Hunan Zhongke Electric Co., Ltd. (300035.SZ) is making an "ambitious" 8 billion yuan investment to establish an overseas anode material base, but the Morocco project, another overseas base, has been delayed.
According to an announcement by Hunan Zhongke Electric, the company plans to invest in Oman to establish a project company through its Hong Kong wholly-owned subsidiary, Zhongke Shinzoom (Hong Kong) Holdings Limited, a subsidiary of its holding subsidiary Hunan Zhongke Shinzoom Graphite Co., Ltd. The project aims to implement an integrated base for the production of 200,000 mt of lithium-ion battery anode materials annually, with a total investment not exceeding 8 billion yuan. The project will be constructed in two phases, each with a planned capacity of 100,000 mt per year, and the construction period for each phase is expected to be 36 months.
Meanwhile, the announcement mentioned that to ensure the steady and orderly progress of the company's overseas investments, the previously approved "Morocco Integrated Base Project for the Production of 100,000 mt of Lithium-ion Battery Anode Materials Annually" will be postponed. Hunan Zhongke Electric's Morocco project was proposed on April 26, 2024, with a planned total investment not exceeding 5 billion yuan to implement an integrated base for the production of 100,000 mt of lithium-ion battery anode materials annually.
From the perspective of Hunan Zhongke Electric's financial situation, it may be challenging to support an investment of 8 billion yuan.
According to the company's first-quarter report data, as of March 31, the company's monetary funds amounted to 524 million yuan, and total current assets were 6.826 billion yuan. Meanwhile, short-term borrowings reached 2.467 billion yuan, and current liabilities were 4.619 billion yuan.
On May 30 earlier this year, Hunan Zhongke Electric also issued an "Announcement on the Progress of Guarantees Provided Between the Company and Its Subsidiaries." Approved at the ninth meeting of the sixth board of directors on October 28, 2024, and the second extraordinary general meeting of shareholders in 2024 on November 13 of the same year, it was agreed that the total amount of guarantees provided between the company and its subsidiaries should not exceed 10.5 billion yuan, with a validity period of one year from the date of approval at the second extraordinary general meeting of shareholders in 2024. As of the announcement date, the actual total amount of external guarantees incurred by the company and its subsidiaries was 6.282 billion yuan, accounting for 132.27% of the company's latest audited net assets. The company and its subsidiaries have no overdue external guarantees, nor have they provided guarantees for shareholders, actual controllers, or their related parties.
Hunan Zhongke Electric mentioned in the announcement that the total planned investment for this project does not exceed 8 billion yuan (subject to the actual investment amount). The funding sources are self-owned funds and financing (including but not limited to bank project loans, introducing strategic investors, etc.). Meanwhile, the announcement also highlighted risks, noting that the large planned total investment for this project poses certain financial pressures and the risk that funding may not be raised in a timely manner.
In fact, since the beginning of this year, numerous domestic publicly listed lithium battery firms have been frequently taking actions in overseas capacity expansion and order acquisition. On June 2, Lopal Technology (603906.SH) secured a "major order" worth 5 billion yuan for its overseas factory; in March, Easpring Technology (300073.SZ) signed a long-term supply agreement worth 14 billion yuan with LGES.
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