先导智能(300450)

For battery equipment:

CATL: expanded 20-25 battery production lines in 2018 (we estimate this toequate to +20GWh of incremental capacity from Ningde Huxi factory, Liyangfactory and CATL-SAIC JV). Lead Intelligent expects another 30 production lines.This is consistent with CATL’s recent announcement on Nov 28 that it wasapplying for a bank loan facility of Rmb110bn for the Liyang factory’s phase IIIexpansion of up to 20GWh. Accordingly, we revise up our 2019E equipmentorder estimates.

Samsung SDI: Yicai News reported that Samsung SDI will invest Rmb10.4bn toexpand China battery capacity in Xi’an (or Tianjin). However, according to ourKorea technology team, Samsung SDI management has commented thatnothing has been decided officially. As the plan is not finalized we do notinclude it in our base case assumption, but we present an order/EPSsensitivity analysis below (Exhibit 3) in order to gauge the potential upsidefor Lead Intelligent.

Panasonic: Its capacity expansion plan in China is dependent on Tesla’s EVproduction volume ramp-up. Tesla’s Shanghai factory is still at the early stage ofconstruction, and we expect it will partly begin production from 2H2019.

LG: From its Nanjing factory, with plans for 32GWh (22.3/4.2/5.6 GWh forEV/storage/consumer electronics batteries) capacity expansion by 2023, LeadIntelligent mainly supplies cylindrical battery winding equipment for consumerelectronics.

Other non top-tier China local battery makers: Lead Intelligent expectslimited order contribution ahead from those customers mainly due to their lowEV order visibility. Despite multiple headlines from new players, such asWanxiang, announcing large battery capacity plans, Lead Intelligent seems tohave become more cautious about the outlook in this space.n Funeng: is growing quickly and mainly producing pouch batteries. Lead Intelligentcommented that they are developing stacking machines for pouch batteries and areactively talking to Funeng but have yet to see many orders.

Total solutions: The first order was signed in July 2018, and the next order isexpected to be in late 2018/early 2019, and we put it into 2019E.

For non-battery equipment:

Solar-PV equipment: The business is expected to be largely stable, according tothe management. Wuxi Lead has secured Rmb300-400mn in orders ytd and expectsRmb400-500mn in new orders in 2019E mainly from leading Solar PV players.

Consumer electronics testing equipment: The management is optimistic aboutorder breakthrough into next year from this new product (orders increasing toRmb500mn from Rmb100mn in 2018). We assume a lower amount than guidance inour 2019E order assumption due to our cautious view on electronics capex.

Others: The company launched several new businesses such as system integrationof automated logistics and automobile production lines, by embedding its own MESsystem. The company has no specific target into 2019 but it admitted profitabilityshould be lower from new business.

We now forecast Rmb 6.2bn in orders in 2019E, revised up by 7% mainly driven by CATL

In light of the above, we now forecast orders of Rmb5.0bn (flat yoy) in 2018E and Rmb6.2bn in 2019E, revising the latter up by 7% from our previous estimate of Rmb5.8bn,mainly driven by CATL. This suggests a 23% yoy increase from 2018E and also indicateshigher order/earnings quality, in our view, given a much higher contribution from globalleading battery makers ahead.