The performance of the ternary cathode material leader Rongbai Technology (688005.SH) declined for the second consecutive year.

According to the financial report disclosed by Rongbai Technology a few days ago, its annual revenue last year was 15.088 billion yuan, a year-on-year decrease of 33.41%; net profit was 296 million yuan, down 49.06% year-on-year. This is the second consecutive year of negative net profit growth after 2023.

In response to the decline in performance, Rongbai Technology said that the company's profitability was under pressure due to multiple factors such as intensified competition in the domestic market, changes in the international political and economic situation, and fluctuations in raw material prices.

However, in terms of quarters, the net profit of Rongbai Technology in each quarter of last year achieved quarter-on-quarter growth, and there is a trend of improvement. Its net profit in the fourth quarter achieved a year-on-year increase of 612.94%, reaching 179 million yuan, turning losses into profits.

Founded in 2014, Ronbay Technology focuses on the R&D and production of lithium battery materials. The founder of the company, Bai Houshan, was the core founder of Dangsheng Technology (300073.SZ), a listed company in the same industry, and created Rongbai Technology for the second time after his departure.

Cathode material products contributed 14.357 billion yuan of revenue to Ronbay Technology last year, accounting for 95.16% of the total revenue, and the remaining less than 5% of the revenue was contributed by precursors and other products.

Ronbay Technology's cathode products mainly include ternary cathode, lithium manganese iron phosphate and sodium electrocathode. Among them, ternary cathode is the most core business segment of Rongbai Technology.

Ternary and lithium iron phosphate are both the two mainstream battery technology routes. From 2018 to 2020, with the advantages of high energy density and long battery life, the market share of ternary batteries has always maintained a leading position.

In the later stage, with the help of innovative technology, the advantages of lithium iron phosphate in terms of safety and cost have become more and more prominent. In July 2021, the market share of lithium iron phosphate batteries surpassed that of ternary batteries, and it has maintained its leading position since then. This trend has gradually spread across the globe.

Xinchun lithium battery data shows that the global ternary material output last year was 953,000 tons, a year-on-year decrease of 1.6%; The total output of lithium iron phosphate was 2.38 million tons, a year-on-year increase of 50.2%.

In this industry context, Rongbai Technology still achieved a sales volume of 120,000 tons of ternary cathode materials last year, a year-on-year increase of 20% against the trend, and the global market share increased by 2 percentage points from the previous year to 12%, maintaining the world's first place for four consecutive years.

Rongbai Technology pointed out in its annual report that despite the average performance of the global ternary material market last year, in the limited market, the share of Chinese companies will increase from 61.3% in 2023 to 64.4% in 2024, and the shipments of mainstream cathode material factories in Japan and South Korea have decreased sharply.

However, it is worth noting that Rongbai Technology faces the hurdle of overcapacity in the industry.

Last year, the inventory of cathode materials and precursors of Rongbai Technology was 10,400 tons and 3,300 tons respectively, an increase of 189.81% and 256.9% year-on-year respectively.

Rongbai Technology explained that the increase in inventory was mainly due to the company's centralized production scheduling at the end of the year in response to the Spring Festival holiday.

However, according to its annual report data, its cathode material production capacity is 300,000 tons, compared with only 137,400 tons last year, and the capacity utilization rate of its cathode material production line is about 45.8%.

In fact, since 2023, overcapacity has become a major keyword in the cathode materials industry. According to the predictions of many research institutions in the industry, in 2025, cathode materials will still face the risk of surplus.

Rongbai Technology itself also pointed out that the new energy vehicle industry, as an emerging industry supported by the state, has a large number of players participating in market competition and is still increasing, and there may be insufficient capacity utilization caused by intensified competition. In addition, with the continuous adjustment of terminal demand, cathode material companies may face the risk of reducing the demand for existing capacity caused by changes in terminal technology routes.

On the night of the release of the annual report, a project investment adjustment announcement disclosed by Rongbai Technology also confirmed that the company was facing the problem of insufficient capacity utilization.

According to the announcement, the "2025 Power Lithium Battery Materials Comprehensive Base (Phase I)" implemented by Rongbai Technology is a ternary precursor project with an annual output of 60,000 tons, of which 30,000 tons in phase 1-1 has been completed, and 30,000 tons in phase 1-2 has not yet started. Rongbai Technology plans to adjust the construction investment scale of the project to 30,000 tons and close the project.

Rongbai Technology said that in the current environment of intensified market competition and sufficient supply, the completed production line with an annual output of 30,000 tons can meet the company's current R&D and production needs. The company comprehensively considered market demand, strategic planning and other factors, and believed that the 30,000 tons originally planned for the first and second phases of the fundraising project did not have the need to continue to be put into implementation for the time being.

