CATL wins another victory! Increase investment in negative electrode material "Rising Star" and hold 35% of shares!

On February 20, Zhongke Electric (300035) announced that the company, its holding subsidiary Zhongke Xingcheng Holdings, Gui'an New District Zhongke Xingcheng and CATL signed a capital increase agreement. Zhongke Xingcheng Holdings will increase its capital by RMB 420 million to Gui'an New District Zhongke Xingcheng, and CATL or its wholly-owned subsidiary will increase its capital by RMB 280 million to Gui'an New District Zhongke Xingcheng.

After the completion of this capital increase, the registered capital of Gui'an New District Zhongke Star City will increase from 100 million yuan to 800 million yuan. CATL or its wholly-owned subsidiary will hold 35% of the shares of Gui'an New District Zhongke Star City after the capital increase, and Zhongke Star City Holdings will hold 65% of the shares of Gui'an New District Zhongke Star City after the capital increase.

Of course, this is not just a simple capital increase. Based on this capital increase, Gui'an New District Zhongke Xingcheng will invest in the construction of an "integrated project with an annual output of 100,000 tons of lithium battery negative electrode materials ". The project is divided into two phases. The first phase plans to build a production capacity of 65,000 tons, and the second phase plans to build a production capacity of 35,000 tons. The project has officially started on January 4 this year, with a total planned investment of 2.5 billion yuan.

More importantly, after the above-mentioned negative electrode expansion project is completed and put into production, CATL will enjoy the right of priority purchase for the project's production capacity, which means that Gui'an District Zhongke Xingcheng will give priority to guaranteeing the supply of CATL's graphite negative electrode products.

Anode material "new star" is rising

According to the data, Zhongke Electric was established in April 2004. Its main product is electromagnetic stirring equipment (EMS). Through continuous technological innovation, the company gradually broke the foreign monopoly, achieved import substitution of products, and became the leader of magnetoelectric equipment. It was listed on the Shenzhen Stock Exchange Growth Enterprise Market on December 25, 2009, and is currently the only listed company in the domestic electromagnetic industry.

Since 2017, Zhongke Electric has been developing openly and strategically deploying in the field of new energy lithium-ion battery negative electrode materials. It has now grown into a diversified enterprise with "magnetic equipment + lithium battery negative electrode" as its main business. Moreover, the negative electrode business has driven the company's performance to grow rapidly and its market share has continued to increase.

In 2017, Zhongke Electric strategically acquired Xingcheng Graphite and officially entered the field of lithium battery negative electrode materials.

In 2018, Zhongke Electric acquired Guizhou Grete (now Guizhou Zhongke Xingcheng) and began to develop its own graphite supply.

In 2019, it raised 533 million yuan to build 15,000 tons of lithium battery negative electrode materials and 10,000 tons of graphitization projects. At the same time, it invested in Jineng New Materials (holding 37.5% of the shares) to expand graphitization production.

In 2020, the subsidiary Xingcheng Graphite built a production base for lithium battery negative electrode materials with an annual output of 50,000 tons.

So far, Zhongke Electric's negative electrode business has gradually been on the right track and has achieved impressive results. According to Zhongke Electric's public statement in November last year, the company's position in the new energy battery negative electrode material industry is at the forefront. Calculated by shipment volume, it ranks fifth among domestic negative electrode material shipment companies in 2020.

Entering 2021, Zhongke Electric has accelerated the expansion of its negative electrode plate map. In August, it released a plan for a private placement, intending to raise 2.2 billion yuan for negative electrode material and other production projects.

On October 27 of the same year, Zhongke Electric announced that it planned to establish a joint venture with Yiwei Lithium Energy (Zhongke Electric holding 60% and Yiwei Lithium Energy holding 40%), with a planned investment of 2.5 billion yuan to manufacture negative electrode materials with an annual production capacity of 100,000 tons.

In December, Zhongke Electric announced that it plans to invest in the aforementioned "integrated project with an annual output of 100,000 tons of lithium battery negative electrode materials" in Gui'an New District.

