Intern journalist | Ma Yueran
Hunan Long-term Lithium Co., Ltd. (hereinafter referred to as Long-term Lithium) is about to land on the Science and Technology Innovation Board.
On July 21, Long-term Lithium announced the initial public offering of shares and listing on the Science and Technology Innovation Board and the preliminary inquiry announcement.
The prospectus discloses that the number of shares in this offering is about 482 million shares, which is 25% of the total share capital after the issuance. The offering does not involve the transfer of old shares, and the total share capital after the issuance is approximately 1.929 billion shares. Initial inquiry will be made on July 27, 2021; the estimated issue date will be July 30, 2021.
Long-term lithium will become the first non-ferrous metal leader China Minmetals Group under the first listed company on the Science and Technology Innovation Board, and the ninth listed company of China Minmetals.
On September 14, 2020, Long-term Lithium Successfully passed the meeting. On June 29 this year, the CSRC agreed to register for the initial public offering of shares on the Long-term Lithium Science and Technology Innovation Board.
Founded in 2002, Long-term Lithium entered the field of ternary cathode materials in 2011, and is one of the earliest enterprises engaged in the research and development and production of ternary cathode materials in China.
According to the prospectus, the main products of Long-term Lithium include ternary cathode materials and precursors, lithium cobalt oxide cathode materials, ball nickel, etc. Its product downstream is mainly based on the application of electric vehicle power batteries.
At present, the company's competitors include Ronbay Technology (688005.sh), Tianjin Bamo, Dangsheng Technology (300073.sz), Hunan Shanshan and so on. Among them, the biggest competitor is Ronbay Technology.
Founded in 2014, Ronbay Technology is currently the largest provider of ternary cathode materials in China. Compared with the long-term lithium branch, the company entered the industry late, but it took the lead in landing on the Shanghai Stock Exchange's science and technology innovation board in 2019. And in the next two years, it has achieved great development.
As of July 28, the closing price of Ronbay Technology's stock price was 126.19 yuan, up 7.85%, an increase of 3.74 times from the stock price at the beginning of the listing; the market value has exceeded 56.4 billion yuan.
Judging from the market share of ternary cathode materials in the past two years, the long-term lithium family is in a downward trend. In 2018, the long-term lithium market share was 10.34%, ranking first; in 2019, the market share was 10.1%, ranking second, surpassed by Ronbay Technology.
According to the data of the Prospective Industry Research Institute, the market share of ternary cathode materials of Ronbay Technology is 14%, ranking first; the market share of Tianjin Bamo is 11%, ranking second; and the long-term lithium branch ranks third, with a market share of 10%.
In 2020, the sales volume of long-term lithium ternary cathode materials was 16,200 tons, down 16.24% year-on-year, and the gap with Ronbay Technology was widening. In the same period, Ronbay Technology sold 26,000 tons of ternary cathode materials, an increase of 15.5% year-on-year.
Judging from the gross profit margin of cathode materials, in the past two years, long-term lithium and Ronbay Technology have shown a downward trend, but long-term lithium is generally higher than Ronbay Technology.
In 2019, the net profit of Ronbay Technology was only 87 million yuan, far lower than the 206 million yuan of long-term lithium.
In 2020, the net profit of Ronbay Technology increased by 1.44 times year-on-year to 213 million yuan; the net profit of Long-term Lithium Was 110 million yuan in the same period, a year-on-year decrease of 46.76%.
After the long-term lithium science and technology board landed on the science and technology board, whether it can use the power of capital to achieve the transcendence of Ronbay Technology, or will widen the gap with the other party, which is one of the things that the industry pays attention to.
In addition, it is necessary to pay attention to the risks faced by lithium in the long run in terms of customers, performance, technology, downstream demand, finance and so on.
The company's operating income mainly comes from lithium battery cathode materials, and the downstream of lithium battery cathode materials are mainly used in electric vehicles, 3C, energy storage and other fields.
At present, Long-term Lithium is a supplier of mainstream lithium battery companies such as Ningde Times (300750.sz), BYD (002594.sz), and Ewell Lithium Energy (300014.sz).
From 2018 to 2020, the sales amount of the main business of the top five customers of long-term lithium science accounted for 72.41%, 86.61% and 78.38% of the main business income of the current period, respectively. Among them, the sales amount of the main business of CATL and its subsidiaries accounted for 36.49%, 58.43% and 38.2% of the main business income of the current period, respectively.
Long-term lithium said that the reason for the high proportion of the main business sales of its top five customers is that the concentration of the downstream new energy vehicle power battery industry is high, resulting in a relative concentration of customers.
Among many customers, the long-term lithium branch has the highest dependence on the Ningde era.
According to the statistics of the prospectus, in the past three years, the company's sales to the main business of CATL and its subsidiaries accounted for 36.49%, 58.43% and 38.2% of the main business income of the current period, respectively.
