Smart Energy: Domestic Leading Three-Element Powered Battery Enterprise Wins Dominating Competitiven

    Recently, the Ministry of Science and Technology of the PRC issued the 2017 Annual Projects Reporting Guide for “Green Car” pilot project. About 19 to 38 projects involving 6 kinds of technologies are going to be launched in 2017 with a total allocated fund of RMB 1.12 billion, covering such aspects as powered battery, battery management system, motor drive and intelligent automobile and so on. It is also reported on the website of the MIIT (Ministry of Industry and Information Technology) that the research group formed by the MIIT and the Ministry of Finance has come to Chongqing to jointly study the development of green cars.

    The research group in Chongqing said that the green car industry has been advancing greatly in recent years with its rapid growth momentum, basically established industry system and standard regulation system, increasingly enhanced technological level and constant mode innovation. The research group also points out what should be focused on next, namely, to offer a better supporting policy, raise the access threshold, enhance safety supervision, improve technology and its application and realize a sound and sustainable development for green car industry.

    The research group also believes that, with a more favorable subsidy policy being implemented subsequently, the fourth season will embrace a sharp increase in the sales volume of green cars, the three-element lithium battery and electric logistic vehicle industry will be granted with plenty opportunities for further development and the smart energy company (stock code: 600869) will profit promisingly.

   It is said that 18 pieces of green car pilot projects involving 6 kinds technologies have already been started in 2016 and 19 to 38 more are going to be launched in 2017. Enterprises leading the project are required to self-finance enough funds in a ratio no less than 1:1 to those allocated by the state. As for the lithium-ion battery technology with high safety and performance, the evaluation index should cover the safety-risk identifying methods and its evaluation report, and a set of safety evaluation system and standards should be established where the battery monomer energy density goes ≥300Wh/kg, the cycle life≥1500 times, the cost ≤RMB 0.8/Wh, the annual production capacity ≥100,000,000wh and the safety level should keep up with international standards. These pilot projects will help upgrade the lithium-ion battery technology and further promote the development of green cars.

    At the same time, the MIIT has recently issued the Interim Measures for the Concurrent Points Calculation Administration of Average Fuel Consumption of Enterprises and Green Cars (Exposure Draft), which stipulates that passenger vehicle manufacturing enterprises have to meet certain ratio standards between average fuel consumption and production of new green cars, against which relevant points will be calculated positively or negatively. Positive points accumulated in fuel consumption are, to certain degree, transferable among enterprises and allowed to be carried forward for next year use by the same enterprise while positive points accumulated in green cars are transferable among enterprises but not able to be carried forward to next year. Negative points accumulated both in fuel consumption and green cars could only be evened up with positive points from green cars. Given that negative points from fuel consumption could only be balanced out by positive points from green cars, this industry is about to produce a total of 5.58 million passenger vehicle or so from 2016 to 2020, with 2 million of them being produced in 2020 alone. The application of point accumulation system will force the rapid generalization of green cars.

     Individual stock analysis

  Smart Energy: Domestic Leading Three-Element Powered Battery Enterprise Wins Dominating Competitiveness with Expanded Capacity and Upgraded Technology

    The operating revenue of Smart Energy (stock code: 600869) in the first half 2016 has reached to RMB 5,649 million with a year-on-year increase of 8.71%, among which the net profits paid to shareholders has risen up to RMB 207 million with a year-on-year increase of 27.8%, which is basically consistent with previous estimation.

    Key investment point: rapidly increased profits in new business of battery

   As the largest 18650 battery core manufacturer and the largest three-element powered battery leading enterprise, the Far East FST company, a wholly-owned subsidiary of the Smart Energy (stock code: 600869), enjoys solid technical accumulation in 18650 three-element powered battery core field.

    Lately, the Smart Energy (stock code: 600869) has released an announcement that RMB 3.89 billion will be invested to the three-element powered lithium battery project which boasts an annual production capacity of 3Gwh. Supported by stably increased sales volume of green cars, the three-element powered lithium battery will be in great demand correspondingly and the company, as the leading enterprise in this field, is going to expand its production capacity substantially, improve its competitiveness among other counterparts and profit in a more promising way.

    It is estimated by some institutions that the annual net profit of the Smart Energy (stock code: 600869) will increase with a rate of 90.66%, 45.24% and 17.45% from 2016 to 2018 respectively, with an EPS (Earnings per Share) of 0.36, 0.53 and 0.62 respectively, which is recommended to be “bought in”.