Zhenhua New Materials Co., Ltd. IPO plans to raise 1.2 billion yuan to expand the production of ternary cathode materials after the meeting.

On June 11, the Shanghai Stock Exchange announced the results of the 36th review meeting of the Kechuang Board listing Committee in 2021 that Guizhou Zhenhua New Materials Co., Ltd. (referred to as "Zhenhua New Materials") was first approved.

According to public data, Zhenhua New Materials was established in April 2004, and its controlling shareholder is China Zhenhua Electronics Group Co., Ltd., which is the only enterprise specializing in the R & D, production and sales of lithium-ion battery materials under (CEC) of China Electronic Information Industry Group Co., Ltd. The company uses cathode materials in the field of new energy vehicles, including medium nickel, medium high nickel and high nickel, including various types of primary large single crystal nickel cobalt manganate ternary cathode materials (NCM), is the company's core competitive products; consumer electronics cathode materials, mainly including high voltage lithium cobalt oxide, composite ternary cathode materials and primary particle large single crystal ternary cathode materials.

This time, IPO, Zhenhua New Materials intends to raise 1.2 billion yuan. After deducting the issuance expenses, it will invest in the lithium-ion battery cathode material production line construction project (Shawen II) (proposed to raise 650 million yuan), lithium-ion power battery ternary material production line construction (Yilong II) (proposed to raise 200 million yuan) and supplementary liquidity (proposed to raise 350 million yuan).

Among them, the main body of the lithium-ion battery cathode material production line construction project (Shawen II) is Guiyang Xinliao, a wholly owned subsidiary of Zhenhua New Materials, with a total investment of 780.57 million yuan. After the completion of the project, it will form an annual production capacity of 12000 tons of cathode materials for lithium-ion batteries, including ternary cathode materials, lithium cobalt and composite ternary.

The main body of the construction of lithium-ion power battery ternary material production line (Yilong Phase II) is Yilong Xincai, a wholly owned subsidiary of the issuer, with a total investment of 1.12325 billion yuan. After the completion of the project, it will form an annual production capacity of 20,000 tons of ternary materials for lithium-ion power batteries.

In terms of customers, since 2004, Zhenhua Xinliao has successively entered the supply chain of well-known domestic lithium-ion battery manufacturers, and has become an important supplier of cathode materials for domestic battery manufacturers, such as Ningde era, Funeng Technology, New Energy Technology (ATL), Weihong Power, Tianjin Lishen, Zhongshan Tiantao, Duofuo, Zhuhai Guanyu, Huizhou Liwei and other domestic battery manufacturers.

In terms of performance, Zhenhua Xinliao draft shows that from 2018 to 2020 and the first quarter of 2021, the company's operating income was 2.655 billion yuan, 2.428 billion yuan, 1.037 billion yuan and 987 million yuan respectively, and its net profit was 69.3211 million yuan, 33.7636 million yuan,-169.5464 million yuan and 76.8923 million yuan respectively.

Zhenhua Xincai said that in 2020, due to the delay in the execution of some orders and the loss of production shutdown caused by the outbreak of novel coronavirus, the company's current operating income did not reach the break-even point and its net profit was at a loss. From January to March in 2021, with the recovery of demand in the downstream market and the early postponement of order execution, the company turned losses into profits.

Battery net noted that the business of ternary cathode materials was the main component of Zhenhua's business income, accounting for more than 85% during the reporting period.

From 2018 to 2020 and the first quarter of 2021, the sales revenue of the company's ternary cathode materials was 2.534 billion yuan, 2.363 billion yuan, 886 million yuan and 909 million yuan respectively, of which the proportion of sales revenue of nickel 5 series products in the company was 99.97%, 96.70%, 91.48% and 77.97% respectively, and that of medium and high nickel 6 series products was 0.01%, 2.53%, 1.89% and 0.48%, respectively. The proportion of sales revenue of high nickel 8 series products is 0.02%, 0.77%, 6.27% and 21.55%, respectively.

The increase in the proportion of sales of high nickel 8 series NCM ternary materials with relatively high gross profit margin is the main reason for the increase of gross profit margin of Zhenhua new materials from January to March in 2021. The company's high-nickel 8-series NCM ternary materials were sent to customers in 2018, began to supply in 2019, and achieved sales of 113.56 tons, 408.06 tons and 1286.38 tons from January to March in 2019, 2020 and 2021 respectively, showing an increasing trend.

In addition, combined with the demand plan of major customers, the average sales price of high-nickel 8-series NCM ternary materials in the first quarter of 2021 and the market forecast and careful calculation, Zhenhua Xincai expects the company's sales income of high-nickel 8-series NCM ternary materials to achieve 14.07 to 1.865 billion yuan in 2021, accounting for about 40% of the company's main business income in 2021, which is an important guarantee for the continuous growth of the company's business income in 2021 and subsequent years.