Shandong Fengyuan Chemical Co.Ltd(002805)
(No. 1227, Dongshun Road, Taierzhuang District, Zaozhuang City)
Non public offering of A-Shares in 2022
Feasibility analysis report on the use of raised funds
January 2002
1、 Use plan of the raised funds
The total amount of funds raised by the company in this non-public offering does not exceed 940 million yuan. After deducting the issuance expenses, the funds raised will be used in the following directions:
Project name total investment planned to use raised fund No. (10000 yuan) (10000 yuan)
1 production base project of lithium iron phosphate cathode material for lithium battery with an annual output of 50000 tons 92043.56 71400.00
2 supplementary working capital items 23864.39 22600.00
Total 115907.95 94000.00
Note: the above investment amount of raised funds to be used has deducted 10 million yuan of new investment and financial investment to be invested from six months before the resolution of the 12th meeting of the Fifth Board of directors to this offering.
Within the scope of the above-mentioned projects invested with raised funds, the board of directors of the company may appropriately adjust the investment sequence and specific amount of the corresponding projects invested with raised funds according to the actual situation such as project progress and fund demand. Before the raised funds are in place, the company will first invest with self raised funds according to the actual situation of the investment projects with raised funds, and replace them after the raised funds are in place; After the raised funds are in place, if the actual raised funds after deducting the issuance expenses are lower than the total amount of the proposed raised funds, the insufficient part shall be solved by the company through self financing.
2、 Necessity and feasibility analysis of the use of raised funds
(I) production base project of lithium iron phosphate cathode material for lithium batteries with an annual output of 50000 tons
1. Project overview
The main body of the project is Anhui Fengyuan lithium energy technology Co., Ltd., the holding subsidiary of Fengyuan lithium energy, a wholly-owned subsidiary of the company. The total investment of the project is 92.0456 million yuan, and it is planned to use the raised capital of 714 million yuan. The project introduces advanced production equipment at home and abroad and builds a production line of lithium iron phosphate cathode material for lithium batteries with an annual output of 50000 tons. 2. Necessity of project implementation
(1) The fund-raising investment project is conducive to seize the development opportunity of new energy vehicles and meet the growing order demand of downstream customers
Under the background of “carbon peak” and “carbon neutralization”, the substitution of new energy vehicles for fuel vehicles has become an irreversible development trend, and the Shanxi Guoxin Energy Corporation Limited(600617) automobile industry has ushered in a historic development opportunity. According to the data of China Automobile Industry Association, the sales volume of Shanxi Guoxin Energy Corporation Limited(600617) vehicles increased from 777000 in 2017 to 1367000 in 2020, with an average annual compound growth rate of 20.7%. According to the prediction of China Automobile Industry Association, the sales volume of Shanxi Guoxin Energy Corporation Limited(600617) vehicles in 2021 will be 3.4 million, a year-on-year increase of 1.5 times, and that in 2022 will be 5 million, a year-on-year increase of 47%. The development prospect of new energy vehicles is broad.
With the increasing demand for cost reduction and efficiency increase of new energy vehicle manufacturers, the decline of subsidy policies for new energy vehicles, the continuous innovation of power battery technology and the optimization and upgrading of lithium iron phosphate materials, the advantages of lithium iron phosphate batteries such as low cost, high safety and long cycle life are becoming more and more obvious, which promotes the accelerated growth of market demand and the continuous improvement of market share. According to the data of China automotive power battery industry innovation alliance, in November 2021, China Shipbuilding Industry Group Power Co.Ltd(600482) battery output totaled 28.2gwh, with a year-on-year increase of 121.8% and a month on month increase of 12.4%. Among them, the output of ternary battery was 10.4gwh, accounting for 36.8% of the total output, with a year-on-year increase of 42.6% and a month on month increase of 12.9%; The output of lithium iron phosphate battery was 17.8gwh, accounting for 63.0% of the total output, with a year-on-year increase of 229.2% and a month on month increase of 12.0%. From January to November 2021, China Shipbuilding Industry Group Power Co.Ltd(600482) battery output totaled 188.1gwh, a year-on-year increase of 175.5%. Among them, the total output of ternary battery was 82.4gwh, accounting for 43.8% of the total output, with a year-on-year increase of 106.1%; The cumulative output of lithium iron phosphate battery was 105.3gwh, accounting for 56.0% of the total output, with a year-on-year increase of 275.7%.
The lithium iron phosphate industry continues to pick up and grow rapidly, which also brings new potential performance growth points to the company’s cathode material business. The company’s current capacity of lithium iron phosphate cathode material can no longer meet the growing order demand of downstream customers, so it is urgent to expand the capacity scale to meet the demand of downstream customers.
