Another LFP company sprints for IPO - BYD invest in Anda

At the same time that the major customer BYD acquired shares on July 6 this year, Anda Technology, a lithium iron phosphate manufacturer in Guizhou, is accelerating its impact on IPO.

BYD invests in Anda Technology

According to the data, Anda Technology was listed in June 2014 and is one of the earliest enterprises in China to put into production iron phosphate and lithium iron phosphate. On July 5 this year, the company issued 140 million shares at a price of 2.53 RMB per share, raising funds of 354 million RMB. The fundraising will be used for the expansion and construction project of the iron phosphate and lithium iron phosphate production lines of the wholly-owned subsidiary Guizhou Kaiyang Anda Technology Energy Co., Ltd.

For this fixed increase, Anda Technology said that the company’s lithium iron phosphate products have basically reached full production and full sales. As the Anda company entered the supply chain of first-line enterprise customers in industries such as power batteries, the production capacity of downstream customers continued to expand on a large scale. The current production capacity can no longer meet the growth of customers’ future needs, and it is urgent to expand production to solve the bottleneck of production capacity.

The use of the raised funds will be used for the company’s B and C area of 20,000 tons/year lithium iron phosphate and supporting 50,000 tons/year iron phosphate production line technical transformation project and the wholly-owned subsidiary Kaiyang Anda 50,000 tons/year lithium iron phosphate and supporting production line construction project.

After the project is completed and put into production, the company will add 6 production lines with an annual output of 8333.33 tons of lithium iron phosphate, with a total annual production capacity of 50,000 tons, and 6 production lines with an annual output of 10,000 tons of iron phosphate, with a total annual production capacity of 60,000 tons.

The announcement shows that the largest subscriber this time is BYD, the top 10 lithium iron phosphate power battery manufacturers, which subscribed about 11.858 million shares in total, with a total amount of 30 million RMB. This is also the first time BYD has invested in Anda Technology. After the subscription was completed, BYD became the ninth largest shareholder of Anda Technology, with a shareholding ratio of 2.11%.

In addition, in addition to BYD, a number of executives of listed companies also appeared in the list of fixed increase participants, including Lang Hongping, vice chairman of Yibai Pharmaceutical, Wang Wei, chairman of Sunwoda, and Su Gang, director of Jingrui. Among them, as Sunwoda successively realizes the supply of many car companies such as SAIC-GM-Wuling and Dongfeng Liuzhou Automobile, the demand for lithium iron phosphate expands, and the two parties are expected to promote cooperation in supply in the future.

It is worth mentioning that, compared with the current share price of Anda Technology of nearly 25 RMB/share, BYD invested in Anda Technology at a price of 2.53 RMB/share. Compared with the original investment of 30 million RMB, BYD has made a floating profit of hundreds of millions of RMB, with a return rate of nearly 10 times. Clients, Anda Technology’s current customers mainly include lithium-ion battery manufacturers such as BYD, CATL, CALB, ZTE Paineng, and its top five customers account for 96.7% of sales. Among them, the largest customer is BYD, accounting for 60.6% of revenue.

In fact, after Anda Technology entered the battery iron phosphate and lithium iron phosphate industry in 2010, BYD has been the main customer of Anda Technology. In 2020, Anda Technology won the bid for BYD’s 18,000-ton purchase contract; In March 2021, the two parties signed a strategic cooperation agreement, and Anda Technology will supply BYD with a long-term and stable supply of products in the cooperation quantity. At the same time, BYD needs to pay a deposit of 200 million RMB for the capacity expansion plan of Anda Technology.

In terms of performance, under the rapid increase in market demand for lithium iron phosphate, Anda Technology achieved revenue of 1.6 billion RMB and profit of 230 million RMB last year; In the first quarter of this year, the company achieved a revenue of 1.381 billion RMB, a year-on-year increase of 619.46%, and a net profit of 352 million, a year-on-year increase of 15147.36%, which has exceeded the whole year of last year. It is expected that the annual revenue in 2022 will reach 6 billion.

Anda Technology said, “All projects have been built, under construction, and to be built. By the second half of next year, we will strive to achieve an annual production capacity of 150,000 tons of lithium iron phosphate.” In the future, once Anda Technology successfully landed on the Beijing Stock Exchange, according to the current hot market for new energy in the secondary market, with the blessing of major customers such as BYD, Anda Technology will accelerate its entry into the supply chain of more mainstream customers and impact the market structure of lithium iron phosphate materials.

A number of LFP material companies listed

For battery companies, due to the large increase in the application scale of iron-lithium batteries in the passenger car/energy storage market, head battery factories have accelerated their shareholding and invested in upstream LFP material companies to stabilize supply and reduce costs. In addition to Anda Technology, BYD and CATL also invested in Hunan Yuneng, the head lithium iron phosphate company, in 2020, with a shareholding ratio of 5.27% and 10.54% respectively.

In February this year, CATL once again increased its capital by 144 million yuan to Jiangxi Shenghua, and its shareholding rose to 20%. With the support of the market and major customers, many leading LFP material companies have accelerated the process of financing and listing, further impacting the TOP10 market structure.

At present, Hunan Yuneng is sprinting into the capital market, and the first listing of the GEM on June 15 has been approved; Hubei Wanrun successfully held a meeting on the Science and Technology Innovation Board on June 13, and it is expected to be officially listed within this year; Rongtong Hi-Tech recently completed a D-round financing of more than 5 billion RMB. The investors include several large China automobile groups, new car manufacturers, leading battery manufacturers, etc., and are accelerating the promotion of listing work.

Lithium iron phosphate production capacity

From the perspective of market share, at present, the market concentration of lithium iron phosphate materials is relatively high. The top 10 companies in terms of shipments in the first half of this year are Hunan Yuneng, Dynanonic, Longpan Technology, Rongtong Hi-Tech, Hubei Wanrun, Anda Technology , Jiangxi Shenghua, Guoxuan Hi-Tech, Chongqing Terui, Dongsheng Xianxing, the market share of the above TOP10 enterprises reached 89.9%.

It is worth noting that compared with the same period in 2021, the market share of top 5 lithium ion battery anode material companies has declined slightly. This is mainly because the new power companies of lithium iron phosphate have begun to ship. At the same time, the second and third line lithium iron phosphate material companies have expanded rapidly and their market share has increased.

Since 2021, ternary lithium battery material companies such as GEM, Zhongwei, phosphorus chemical and titanium dioxide chemical companies are represented by Longbai Group, Chuanfa Lomon, etc., and cross-border companies represented by Anzhong Co., Ltd. have joined the lithium iron phosphate. Material expansion army, the scale of expansion is mostly in the hundreds of thousands of tons.

According to data, by the end of 2021, the total production capacity of the lithium iron phosphate industry will reach 890,000 tons, and the planned production capacity of various enterprises will exceed 3 million tons; In 2022, the expansion of lithium iron phosphate production capacity will accelerate, and the production capacity of long-term planned projects will double again, which has exceeded 6 million tons. By the end of this year, the available production capacity of lithium iron phosphate in China may reach about 3 million tons, and the overcapacity worries are looming.

In this regard, most of the announced expansion projects are still in the preliminary planning and approval stage, and the actual implementation progress is different. In addition, the actual output and price of upstream lithium carbonate also affect the release of lithium iron phosphate capacity, so the timing of excess capacity remains to be seen. However, the swarming of all parties will inevitably intensify the competition in the lithium iron phosphate industry. At the same time, with the further improvement of the quality requirements of lithium iron phosphate materials from power battery companies, only manufacturers who bind leading companies and have process/cost advantages will have a chance to win.