Another lithium material enterprise IPO will be there for a while! BYD shares in Ningde era / Divine material and other long-term cooperation!

On February 17th, Jiangsu Huasheng Lithium Electric Materials Co., Ltd. (referred to as "Huasheng Lithium Power") successfully passed the review of Science and Technology Innovation Board's listing Committee and will soon land in A shares!

Huasheng Lithium Power Co., Ltd., founded in 1997, is an enterprise specializing in the research, development, production and sales of lithium battery electrolyte additives. The company's main products are electronic chemicals and special silicone series, which have highly covered China's domestic market and exported to Japan, South Korea, the United States, Europe, Southeast Asia and other countries and regions.

In the field of electronic chemicals, Huasheng Lithium is one of the suppliers of vinyl carbonate (VC) and fluoroethylene carbonate (FEC), and its products are widely used in new energy vehicles, electric two-wheelers, power tools, UPS power supplies, mobile base station power supplies, photovoltaic power stations, 3C products and other fields.

IPO, Huasheng Lithium Power plans to raise 700 million yuan for the "annual production of 6000 tons of ethylene carbonate, 3000 tons of fluoroethylene carbonate project" and "R & D center construction project" and so on.

The project with an annual output of 6000 tons of vinyl carbonate and 3000 tons of fluoroethylene carbonate has a total investment of 873.5 million yuan and is located in the Yangtze River International Chemical Industrial Park in Zhangjiagang City.

The project increases the production scale of lithium battery electrolyte additives through new workshops and new equipment, with an annual increase of 6000 tons of vinyl carbonate, 3000 tons of fluoroethylene carbonate, 20675 tons of hydrochloric acid, 49089 tons of sodium hypochlorite, 7977 tons of sodium chloride, 4265 tons of potassium chloride and KF mixed salt.

According to the prospectus, "the company invests in the above-mentioned projects with its own funds, and after the funds raised are in place, it will use the raised funds to replace this part of its own funds." If the net amount of funds raised cannot meet the funding needs of the above-mentioned projects, the company will raise funds by itself through bank loans and other means. "

BYD participates in shares and cooperates for a long time.

According to the prospectus, BYD repeatedly transferred Huasheng Lithium shares in February 2021 to 492000 shares held by Huizhang Venture Capital (accounting for 0.6 per cent of Huasheng Lithium Power's registered capital), 82000 shares (0.1 per cent) held by Dingtiansheng in the transfer of 1.5 million yuan, and 1.0496 million shares (1.28 per cent) held by Dunhang No.2 and Dunhang No. 3, transferees of 19.2 million yuan.

In other words, BYD spent a total of 29.7 million yuan to acquire 1.6236 million shares of Huasheng Lithium Power, with a shareholding ratio of 1.98%, ranking the 12th largest shareholder.

In terms of customers, Huasheng Lithium's main customers in the domestic market include lithium battery industry chain manufacturers such as BYD, Tianci Materials, Ningde Times, Guotai Huarong, Shanshan shares, as well as trade-oriented enterprises such as Jiangsu Huihong and Jiangsu Suhao; export customers include Mitsubishi Chemical and other lithium-ion battery electrolyte production enterprises, high chemistry, SKYE&M and other trade enterprises, as well as special silicone products customers such as Covestro, Evonik, Merck.

Among them, Divine Materials, BYD, Ningde Times and other companies have signed long-term cooperation agreements with Huasheng Lithium Power:

In August 2021, Ningde Times signed a "Cooperation Agreement" with Huasheng Lithium Power. Ningde Times will purchase vinyl carbonate products directly from Huasheng Lithium Power. The agreed supply is: 400 tons / year in 2021, 1120 tons / year in 2022, and 3360 tons / year from 2023 to 2025.

In September 2021, BYD and Huasheng Lithium Power signed a long-term cooperation agreement. According to the agreement, the supply of vinylidene carbonate is 240t / an in 2021, 800t / year in 2022 and 3120 t / year from 2023 to 2025. The supply of fluorinated vinyl carbonate is 40t / year in 2021, 160t / year in 2022 and 600t / year from 2023 to 2025.

In September 2021, Tianzhi material and Huasheng Lithium Power signed a long-term cooperation agreement to purchase Huasheng Lithium Electric Fluoroethylene Carbonate products with a supply of 200 tons / year in 2021, 660 tons / year in 2022 and 960 tons / year from 2023 to 2024.

In Huasheng Lithium Power's top five customer list from January to June in 2021, Tianci material is the largest customer with a proportion of 33.09% of Huasheng Lithium Power's operating revenue, while BYD is the fourth largest customer with 9.58% of Huasheng Lithium's operating revenue.

Pre-increase of net profit by more than four times in 2021

According to the prospectus, the market share of lithium-ion battery electrolyte additives produced by Huasheng Lithium Power from 2018 to 2020 ranks first among similar products in China.

For example, according to QYResearch statistics of the major manufacturers of lithium battery electrolyte additives in the global market in 2019, Huasheng Lithium ranked first with a market share of 22.19%.

For another example, according to the global market share of electrolyte additives in 2020, Huasheng Lithium Power ranked first with a market share of 20.89%, according to the statistics of Ivy Economic Research Institute.

In terms of performance, according to the prospectus data, Huasheng Lithium achieved revenue of 369 million yuan, 423 million yuan and 445 million yuan respectively from 2018 to 2020, rising year by year; net profit of 60.95 million yuan, 76.08 million yuan and 77.366 million yuan respectively.

From January to September 2021, Huasheng Lithium Power achieved revenue of 691 million yuan, an increase of 135.61 percent over the same period last year, and a net profit of 265 million yuan, an increase of 563.93 percent over the same period last year.

Washington Lithium said that since the fourth quarter of 2020, the demand for downstream applications of the company's main products has increased significantly, the products are in short supply, and the sales price of the products has increased significantly. As a result, business income increased significantly from January to September in 2021, an increase of 135.61% over the same period in 2020. Affected by the rising price of lithium battery electrolyte additives, the company's comprehensive gross profit margin also increased significantly from January to September 2021, making the company's non-return net profit increased by 666.95% compared with the same period in 2020.

Huasheng Lithium Power also expects revenue of 930 million to 990 million in 2021, a year-on-year increase of 109.14% to 122.64%, and net profit of 337 million yuan to 386 million yuan, up 410.02% to 484.29%.

In terms of production capacity, Huasheng Lithium Power currently has two production bases in Zhangjiagang Phase I and Phase II, as well as Taixing Huasheng, a wholly-owned subsidiary, with an annual production capacity of 5000 tons of VC and FEC products. From 2018 to 2020, the VC and FEC production capacity of Huasheng Lithium Power is 3000 tons and 2000 tons respectively, and the capacity utilization rate is increasing year by year. In 2020, the capacity utilization rate of Huasheng lithium power's main products is about 80%, and the production and sales rate of VC and FEC is more than 98%.

Finally, Huasheng Lithium pointed out that increasing the production scale of lithium battery electrolyte additives through new workshops and new equipment will help to increase the company's production capacity, meet market demand, expand market share, consolidate industry position, and improve intelligent and clean production and profitability.