After the failure of the prospectus submitted on the Hong Kong Stock Exchange in October last year, Lopal Technology (603906.SH), a leading manufacturer in the global lithium iron phosphate cathode material market, recently sprinted to the Hong Kong Stock Exchange again.
If it successfully lands in the Hong Kong stock market, Lopal Technology will become an "A+H" listed company.
In recent years, Lopal Technology has lost popularity in the capital market, and after the stock price peaked in November 2021, it started a thousand-mile mode, and now the market value is only more than 50 billion yuan, which is embarrassing.
Despite the challenges brought by the industry, Lopal Technology's ambitions for expansion are still not small. For the use of the funds raised in the Hong Kong stock listing, Lopal Technology intends to be mainly used for the expansion of lithium iron phosphate cathode material production capacity in Indonesia and lithium manganese iron phosphate production capacity in Hubei.
The performance has changed dramatically, with a loss of more than 1.2 billion last year
Founded in 2003, Lopal Technology is mainly engaged in the production and sales of environmentally friendly fine chemicals for vehicles, and later entered the new energy vehicle market in 2020 and laid out the production capacity of lithium iron phosphate cathode materials.
With the significant progress made in the transformation, the lithium iron phosphate cathode material business will take over the automotive fine chemicals in 2022 and become the main revenue force of Lopal Technology.
However, in 2023, the domestic lithium battery value chain will be affected by the imbalance between supply and demand in the industry, and the upstream lithium iron phosphate cathode material market will usher in a change, and product prices will plunge in the context of oversupply.
Wind data shows that since 2021, the price of domestic lithium iron phosphate cathode materials has shown a "figure eight" trend, and has fallen all the way after peaking at the end of 2022, although the price of lithium iron phosphate cathode materials has remained stable since the beginning of this year, it has fallen to the level of early 2021, falling by more than 7% compared with the highest point in 2022.
Lung Poon Technology is naturally not spared, although the sales of lithium iron phosphate cathode materials will increase in 2023, the average selling price has been cut in half, from 128,700 yuan/ton in 2022 to 62,500 yuan/ton in 2023. In 2023, the capacity utilization rate of this business will drop sharply to 57.6%, the revenue will decrease by 44.8% year-on-year to 6.754 billion yuan, and the gross profit margin will turn from positive to negative to -8.1%.
The change of lithium iron phosphate cathode material business has brought a huge blow to the overall performance of Lopal Technology. In 2023, the company's total revenue fell by 38% to 8.729 billion yuan, and turned from profit to loss, recording a net loss attributable to the parent company of 1.233 billion yuan, compared with a net profit of 753 million yuan in 2022.
Lopal Technology said in the prospectus that due to the decline in raw material prices, the amount of inventory recoverable decreased, so the company recognized an inventory impairment loss provision of 555 million yuan in 2023.
According to the recently released financial report, in the first quarter of this year, Lopal Technology still failed to turn around its losses, with revenue falling 29.24% year-on-year to 1.474 billion yuan, and a net loss of 78.045 million yuan, a year-on-year decrease of 64.96%, mainly due to the loss of profits in the lithium iron phosphate cathode materials business.
However, CICC poured cold water on the market, and the bank recently said in a research report that considering the sharp decline in lithium carbonate prices and the inventory impairment of Lopal Technology, the bank lowered its profit forecast for 2024 to 450 million yuan and introduced a profit forecast of 990 million yuan for 2025.
Sales growth was sluggish, and market share declined
Since entering the lithium iron phosphate cathode material track, Lopal Technology has performed well in customer expansion capabilities, and has won orders from leading lithium battery manufacturers such as CATL (300750.SZ), Ruipu Lanjun (00666.HK), Xinwangda (300207.SZ) and EVE Lithium Energy (300014.SZ).
The leading enterprises in the lithium battery market in mainland China have obvious advantages and high market concentration, so Lopal Technology has the problem of high customer concentration. From 2021 to 2023, the top five customers accounted for 42.9%, 80.0% and 64.5% of the Company's total revenue in the corresponding periods, respectively, of which CATL accounted for 30.3% of the revenue in 2023.
According to the statistics of Gaogong Lithium Battery, the shipment volume of the lithium battery cathode market in mainland China in 2023 will be 2.48 million tons, a year-on-year increase of 31%, of which the shipment of lithium iron phosphate cathode materials will reach 1.65 million tons, a year-on-year increase of 48.3%. In 2023, the sales volume of lithium iron phosphate cathode materials of Lopal Technology will grow sluggishly, with a year-on-year increase of only 13.7%.
In contrast, Lopal Technology's peer companies will have quite bright orders in 2023, such as Hunan Yuneng (301358.SZ) lithium iron phosphate cathode material sales increased by 56.49% year-on-year, and German nano (300769.SZ) phosphate cathode material sales increased by 24.15% year-on-year, both of which are significantly better than Lopal Technology.
It is not difficult to speculate that Lopal Technology's market share in the lithium iron phosphate cathode material market has declined, and the data listed in the company's prospectus also proves this.
According to the prospectus disclosed in October last year, in 2022, in terms of sales volume, Lopal Technology will have a market share of 8.6% in the global lithium iron phosphate cathode material industry, ranking third. In 2023, Lopal Technology's market share will decline significantly, at 6.5%, ranking fourth.
Entering 2024, Lopal Technology suddenly ushered in heavy good news, in February this year, its subsidiary signed a large order of more than 7 billion yuan, and will sell 160,000 tons of lithium iron phosphate cathode materials to South Korean power battery manufacturer LGES from 2024 to 2028. If the contract can be successfully performed, it will help Lopal Technology to increase its market share and revenue level, and have a positive impact on the company's future performance.
Author: Far away