A few days ago, Ganfeng Lithium (002460. SZ) announced that the company signed an agreement with Guizhou Anda Technology Energy Co., Ltd. (hereinafter referred to as "Anda Technology"), and Anda Technology transferred 60% of the equity (unpaid capital contribution) held by Inner Mongolia Autonomous Region Anda New Energy Technology Co., Ltd. (hereinafter referred to as "Inner Mongolia Anda") to the company at a price of 1 yuan. After the completion of this transfer, the company will fully control Inner Mongolia Anda. It should be noted that Inner Mongolia Anda is a joint venture established by the company and Anda Technology.
Titanium Media APP noticed that Inner Mongolia Anda was established only about half a year, and Anda Technology was eager to withdraw or was in trouble due to its own operation. From the perspective of the lithium battery industry chain, the midstream lithium iron phosphate market is sluggish, and the upstream lithium mines and lithium salts are no longer booming, and the company's operating performance is affected. In this context, the company's contrarian layout is likely to be determined by the business strategy of "heavy assets" layout of the industrial chain in recent years.
The seller exits or is in trouble due to business
In October 2023, the company signed an agreement with Anda Technology to jointly establish a joint venture company, Inner Mongolia Anda, to invest in the construction of a lithium iron phosphate cathode material manufacturing project with an annual output of 20,000 tons. Among them, Inner Mongolia Anda has a registered capital of 50 million yuan, the company holds 40% of the shares, and Anda Technology holds 60% of the shares. After the completion of the project, the two parties shall give priority to the supply of raw materials and product sales of the joint venture company according to the market price or the price and proportion agreed by both parties.
However, only about half a year after the establishment of Inner Mongolia Anda, Anda Technology chose to withdraw. According to the agreement, Anda Technology will transfer its 60% equity (unpaid capital contribution) held by Inner Mongolia Anda to the company at a price of 1 yuan, and the corresponding registered capital of 60% equity is 30 million yuan, and the company will bear the obligation of capital contribution in the future.
Titanium Media APP found that the reason why Anda Technology withdrew may be due to operational difficulties.
Founded in 1996, Anda Technology is a manufacturer of cathode materials for lithium iron phosphate batteries in China, and its main products are widely used in the domestic lithium iron phosphate power battery industry.
Since the end of 2022, the price of lithium carbonate has been declining, and the industry environment of lithium battery materials has changed significantly.
From the perspective of production capacity, data from the Power Battery Application Branch shows that in the first half of 2023, the cumulative output of Continental Power's lithium iron phosphate batteries will be about 194GWh, while the installed capacity will only be 103.9GWh, and the production installation rate will only be 53.6%, that is, nearly half of the "relative overcapacity". According to the Wood Mackenzie report, the lithium iron phosphate cathode materials market will remain in a state of oversupply until 2035.
From the price point of view, the average price of lithium carbonate in 2022 will be as high as 482,400 yuan/ton, and the average price of lithium iron phosphate cathode materials in 2022 will be 125,000 yuan/ton, an increase of 127.3% year-on-year. At the beginning of 2023, the price of lithium iron phosphate was even as high as 166,500 yuan/ton, but at the end of the year, it dropped to 44,000 yuan/ton, and the price was less than one-third.
In this context, Anda Technology's performance is bound to be under pressure. In 2023, Anda Technology will have a net profit loss of 634 million yuan, and a net loss of 163 million yuan in the first quarter of 2024, turning from profit to loss year-on-year.
The industry as a whole is sluggish, and the performance of other cathode material companies is hardly optimistic. Hunan Yuneng will achieve revenue of 4.52 billion yuan in the first quarter of 2024, a year-on-year decrease of 65.69%; The net profit attributable to the parent company was 159 million yuan, a year-on-year decrease of 43.56%.
In this regard, Hunan Yuneng believes that the competition in the industry will be more fierce in 2024, and the clearing of backward production capacity in the industry will become the main theme. At present, cathode material companies are experiencing a difficult moment of high production costs, low processing costs, and weakened profitability.
Buyer's performance declined, and the "asset-heavy" strategy drove the layout
From the perspective of the lithium battery industry chain, the midstream lithium iron phosphate market is sluggish, and the upstream lithium mines and lithium salts are also difficult to return to the previous high prosperity. According to the financial report, Ganfeng Lithium's revenue in 2023 will be 32.972 billion yuan, a year-on-year decrease of 21.16%; net profit was 4.947 billion yuan, down 75.87% year-on-year; In the first quarter of 2024, the company's revenue will be about 5.058 billion yuan, and the net profit loss will be about 439 million.
In the above context, the company's layout may be due to the current low price of battery-grade lithium carbonate. According to the data, in the first quarter of this year, the average price of domestic battery-grade lithium carbonate was 101,600 yuan, compared with 402,700 yuan in the same period last year, a year-on-year decrease of 74.77%. It is understood that Inner Mongolia Anda's business is mainly involved in the downstream applications of the lithium industry, including battery manufacturing, battery sales, and electronic special materials manufacturing.
In addition, Inner Mongolia Anda has two licensed projects for lithium iron carbonate behind it. According to Tianyancha, Inner Mongolia Anda has administrative licenses for the "80,000 tons/year lithium iron carbonate project" and many lithium carbonate production lines, and the validity period is long.
More importantly, the capital operation of Ganfeng Lithium and Tianqi Lithium seems to be different, and the company chooses to lay out the upstream and downstream links in the way of heavy asset investment.
On May 7, the company agreed that its wholly-owned subsidiary, Ganfeng International, intends to acquire the remaining 40% stake in Mali Lithium from LeoLithium with its own funds of US$342.7 million.
Previously, the company has increased its capital in Mali Lithium twice. In September 2023, Ganfeng International increased its capital to Mali Lithium by no more than US$138 million by subscribing for new shares. After the completion of the capital increase, Ganfeng International will hold 55% of the equity of Mali Lithium. In January this year, Ganfeng International planned to acquire no more than 5% of the equity of Mali Lithium from Leo Lithium with its own funds of no more than 65 million US dollars.
不过,目前收购Mali Lithium公司5%股权事项尚未完成股份转让,待上述股权全部交割完成后,赣锋锂业将取得Mali Lithium和其旗下锂辉石Goulamina项目的经营控制权,Mali Lithium将纳入赣锋锂业合并报表范围。
According to the data, the total ore resources explored in the Goulamina spodumene project are 211 million tons, with an average lithium oxide grade of 1.37%, of which the total proven, controlled and inferred resources of lithium oxide are 2.89 million tons, equivalent to about 7.14 million tons of lithium carbonate equivalent. The project is planned to have a production capacity of 506,000 tons of lithium concentrate in the first phase, and the production capacity of the second phase can be expanded to 1 million tons of lithium concentrate.
According to the inquiry of Titanium Media APP, the company has begun to lay out multiple links in the lithium battery industry chain such as lithium battery manufacturing, cathode material manufacturing, and battery recycling. In this regard, the company also said that it will continue to adhere to the development strategy of upstream and downstream integration of lithium battery and give full play to the synergistic effect of the upstream and downstream of the industrial chain.
Although the company continues to make breakthroughs in the layout of the lithium industry chain, there are also hidden worries at present. Guosen Securities Research Report pointed out that due to the significant month-on-month decline in the current lithium salt price, the high-cost lithium concentrate inventory and the high-cost lithium salt finished product inventory have brought obvious cost pressure to the company. (This article was first published on the Titanium Media App, by Zhai Zhichao)