(2) Expanding production capacity is an inevitable choice to enhance the company’s market competitiveness
From the perspective of market competition pattern, the industry pattern of lithium iron phosphate cathode material is relatively scattered, and there are still shuffling opportunities. From the industry level, according to the data of GGII, China shipped 124000 tons of lithium iron phosphate cathode materials in 2020, a year-on-year increase of 41%. The competition pattern presents a relatively scattered situation, has not yet formed an absolute leading manufacturer, and there are still opportunities for reshuffle in the industry. Among them, in 2020, the shipments of Hunan Yuneng and Shenzhen Dynanonic Co.Ltd(300769) were 31000 tons and 30000 tons respectively, with market shares of 25% and 24% respectively, ranking first and second in the industry; The shipment volume of Hubei Wanrun is 21000 tons, accounting for 17% of the market share; Beiteri shipped 17000 tons, accounting for 14% (beiteri has sold the assets of lithium iron phosphate cathode materials to Jiangsu Lopal Tech.Co.Ltd(603906) in 2021).
Data source: GGII
The company’s existing capacity and planned capacity of lithium iron phosphate are shown in the table below:
Capacity status / planning of the project base
Shandong Zaozhuang headquarters phase I 5000 tons has been put into operation
The existing capacity of Shandong Zaozhuang headquarters phase II is 5000 tons, and the conditions for mass production are ready on September 30, 2021
The planned capacity of Anhui Anqing phase I is 25000 tons, and it is planned to invest 25000 tons in Anhui Anqing phase II with the raised funds
The estimated total capacity is 60000 tons
Facing the relatively scattered competition pattern of lithium iron phosphate cathode materials and the expansion of production by companies in the same industry, the company’s existing capacity of 10000 tons of lithium iron phosphate has no scale competitive advantage.
If the company does not expand its production capacity in time, it may be in a disadvantageous position in the future market competition. The investment project of the raised funds will be used for the construction of lithium iron phosphate cathode material with an annual output of 50000 tons in Anqing, Anhui Province, which can effectively supplement the existing production capacity, improve the scale advantage of the company and further enhance the industry position of the company. If the raised investment project and the previous project reach the production capacity smoothly, the company will have a production capacity of 60000 tons of lithium iron phosphate cathode material, which can effectively cope with the increasingly fierce market competition and open up market space. The implementation of the raised investment project is the inevitable choice for the operation and development of the company.
(3) The implementation of this raised investment project is conducive to strengthening the company’s in-depth cooperation with Byd Company Limited(002594) , Guangzhou Great Power Energy&Technology Co.Ltd(300438) and other important customers, and improving the company’s profitability and innovation ability
The company focuses on high-value customer development and technology upgrading. Through the company’s efforts, it has successfully passed the supplier qualification certification of key customers Byd Company Limited(002594) and officially started mass supply in July 2021
According to the production and sales express data of November 2021 released by Byd Company Limited(002594) , the cumulative output of new energy vehicles from January to November 2021 was 161063, with a year-on-year increase of 219.81%, and the cumulative sales volume was 160848, with a year-on-year increase of 216.97%, showing a strong growth momentum. Benefiting from the hot sale of new energy vehicles, Byd Company Limited(002594) power battery installed capacity also showed a rapid growth trend, and its share in China Shipbuilding Industry Group Power Co.Ltd(600482) battery installed capacity also increased significantly. According to the data of China automotive power battery industry innovation alliance, the loading volume of Byd Company Limited(002594) from January to November 2021 was 21.34gwh, accounting for 16.6% of the market, ranking second only to Contemporary Amperex Technology Co.Limited(300750) , and has an obvious leading advantage over subsequent manufacturers. Under the trend of rapid recovery of lithium iron phosphate technology route, Byd Company Limited(002594) as a leading enterprise of lithium iron route, new energy vehicle models have obvious competitive advantages, and the hot sales of vehicles have led to the rapid improvement of lithium iron phosphate battery installation. At this point, the company seizes the opportunity to successfully introduce Byd Company Limited(002594) , which will bring a strong guarantee for the company’s large-scale lithium iron phosphate products. In the third quarter of 2021, the average monthly installed capacity of Byd Company Limited(002594) power battery is 2.4gw h. according to the estimation of 1GW h corresponding to 2500 tons of lithium iron phosphate cathode material demand, Byd Company Limited(002594) needs 6000 tons of lithium iron cathode material in a single month, and the demand is expected to continue to increase. In addition, in November 2021, Fengyuan lithium energy signed a cooperation agreement with Guangzhou Great Power Energy&Technology Co.Ltd(300438) and agreed that Guangzhou Great Power Energy&Technology Co.Ltd(300438) would purchase lithium iron phosphate and lithium nickel cobalt manganate products from Fengyuan lithium energy from December 2021 to December 2022, with a total contract amount of about 800 million yuan.
