Divesting Power Batteries! Focusing on Energy Storage! Another Cross-Industry Move by a Publicly Listed Firm

Battery Network reported that recently, Leaptech Technology (300530) announced the divestment of its underperforming power battery business, with its wholly-owned subsidiary selling equipment.

According to the announcement, this transaction is an agreement-based transfer, where Hunan Leaptech sold part of the auxiliary equipment of Plant #1 to Hongxin Construction. The equipment includes a centrifugal chiller unit, a screw air compressor unit (with heat recovery), a horizontal steam boiler, a wastewater treatment system, and a low-voltage withdrawable switchgear assembly, among others. The transaction amount was 48.7468 million yuan.

Leaptech Technology analyzed that with intensified market competition and accelerated technological advancements in the new energy battery industry, the company carried out technical upgrades and end-use product adjustments on the #1 battery cell production line in 2023, converting 135Ah battery cells to 100Ah battery cells. However, it failed to achieve economies of scale, and the unit cost remained higher than that of peers. In 2024, the capacity utilisation rate of the #1 battery cell production line was low, primarily due to the digestion of prior inventory of 135Ah and 100Ah battery cells, generating sales revenue of approximately 25.7967 million yuan.

In 2024, Leaptech Technology gradually shifted its focus to producing 280Ah and 314Ah energy storage battery cells on the #3 production line and concentrated on the energy storage system business. Additionally, based on the company's and its subsidiaries' business adjustment needs, Hunan Leaptech, a wholly-owned subsidiary, reached an agreement with Hongxin Construction to terminate the "Lease Agreement for Production Line #1" on November 19, 2024. The sale amount of part of the auxiliary equipment in Plant #1 was 48.7468 million yuan. As of September 30, 2024, the book value of the sold auxiliary equipment in Plant #1 was 50.7983 million yuan, and the impact on the current period's profit and loss from this equipment sale was 2.0465 million yuan.

Leaptech Technology stated that the lease termination of Production Line #1 and the sale of part of the auxiliary equipment in Plant #1 would not affect the delivery of the company's current orders on hand. Subsequently, the company will primarily focus on digesting prior inventory, which will not have a significant impact on its normal operations. The sale of part of the auxiliary equipment in Plant #1 to Hongxin Construction aligns with the company's strategy to gradually divest its underperforming power battery business, consolidate resources, and focus on the development of higher-margin energy storage batteries and systems. This move is conducive to improving the financial position, enhancing asset utilisation efficiency and profitability, and increasing the company's working capital reserves.

Additionally, on the same day, Leaptech Technology announced that its wholly-owned subsidiary had signed a "Lease Agreement" involving a related-party transaction. This related-party transaction was primarily based on the production and operational needs of the company's focus on energy storage batteries and systems. The leased assets include battery cell production line plants and auxiliary equipment, pilot line plants, large-scale storage line plants, module line plants, and equipment, ensuring the subsidiary's R&D, production, and daily operations in the new energy battery sector.

According to public information, Leaptech Technology was established in 2002 and was listed on the Shenzhen Stock Exchange's ChiNext A-share market in August 2016. In 2020, the company ventured into the new energy power battery industry, forming a dual-core business model of "new energy batteries + surface engineering chemicals." The company's product line spans from battery cells and modules to system integration, with comprehensive deployment in three major application fields: NEVs, energy storage, and construction machinery.

On the customer side, Leaptech Technology has continuously secured orders from power battery clients such as SAIC-GM-Wuling, Beijing Automobile Works, Jiangsu Jinpaike, and Hengtian Lingrui. In the energy storage sector, the company has developed a full range of energy storage products, including over 20 types for the power generation and grid side, commercial and industrial side, and residential energy storage. These products are exported to more than ten countries, including South America and Europe.