A shares will usher in the first listed company with electrolyte additives as its main business. On February 17, Huasheng lithium successfully passed the review of the municipal Party Committee on the science and innovation board and will soon land in a shares. It is worth noting that Byd Company Limited(002594) directly holds 1.98% of Huasheng lithium battery.
main electrolyte
Founded in 1997, Huasheng lithium battery focuses on the R & D, production and sales of electrolyte additives for lithium batteries. Its products mainly include electronic chemicals and special silicone. Among them, in the field of electronic chemicals, the company is one of the leading suppliers of vinyl carbonate (VC) and fluorovinyl carbonate (FEC), and its products are widely used in new energy vehicles Electric two wheeled vehicles, electric tools, UPS power supply, mobile base station power supply, photovoltaic power station, 3C products and other fields.
Huasheng lithium battery entered the lithium battery electrolyte additive Market in 2003 and has directly reached cooperation with well-known lithium battery industry chain manufacturers at home and abroad, including Mitsubishi Chemical, Byd Company Limited(002594) , Guangzhou Tinci Materials Technology Co.Ltd(002709) , Cathay Huarong, Ningbo Shanshan Co.Ltd(600884) .
According to the data of China Battery Industry Association, the market share of lithium-ion battery electrolyte additives produced by Huasheng lithium battery from 2018 to 2020 ranks first among similar products in China. Under the background of the rapid development of new energy vehicle industry at home and abroad, the demand of lithium battery electrolyte industry in the world is increasing, and the production capacity is expanding rapidly, driving the continuous growth of the demand for VC, FEC and other additive products.
From 2018 to the first half of 2021, the operating revenue of Huasheng lithium battery was 369 million yuan, 423 million yuan, 445 million yuan and 383 million yuan respectively, which showed an overall upward trend, mainly due to the continuous increase in the demand of downstream customers of lithium battery electrolyte additives; The net profit attributable to the parent company was 60.3215 million yuan, 75.9309 million yuan, 78.0302 million yuan and 121 million yuan respectively. During the reporting period, Huasheng lithium battery products were mainly vinyl carbonate (VC) and fluorovinyl carbonate (FEC), accounting for about 85% of the revenue.
In terms of the annual performance in 2021, Huasheng lithium battery is expected to realize an operating revenue of 930 million yuan to 990 million yuan, with a year-on-year increase of 109.14% to 122.64%, and the net profit attributable to the parent after deduction is 337 million yuan to 386 million yuan, with a year-on-year increase of 410.02% to 484.29%.
According to the prospectus, Shen Jinliang and Shen Ming jointly control the voting rights of 81.31% shares of Huasheng lithium battery, and are the controlling shareholder and actual controller of the company. It is worth noting that as of the signing date of the prospectus, Byd Company Limited(002594) directly holds 1.98% of the shares of the company.
raising 700 million to expand production
Huasheng lithium intends to raise 700 million yuan in this IPO, mainly investing in the projects with an annual output of 6000 tons of ethylene carbonate, 3000 tons of fluoroethylene carbonate and the construction of R & D center.
Since September 2020, under the influence of multiple factors such as the introduction of a series of relevant policies to encourage and support the development of new energy vehicle industry and the strong demand for new energy vehicles, there has been a strong demand for all kinds of products in the electrolyte industry chain, and the shortage of additive products of Huasheng lithium battery due to capacity constraints has continued to this day. In order to alleviate the tight supply situation, downstream electrolyte manufacturers have gradually increased their production scale in the field of additives, so as to improve the self-production rate of raw materials. The strategy of “integrated operation” of downstream customers may lead to the decline of the scale of additive products directly purchased from Huasheng lithium battery, which will have a certain impact on the sustainability of the company’s business income and the stability of bilateral cooperation.
It is worth noting that the addition proportion of VC, the main product of Huasheng lithium battery, in the electrolyte is generally about 1% – 3%, of which the addition proportion in the electrolyte of ternary battery is 1% – 2%, while in the electrolyte formula of lithium iron phosphate battery, the addition proportion of VC will be higher, generally 3% – 5%. In recent years, as the product performance and cost advantages of lithium iron phosphate battery have gradually become prominent, its shipment has increased significantly.
According to the data of lithium battery research institute of Gaogong, the shipment of lithium iron phosphate battery increased by 270% year-on-year in 2021, which led to the continuous shortage of Huasheng lithium battery VC products in the market in 2021, and the product price and gross profit margin increased significantly. However, if the ternary battery technology route significantly replaces the market share of lithium iron phosphate battery technology route in the future, it may reduce the market demand of the company’s main product VC, and the continuous growth of the company’s revenue and operating performance will be adversely affected.
On February 17, when the municipal Party Committee deliberated on the science and innovation board, it also asked about the impact of Huasheng lithium battery on the evolution of lithium battery technology route. The municipal Party committee asked Huasheng lithium battery to make supplementary disclosure, analyze the prospect of replacing liquid lithium-ion battery with hydrogen fuel cell and solid-state lithium-ion battery, explain whether the market space of the company’s existing main products will be significantly compressed under the background that liquid lithium-ion battery may be replaced, and make supplementary disclosure of relevant risks in the tips of major matters in the prospectus.