Through the implementation of the raised investment project, the company can further strengthen the in-depth cooperation with Byd Company Limited(002594) , Guangzhou Great Power Energy&Technology Co.Ltd(300438) and other important customers, give full play to the advantages of technology, market, channel and brand in the industrial chain, improve the company’s profitability, improve the company’s technological innovation ability, promote the company’s market expansion and promote the company’s future sales performance.
(4) Enrich the company’s product structure and improve the company’s comprehensive strength and anti risk ability
With the increasing attention of the new subsidy policy to high energy density and high endurance mileage and the cost pressure caused by the decline of subsidies, all new energy vehicle enterprises will accelerate the replacement of the original system power batteries, one is the ternary power battery with high nickel and low cobalt, and the other is that some models will use lithium iron phosphate power batteries. As a company with lithium iron phosphate and ternary material product lines in the industry, the investment in the construction of lithium iron phosphate cathode material with an annual output of 50000 tons will optimize and enrich the company’s existing product structure and capacity pattern, better meet the existing customers and future market demand, and the significant increase of total capacity will help to form product scale effect and reduce marginal cost, Generate synergy and improve the company’s comprehensive market competitiveness and anti risk ability.
3. Feasibility of project implementation
(1) Policy feasibility: the investment project of the raised funds complies with the national industrial policy
The products produced by the raised funds investment project are mainly used in the manufacturing of lithium iron phosphate batteries, and the terminal is mainly used in the field of new energy vehicles and energy storage. Under the background of accelerating the realization of the goal of “carbon peaking and carbon neutralization”, new energy vehicles and energy storage industry are an important part of building a green, clean and efficient energy system. In recent years, the state has intensively issued a number of relevant policies to support the development of new energy vehicles and energy storage, and formulated a comprehensive policy system from the aspects of macro integration, industry management, tax preference, scientific and technological innovation, promotion and application, infrastructure, etc., so as to drive China’s new energy vehicle industry and energy storage industry into the fast lane.
As an important field of carbon emission reduction, the transformation trend of transportation industry to new energy has been established, and the new energy automobile industry will face unprecedented development opportunities. Since 2020, national ministries and commissions have issued a number of planning and management policies to guide, support, encourage and standardize the development of new energy vehicle industry, such as the development plan of new energy vehicle industry (2021-2035) (GBF [2020] No. 39), the notice on further improving the financial subsidy policy for the promotion and application of new energy vehicles (CJ [2020] No. 593), Promote the sustainable and healthy development of new energy vehicle industry. In the face of large-scale new energy access and consumption in the future, the coordinated and optimized operation of energy storage, new energy development and power system has become the only way to achieve the goal of “double carbon”. In July 2021, the national development and Reform Commission and the National Energy Administration jointly issued the guiding opinions on accelerating the development of new energy storage (fgyg [2021] No. 1051), pointing out that by 2025, the new energy storage will change from the initial stage of commercialization to large-scale development, the installed scale of new energy storage will reach more than 30 million KW, and the comprehensive market-oriented development of new energy storage will be realized by 2030.
(2) Market feasibility: there is a strong demand for power batteries and energy storage batteries, providing a good market foundation for new production capacity
Under the development goal of “carbon peak and carbon neutralization”, the new energy vehicle industry and energy storage industry are developing at a high speed. In the field of new energy vehicles, according to the data of China Automobile Industry Association, the sales volume of Shanxi Guoxin Energy Corporation Limited(600617) vehicles increased from 777000 in 2017 to 1367000 in 2020, with an average annual compound growth rate of 20.7%. According to the prediction of China Automobile Industry Association, the sales volume of Shanxi Guoxin Energy Corporation Limited(600617) vehicles in 2021 will be 3.4 million, a year-on-year increase of 1.5 times, and the sales volume in 2022 will be 5 million, a year-on-year increase of 47%. Benefiting from the rapid development of downstream new energy vehicle industry, the market scale of power battery and cathode materials has grown rapidly. Since 2020, due to the increased attention of downstream terminals to the safety of new energy vehicles, passenger models equipped with lithium iron phosphate batteries have begun to increase. According to GGII data, the installed capacity of power battery in the first half of 2021 was 46.39gwh, of which lithium iron phosphate battery accounted for 37.5%, an increase of 9.7 percentage points over the first half of 2020. Lithium iron phosphate battery