According to the China Business Daily, from 2018 to 2020, the average price of ternary cathode materials supplied by Long-term Lithium to Ningde Times was 13.81%, 12.89% and 0.76% lower than the average price of other customers, respectively.
Long-term lithium said that as an important customer of the company, CATL expects that the company's sales proportion will remain high in the future.
According to the prospectus, if the future CATL era due to major adverse changes in downstream industries or operating conditions, development strategy or business plan adjustments, etc., reduce or cancel the procurement of long-term lithium products and services, will adversely affect the company's sustained profitability, the company's performance has the risk of decline or even loss.
CATL is the largest power battery enterprise in China and even in the world. According to the data of China Automotive Power Battery Industry Innovation Alliance (hereinafter referred to as power battery alliance), in the first quarter of this year, the domestic market share of CATL reached 52.6%. But in the first half of the year, the market share fell below 50% to 49%.
In recent years, the profit margin of the Ningde era has been squeezed, which will also affect the living space of upstream suppliers. The gross profit margin of CATL has continued to decline from 43.7% in 2016 to 27.76% in 2020.
CATL said in the announcement that the gross profit margin continued to decline, mainly due to the decline in new energy subsidies and the intensification of market competition, technological progress and industrial chain maturity and other factors to promote the continuous decline in power battery prices. The same problem also constrains the long-term future of lithium.
In 2019, the gross profit margin of the main business of long-term lithium was 17.14%, which was more than 2% lower than the industry average gross profit margin of 19.93% and 3.84 percentage points lower than its 2017 gross profit margin.
Although the company has established cooperation intentions or business contacts with internationally renowned lithium-ion battery manufacturers such as Toyota, Panasonic, Murata, lg chemicals, Samsung SDI, etc., most of the above cooperation is in the initial experimental verification stage.
At present, there are no Japanese and Korean battery manufacturers in the downstream customers of Long-term Lithium. The company's cooperative operation with international customers such as Toyota, Panasonic, LG Chemical, Samsung SDI and other international customers is still in its infancy. This is also a major disadvantage.
In addition, long-term lithium is also very dependent on raw material supplier Hunan Bangpu Recycling Technology Co., Ltd. (hereinafter referred to as Hunan Bangpu).
The prospectus shows that when the company's own ternary precursor production capacity is difficult to meet continuous production, it will require priority to purchase ternary precursors from Hunan Bangpu.
According to the official website, Hunan Bangpu is the largest waste battery recycling base in China, with an annual recycling of more than 6,000 tons of waste batteries, and an annual production of nickel, cobalt, manganese hydroxide (ternary precursor), nickel, cobalt, manganese oxide (ternary material), lithium cobalt oxide, cobalt chloride, nickel sulfate, cobalt sulphate and cobalt tetroxide up to 4500 tons.
The ternary precursor is the key raw material for the preparation of ternary cathode materials. Public information shows that Hunan Bangpu is a sun company under the Ningde times. In 2018, 2019 and 2020, the purchase amount of Long-term Lithium to Hunan Bangpu was relatively high, accounting for 37.3%, 53.09% and 27.95% of the procurement, respectively.
According to long-term lithium data, in 2017-2019, the compound growth rate of its subsidiaries in the Ningde era such as Guangdong Bangpu Hunan Bangpu was 97.12%.
On January 7 this year, the official microblog of "Ningxiang Release" released the news that at about 18:12 on the same day, an explosion and fire broke out in the workshop of the old factory in Bangpu, Hunan. Therefore, the industry is worried that the ternary cathode material industry where the long-term lithium branch is located may be affected.
From the perspective of financial data, the long-term lithium branch also faces a certain amount of receivables and the risk of bad debts.
According to the prospectus, as of the end of 2018, the end of 2019 and the end of 2020, the sum of the book value of the company's notes receivable, accounts receivable and receivables financing was 1.192 billion yuan, 1.255 billion yuan and 1.572 billion yuan, accounting for 34.21%, 32.24% and 33.66% of the total assets of the current period, respectively.
Long-term lithium believes that its product customers are mainly power battery manufacturers, downstream customers and the industry generally use bankers' acceptance bills to pay for goods, resulting in a higher balance of bills receivable of the company. In addition, due to the greater financial pressure of new energy vehicle enterprises in the downstream of the industrial chain, the pressure of accounts receivable is transmitted upstream, resulting in a higher balance of accounts receivable.
Long-term Lithium disclosed its future goals in the prospectus. From 2022 to 2025, long-term lithium cathode materials plan to complete the construction of 4+ 40,000 tons of projects, reaching a production capacity of 110,000 tons, and the market share of power ternary materials will remain the first in the world, with a share of more than 20%.
In addition, it is planned to develop other system cathode materials in a timely manner, form a diversified material-based product portfolio, supplemented by manganese, iron and cobalt, and form industry influence and competitiveness in the fields of digital and energy storage.