On January 6, 603399.SH announced that it plans to buy Ningbo Yongshan Lithium Industry 100% stake in Hunan Yongshan Lithium Industry for 480 million yuan in cash. Ningbo Yongshan, a subsidiary of 600884.SH. This acquisition means that Jixiang officially extends its business sector to the promising field of lithium new energy, and also indicates that Shanshan will focus on the two core businesses of polarizer and lithium battery negative materials, optimize the allocation of resources, and further improve the competitiveness of the company.
It is reported that Hunan Yongshan lithium industry mainly produces lithium carbonate and lithium hydroxide and other products, which are the main raw materials of cathode materials for lithium batteries, and downstream applications include power batteries and energy storage batteries. In recent years, new energy vehicles and other downstream industries have developed rapidly. With the company's sufficient financial support and professional operation and management, Yongshan lithium industry will have good development prospects and can provide better performance returns for the company.
From the point of view of the industry, the production and sales of new energy vehicles are increasing rapidly, and the permeability continues to increase rapidly. From January to November in 2021, domestic sales of new energy vehicles were 2.928 million, an increase of 179% over the same period last year, with a penetration rate of 12.5%, of which the monthly penetration rate in November was about 18%. According to the China Automobile Association, total car sales in China will be 27.5 million in 2022, an increase of 5.4 per cent over the same period last year. Of these, sales of new energy vehicles are 5 million, up 47 per cent from the same period last year, and the penetration rate of new energy vehicles is about 18.2 per cent. Analysts at AVIC Securities said in a recent research report that the proportion of new energy vehicles in China is expected to reach 33% in 2025.
The strong growth of various financial indicators of Hunan Yongshan lithium industry further demonstrates the potential of the company. Financial data show that as of September 30, 2021, Hunan Yongshan Lithium Industry had total assets of 747 million yuan and net assets of 301 million yuan, an increase of 40.15% compared with 215 million yuan at the end of 2021. From January to September 2021, Hunan Yongshan Lithium Industry had revenue of 27.4701 million yuan, an increase of 1704.75% over the whole year of 2020, and net profit of 6.3145 million yuan in the same period, compared with net profit in 2020.
This acquisition will also form a good business synergy. It is understood that Jixiang shares for molybdenum metal production and processing enterprises, relying on years of large-scale production and diversified sales channel advantages, has become a large domestic molybdenum industry enterprises. However, affected by macroeconomic fluctuations, changes in upstream and downstream market demand and other factors, the molybdenum industry fluctuates greatly, which leads to the performance fluctuation of the company in recent years. This acquisition will further optimize the company's product structure and reduce the impact of fluctuations in the molybdenum industry on the company's operating performance.
In addition, Jixiang's original smelting business and Hunan Yongshan lithium industry belong to the mineral processing industry, and the company has rich industry experience in this field and has strong industrial cooperation with Hunan Yongshan lithium industry. After the completion of this transaction, Jixiang will continue to focus on the processing and production of metal minerals to improve the company's anti-risk ability and sustainable profitability.
It is worth mentioning that because Jixiang shares and Shanshan shares belong to the same actual controller Zheng Yonggang, this transaction constitutes a related party transaction, but does not constitute a major asset restructuring. Shanshan shares also announced the sale of the shares at the same time. At present, it has been examined by the board of directors and needs to be examined and approved by the general meeting of shareholders of Jixiang shares.
As far as Shanshan shares are concerned, the sale of Hunan Yongshan lithium shares is intended to focus on the company's core business development, optimize the allocation of resources, and further enhance the company's core competitiveness. At present, Shanshan Co., Ltd. is strengthening and highlighting the development strategy of the two core businesses of polarizer and lithium battery anode materials.
Listed companies made it clear in the announcement: "with the strategic adjustment of Shanshan shares, this asset sale aims to further deepen the company's specialized development strategy, focus on the development of polarizer and lithium battery anode materials, and optimize the allocation of resources. enhance the core competitiveness of Cedar shares."
Specifically, Shanshan's sale of Hunan Yongshan lithium industry is mainly based on its own strategic adjustment, on the one hand, as Shanshan's positive pole business has reached a joint venture and cooperation with BASF SE ((hereinafter referred to as "BASF"), and the company's raw material procurement will be incorporated into BASF's global supply chain management system, Hunan Yongshan lithium's original plan to supply lithium salt and other raw materials for Shanshan's positive business also came to an end. It is reported that the cooperation between Shanshan and BASF was completed at the end of August 2021. BASF and the company hold 51% and 49% shares in the positive business joint venture company, respectively, and the positive business subsidiary is changed into a joint venture company.
On the other hand, Hunan Yongshan is currently in the period of construction investment, and it still needs continuous capital investment and operating capital support in the future. In addition, with the transfer of positive business control, the synergy of the industrial chain is limited. Obviously, this transaction, in terms of Shanshan shares and Jixiang shares, is a win-win situation.
