EVE Lithium Energy: Lost $250B in 3 Years!

• Article
• 2024-07-25
• 18 Comments

Here is the translation of the provided text into English: What has Ewei Lithium Energy gone through?

From 2019 to 2021, the stock price of Ewei Lithium Energy experienced an explosion, rising from around 5 yuan to 152 yuan, with an increase close to 30 times, becoming the market's most dazzling star; however, from the end of 2021 to the present, the stock price has experienced an avalanche, falling to around 30 yuan, with the maximum drop reaching 80%, and the market value has fallen by 250 billion.

In other words, Ewei Lithium Energy has been on a roller coaster.

So, what is the reason for Ewei Lithium Energy's continuous decline?

At first glance, the operating performance seems to be okay.

Although the operating income and net profit in the first half of this year fell year-on-year, the net profit excluding non-recurring gains increased by 19.32%.

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In addition, the net profit of 2.137 billion yuan is also far better than other peer companies struggling around the break-even line.

However, the capital market does not buy it.

Let's look at the company's gross margin.

According to the financial report, in the first half of this year, the power battery and energy storage battery, which together account for 80% of the operating income, have gross margins of 11.45% and 14.38% respectively.

What concept?

In 2023, these two figures were 14.37% and 17.03% respectively.

In other words, the two businesses of Ewei Lithium Energy are not getting better but are continuing to deteriorate.

In other words, Ewei Lithium Energy's profits mainly depend on consumer batteries, and the performance of power batteries and energy storage batteries is still poor!

In addition, the capital market is becoming more and more pessimistic about the prospects of Ewei Lithium Energy.

As we all know, the major customers of Ewei Lithium Energy's power batteries are GAC Aion and Xiaopeng Motors.

But the problem lies here.

In the first half of this year, both car companies encountered sales problems, especially GAC Aion, which also gave a lot of orders to peer battery companies such as China Innovation Aerospace.

There is also a significant change in the market this year, that is, BYD's subsidiary, Fudi Battery, has accelerated external supply, and has now entered the supply chain of popular models such as Xiaomi SU7, Xiaopeng MONA M03, and Le Dao L60, which will inevitably erode the market share that originally belonged to second and third-tier battery companies.

In short, Ewei Lithium Energy's imagination space has been cut off, coupled with poor financial performance, which has severely hit market confidence.

However, Ewei Lithium Energy has stated that it will continue to finance and expand production.

According to the company, by the end of 2023, Ewei Lithium Energy's ternary large cylindrical battery has obtained the customer's intended demand of about 486GWh for the next five years, and the order demand is urgent.

Therefore, it is planned to raise 5 billion yuan through the issuance of convertible bonds, which will be used for the 23GWh cylindrical lithium iron phosphate energy storage power battery project.

Not only that, Ewei Lithium Energy has also reached out to its own employees.

Ewei Lithium Energy issued an announcement, intending to grant a one-time reward of 70.65 million shares to 619 management and employees, accounting for about 3.45% of the company's total share capital, with a grant price of 22.76 yuan, which is nearly 30% lower than the closing price on the announcement date.

At first glance, it seems that there is no problem, but the problem lies in the performance assessment.

The performance assessment targets set by Ewei Lithium Energy for 2024 and 2025 are that the total shipment of power batteries and energy storage batteries should not be less than 71GWh and 102GWh respectively.

There are two problems here.

First, neither net profit targets nor revenue targets are set, but shipment targets; second, 2024 is about to enter the fourth quarter, and the significance seems to be not very great.

In short, it gives people the feeling that Ewei Lithium Energy has deliberately set low assessment targets in order to implement the equity incentive plan smoothly.

Because in this case, assuming a grant price of 22.76 yuan, Ewei Lithium Energy can raise nearly 1.6 billion yuan from management and employees!

So, do you think Ewei Lithium Energy's financing behavior is reasonable?

Here is an additional point.

From 2021 to 2023, Ewei Lithium Energy successively launched the third, fourth, and fifth equity incentives, but due to the high exercise price, if exercised, the management and employees will suffer heavy losses.

Finally, let's briefly talk about the large cylindrical battery.

As we all know, Tesla has high hopes for the large cylindrical battery and has invested 3 billion US dollars in the past five years.

However, despite several breakthroughs, it has not yet been mass-produced on a large scale, and there have even been rumors of large-scale layoffs.

Driven by Tesla, many battery companies, including Ewei Lithium Energy, have also increased their investment in large cylindrical batteries.

However, it seems to have walked into a dead end.

On the one hand, the large cylindrical battery is trapped in the process and has not been able to be solved for a long time; on the other hand, the square battery technology has rapidly iterated beyond expectations, and its competitiveness in terms of energy density, fast charging speed, and cost is continuously increasing.

In the future, solid-state batteries are expected to be mass-produced around 2028, which will deal a fatal blow to large cylindrical batteries.

In short, the popularity of large cylindrical batteries is very high, and both battery companies and car companies have invested a lot, but it is almost 2025, and the future is still unclear.