It is worth mentioning that in the implementation of the 1-1 phase of the project, Rongbai Technology has used up more than ninety percent of the promised investment amount of the raised funds.

In the overseas market, Sanyuan still occupies about ninety percent of the market share, and the market space still exists. Therefore, the overseas market is very important for Ronbay Technology.

According to Rongbai Technology, it developed 57 new international customers in Japan, South Korea, Europe and North America last year, and the cumulative sales of overseas customers exceeded 20,000 tons for the first time.

At present, the company has built an annual production capacity of 20,000 tons of high nickel ternary and 6,000 tons of precursors in South Korea, and another 40,000 tons of high nickel production capacity has been completed, and it is expected to achieve trial production in the first half of this year. Last year, Ronbay Technology's South Korea factory has obtained the certification license of Japanese customers, started mass production, and achieved full production in a single month in the fourth quarter.

Rongbai Technology has also completed the layout of the Polish base through investment and mergers and acquisitions, and the construction of the first phase of 20,000 tons of medium/high nickel ternary material project is advancing, and the main project is expected to be completed this year. Its North American project has also entered the start-up phase.

While making efforts in overseas markets, Ronbay Technology is also upgrading the product structure of ternary cathode materials according to industry trends.

At present, the global ternary market is showing a trend of high nickel, and the global high-nickel ternary production increased by 3.3% year-on-year to 530,000 tons last year. Rongbai Technology said that this is strongly related to the positioning of mainstream car companies for ternary products to tend to be mid-to-high-end.

High-nickel cathode materials often refer to cathode materials with a nickel content of more than 80%, and the larger the proportion of nickel content, the higher the energy density of the battery.

According to the annual report of Rongbai Technology, with the gradual application of high-energy-density batteries such as solid-state batteries and large cylindrical batteries, the proportion of the company's high-nickel and ultra-high-nickel product shipments has increased significantly, of which the cumulative sales of 9 series ultra-high nickel products are 27,000 tons, accounting for 23%, a new high.

In the field of solid-state batteries, Ronbay Technology has established cooperative relations with more than 40 battery and vehicle companies such as CATL (300750.SZ) and Weilan New Energy, among which the battery products supporting the cathode materials of semi-solid-state batteries have been applied to 1,000 km ultra-long endurance models of end customers.

The rapid development of emerging markets such as eVTOL and humanoid robots is also expected to provide new support points for the future market demand of high-nickel ternary materials.

eVTOLs require a battery energy density of > 300 Wh/kg, and it is difficult for lithium iron phosphate batteries to meet the requirements in this scenario. Humanoid robots typically require high energy density to support long working hours and high power density to cope with fast movements, while also requiring safety, long cycle life, light weight, and small size.

Last year, in terms of lithium manganese iron phosphate and sodium electrode cathode, Rongbai Technology also made breakthroughs.

Lithium manganese iron phosphate is a new type of phosphate lithium-ion battery cathode material formed by doping a certain proportion of manganese on the basis of lithium iron phosphate, which has advantages in energy density, cost and low temperature performance. Applications of lithium manganese iron phosphate include blending with ternary materials and pure use.

In 2022, Ronbay Technology will achieve mass production of lithium manganese iron phosphate through the acquisition of Tianjin Skoland Technology Co., Ltd., so as to step into the lithium iron phosphate camp.

Last year, on the basis of the original small power market, with the development of commercial vehicle markets such as electric trucks, the sales of lithium manganese iron phosphate products in the field of large power increased significantly, and the shipment of lithium manganese iron phosphate products of Rongbai Technology increased by more than 100% year-on-year, and nearly 10,000 car orders have been obtained from the head power battery enterprises.

In addition, the second-generation product of lithium manganese iron phosphate of Ronbay Technology has completed the demonstration and the first stage of finalization, and the cost per ton of watt-hour is 10% lower than that of lithium iron phosphate, and it is expected that the production line transformation will be completed in 2025 after the completion of the batch stability verification to achieve mass production and delivery.

In terms of sodium cathode, Rongbai Technology said that the company's products continue to maintain close cooperation with mainstream customers at home and abroad, and have been stuck in a leading position among leading battery manufacturers in the fields of power, energy storage, and start-stop power supply, with an industry-leading annual shipment, and it is expected that shipments will continue to maintain rapid growth in 2025.

According to the annual report, the company has successively obtained orders for 3,000 tons of layered oxide cathode materials and hundreds of tons of polyanionic cathode materials at the beginning of this year, and immediately started the mass production delivery process. It will also build a new production line with an annual output of 6,000 tons of sodium electrocathode materials in Xiantao, Hubei Province.

As of the close of trading on April 11, the share price of Rongbai Technology rose 1.39% to close at 19.72 yuan per share, which has fallen more than eighty percent from the historical high.