Thanks to the explosive demand in the new energy vehicle market and the early expansion of production, Zhongke Electric's negative electrode material production and sales in 2021 increased significantly year-on-year. According to the performance forecast, Zhongke Electric expects to achieve a net profit of 344 million to 393 million yuan in 2021, a year-on-year increase of 110.00% to 140.00%; non-net profit is 321 million to 366 million yuan, a year-on-year increase of 110.00% to 140.00%.

In terms of customers, Zhongke Electric has maintained long-term good cooperative relations with well-known domestic and foreign companies in the industry, such as BYD , CATL, Zhongxinhang, EVE Energy, Ruipu Energy, SKI of South Korea, and ATL. It can be seen that the signing of the capital increase agreement is, on the one hand, a deepening of the cooperative relationship between Zhongke Electric and CATL, and on the other hand, a preparation for CATL to ensure its own lithium resource supply.

CATL accelerates efforts to ensure lithium resource supply

In 2021, the prices of upstream raw materials for lithium batteries continued to rise, prompting a number of companies in the industry chain to come up with various strategies to deploy in the field of raw materials. Entering 2022, the prices of lithium carbonate and lithium hydroxide also rose all the way at the beginning of the year, and battery companies have already "bet" to seize resources.

When it comes to fast layout, CATL is the best choice. Only a month and a half have passed this year, and CATL has further comprehensively stabilized its supply chain through long-term contracts, investment cooperation and other means.

On February 16, Fulin Precision announced that CATL plans to further increase its capital in Jiangxi Shenghua and subscribe to the same amount of registered capital increased by Jiangxi Shenghua, which is 144 million yuan. After the completion of this capital increase, CATL will hold 20% of Jiangxi Shenghua's equity and become the latter's second largest shareholder. It is reported that Jiangxi Shenghua plans to plan to invest in a 250,000-ton annual lithium iron phosphate cathode material project with an estimated total investment of 4 billion yuan.

In February, the subsidiary Sichuan Times New Energy Resources Co., Ltd. signed a joint venture agreement with Ganzi Prefecture Investment Group, Yibin Sanjiang Huida Company, and Sichuan Tianfu Mining Company in Chengdu. According to the agreement, the parties will carry out all-round cooperation under the premise of complying with the national strategic mineral security guarantee, accelerate the exploration and development of lithium mineral resources in the province, increase the supply of lithium resources, promote comprehensive utilization in a scientific and orderly manner, promote the coordinated development of the entire new energy industry chain, and provide important support for the development of Sichuan's trillion-level power battery industry.

On February 8, Jiayuan Technology announced that it plans to jointly invest with CATL to establish Jiayuan Times in Meixian District, Meizhou City (Jiayuan Technology holds 80% of the shares and CATL holds 20% of the shares), and invest in the construction of a high-performance electrolytic copper foil project with an annual output of 100,000 tons.

On the evening of January 28, Tianhua Super Clean announced that it plans to jointly invest with CATL or its wholly-owned subsidiary to establish a joint venture in Yichun City (CATL holds 90% of the shares and Tianhua Super Clean holds 10% of the shares), and the joint venture will invest in a 100,000-ton lithium carbonate smelting capacity project.

On January 26, Yongxing Materials announced that it plans to establish a joint venture with CATL to jointly invest in the construction of a lithium carbonate project and carry out cooperation in related product areas. The total investment amount of the project will not exceed 2.5 billion yuan, and it is planned to build a 6 million ton mining capacity (mainly contracting some mine operations of CATL), a 6 million ton mineral processing capacity and a 50,000 ton lithium carbonate capacity project.

On January 9, Fengshi New Zhicun New Energy Materials Co., Ltd. was officially established. It is jointly held by CATL and Jiangxi Zhicun Lithium Co., Ltd. The joint venture is mainly engaged in the research and development, production and sales of lithium carbonate series products, lithium battery positive electrode materials and other chemical products. The registered capital is 1 billion yuan, and the equity ratio has not been disclosed yet.

On January 8, Rongbai Technology announced that it had signed a strategic cooperation agreement with CATL. According to the agreement, CATL expects to purchase about 100,000 tons of high-nickel ternary cathode materials from the company in 2022; from 2023 to the end of 2025, CATL will use Rongbai Technology as its first supplier of ternary cathode powder and purchase no less than a certain proportion of high-nickel ternary cathode materials from the company.