary Amperex Technology Co., Ltd. (CATL), BYD, Guoxuan High-Tech, Zhongjin Lithium, Ruipu Lanjun, Farasis Energy, Xinwangda, and Penghui Energy have all expanded their production capacity.
The journalist noted that in addition to expanding production domestically, on July 5th, Eve Energy announced plans to invest in the construction of energy storage battery and consumer battery manufacturing projects in Malaysia, with a total investment of nearly 3.3 billion yuan.
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