Why is it too urgent to make lithium across the border? It is better to be quiet than to chase hot spots.

The price of lithium materials has skyrocketed, so that more listed companies can not resist the impulse to cross the border. On the evening of March 28th, COVID-19 testing unit Xilong Science announced that it intends to acquire 100% stake in Xintai Yinghe New Energy Materials Co., Ltd. (referred to as Yinghe New Energy). Yinghe New Energy is mainly engaged in the research and development, production and sales of cathode materials for lithium-ion batteries, which means that Xilong Science has officially joined the ranks of cross-border lithium.

According to incomplete statistics, at least 23 listed companies have announced their cross-border involvement in the lithium industry chain since last year. Despite the poor performance of the new energy sector this year, lithium materials such as lithium carbonate are in short supply and prices are soaring, making more listed companies red-eyed and trying to share the investment dividends of the lithium industry. On the face of it, most of the listed companies with the new layout of the lithium industry chain are also sought after by investors. Songdu, a recently controversial real estate company, gained 12 boards in 16 days after it was announced that it had entered the Salt Lake to extract lithium.

The industry does not constitute a restriction on the operation of the company. As long as legal compliance, according to their own logic to make judgments, listed companies to enter any field is understandable, the key is whether it is worth doing so? From the point of view of the subject matter of this acquisition, the sale of Xilong Science is in fact a lot of controversy. In 2021, when the performance of listed companies in the lithium battery industry soared, Yinghe New Energy had a revenue of more than 20 million but lost money, and its profitability was obviously insufficient, lagging behind the industry level. Like a large number of cross-border lithium listed companies, Xilong Science has no professional experience in lithium business, and it is uncertain whether it can effectively manage this business in the fierce market competition.

From the trend of the industry, although the new energy industry is still in the policy dividend period, the trend of strict supervision and integration of the whole industry has gradually become clear. Recently, at the High-level Forum of China Electric vehicle Association of 100 people (2022), Vice Minister of Industry and Information Technology Xin Guobin clearly pointed out that it is necessary to promote the rational price of key raw materials, and to further strengthen the overall layout to curb blind investment and repeated construction. This shows that in recent years, the phenomenon of horse racing enclosure and disorderly competition in the new energy industry has attracted the attention of industry regulatory departments. Some securities firms predict that from the current production expansion situation, it is expected that there may be an inflection point between supply and demand in the market by 2023. Xilong Science now enters the bureau, and the real release of production capacity is exactly one or two years later, will the market still be as hot as it is now? Can the company really get an industry dividend? It's all uncertain.

Although any investment has to face uncertainty about the quality of the project and the future of the industry, in recent years, whether it is cross-border wine production or cross-border pig farming, many listed companies are intoxicated. When the liquor sector was very hot in the first half of last year, a large number of listed companies announced that they would make wine across the border, but in less than half a year they announced that they would stop "getting drunk" and leave a place full of chicken feathers. If this wave of cross-border lithium is the same, aren't these different new energy targets all kinds of Maotai town wineries chased by all kinds of capital last year?

The hot spots in the market are always changing, and no company can achieve itself by chasing hot spots. Compared with the horse racing enclosure of several giants in the industrial chain, most of the listed companies that cross the border from outside the lithium industry have no accumulation, nor can they see a clear resonance effect with the original business. The author thinks that, compared with the capital carnival brought by several trading boards, these listed companies should still look farther and more determined. Although it is not enough to "everyone is drunk and I wake up alone", but a cool head is necessary.