Zhuhai Guanyu, a supplier of Apple and Huawei, has its IPO on the Science and Technology Innovation Board accepted, and will raise 3.2 billion yuan to expand

On November 5, the Shanghai Stock Exchange officially accepted the Science and Technology Innovation Board IPO application of Zhuhai Guanyu Battery Co., Ltd. (referred to as "Zhuhai Guanyu").

According to information, Zhuhai Guanyu is mainly engaged in the research and development, production and sales of consumer polymer soft-pack lithium-ion batteries, and also has a layout of power lithium-ion batteries. Its products are mainly used in laptops, tablets, smart phones, smart wearable devices, drones, car start-stop systems, electric motorcycles and other fields.

In the field of consumer batteries, Zhuhai Guanyu has long served the world's top notebook computer, tablet computer and smartphone brand manufacturers and is one of the world's leading suppliers of consumer polymer soft-pack lithium-ion batteries.

According to statistics from Techno Systems Research, in 2019, Zhuhai Guanyu ranked second in the world in terms of total shipments of lithium-ion batteries for laptops and tablets, and fourth in the world in terms of shipments of lithium-ion batteries for smartphones. Zhuhai Guanyu has established long-term and stable cooperative relationships with laptop and tablet manufacturers such as HP, Lenovo, Dell, Asus, Acer, Microsoft, and Amazon, smartphone manufacturers such as Huawei, OPPO, Xiaomi, Motorola, and ZTE, and drone and smart wear manufacturers such as DJI, BOSE, and Facebook, and has entered the supply chain system of manufacturers such as Apple, Samsung, and VIVO.

In the field of power batteries, Zhuhai Guanyu has entered the supply chain systems of manufacturers such as Haojue, Cummins, and China Motor.

During the reporting period, the sales amount of Zhuhai Guanyu's top five customers accounted for 64.38%, 67.97%, 68.42% and 68.06% of the company's operating income in the current period, respectively. The sales revenue of Zhuhai Guanyu to the top five customers accounts for a relatively high proportion of its operating income. In this regard, Zhuhai Guanyu explained that this is mainly because Zhuhai Guanyu's terminal customers are mostly well-known notebook computer and smartphone brand manufacturers with a high market share. Zhuhai Guanyu has reduced the impact of customer concentration by increasing customer coverage and enriching product structure, but if there are major changes in the cooperative relationship with major customers in the future, or if the business of major customers shrinks significantly, it may have a significant adverse impact on Zhuhai Guanyu's production and operation.

In terms of performance, according to the prospectus, in 2017, 2018, 2019 and January-June 2020, Zhuhai Guanyu's operating income was RMB 293,505.67 million, RMB 474,695.09 million, RMB 533,105.08 million and RMB 269,615.88 million, respectively, of which the main business income was all from core technology product income.

From the perspective of the main business income structure, consumer batteries account for a high proportion and are the main source of income, while power batteries are still in the initial stage. During the reporting period, Zhuhai Guanyu's comprehensive gross profit margin was 11.15%, 16.91%, 28.26% and 30.02% respectively, showing an overall upward trend.

Plans to raise 3.249 billion yuan to expand battery production capacity projects

According to the prospectus, the investment projects of the funds raised from Zhuhai Guanyu's IPO are the Zhuhai polymer lithium battery production base construction project, the Chongqing lithium battery cell packaging production line project, the R&D center upgrade construction project and the supplementary working capital project, which are closely related to the issuer's main business.

Zhuhai Guanyu stated that the investment projects with the raised funds are in line with Zhuhai Guanyu’s development goals and the development laws of the industry, have improved Zhuhai Guanyu’s production capacity and core technology level, are a supplement and continuation of the existing main business, and are closely related to the main business and core technology.

Specifically, the Zhuhai polymer lithium battery production base construction project plans to build a new production plant and vacuum systems, air compression systems, exhaust gas treatment systems and other production and supporting facilities, purchase automatic positive and negative electrode batching systems, positive and negative electrode coating machines, fully automatic vacuum differential baking lines, fully automatic hot pressing component selection machines and other domestic and foreign advanced production and testing equipment to build a highly automated and intelligent polymer lithium-ion battery production base.

This project will effectively expand the production capacity of Zhuhai Guanyu's consumer lithium-ion batteries and continuously improve the level of automation and informatization in production and manufacturing. It will be beneficial for Zhuhai Guanyu to continue to deepen its roots in the consumer lithium battery field, actively seize the vast market space in the future, and continuously consolidate and enhance Zhuhai Guanyu's product market share and industry status in the consumer lithium battery field.

The main construction contents of Chongqing Lithium Battery Cell Packaging Production Line Project include the construction of production plants and production and supporting facilities such as vacuum systems, air compression systems, and waste gas treatment systems, the purchase of corresponding production and construction equipment, and the deployment of corresponding production technicians. After the completion of the project, the production service capacity of 111.5 million mobile phone and wearable lithium battery packaging will be formed in the year of full production.

The implementation of the project will expand the self-supplied proportion of lithium-ion battery cell packaging, thereby providing one-stop service for downstream customers and enhancing Zhuhai Guanyu's overall service capabilities and market competitiveness.

The R&D center upgrade project will further improve Zhuhai Guanyu’s existing R&D conditions, increase research and development investment, and thus continuously enhance R&D capabilities and overall competitiveness. It will help Zhuhai Guanyu maintain its technological advantages in the field of consumer lithium batteries. At the same time, it will lay a solid technical reserve for the active layout of power and energy storage lithium batteries in the future, and take the lead in the research and development of next-generation batteries such as solid-state and lithium-sulfur.

The working capital supplement project will meet the operating working capital needs brought about by the rapid growth of Zhuhai Guanyu's business scale. At the same time, it will help improve Zhuhai Guanyu's financial structure, reduce financial risks, and lay the foundation for Zhuhai Guanyu to consolidate its existing market position and subsequent development.

Regarding future development, Zhuhai Guanyu said that with the continuous expansion of lithium-ion battery application areas and the increasing demand, Zhuhai Guanyu insisted on developing its existing main business, based on the consumer battery field, maintaining its leading position in the notebook computer battery industry, further increasing the market share of mobile phone batteries, and expanding other application areas, such as drone batteries, smart wearable device batteries, etc. In the power battery market, the current business of automobile start-stop batteries and electric motorcycle batteries will be gradually extended to pure electric vehicle batteries and energy storage batteries, and the scale of Zhuhai Guanyu's power battery business will be continuously expanded to enhance market competitiveness, and strive to make Zhuhai Guanyu reach a new level within five years.