Baolixin 'bets' on the low-speed travel market for lithium batteries

After withdrawing from the power lithium battery market, Baolixin extended its tentacles to the low-speed smart travel market. On January 19, Polysun (300116) announced that it will jointly fund the establishment of Polysun (Dongguan) System Integration Co., Ltd. (Dongguan Jiali) with Dongguan Jiali New Energy Technology Company (Limited Partnership) (hereinafter referred to as 'Dongguan Jiali'). Hereinafter referred to as 'joint venture company'). And signed a cooperation agreement on the construction of an annual output of 120,000 KWh battery PACK production line. According to the announcement, the registered capital of the joint venture company is 20 million, of which Baolixin subscribed capital of 16 million, holding 80% of the equity of the joint venture company, and Dongguan Jiali subscribed capital of 4 million, holding 20% u200bu200bof the equity of the joint venture. In the future, the joint venture will make important investments to develop the low-speed smart travel market to meet the demand for battery packs in low-speed vehicles such as electric balance bikes, electric scooters, and electric power-assisted bicycles. Baolixin's shift to the low-speed smart travel market is not unrelated to the gradual increase in demand in the small-power market. Different from the power lithium battery, the small power lithium battery is mainly to supply the power system of each subdivided product. The important feature is to replace the original power system, such as lead-acid, nickel-metal hydride and other batteries. Therefore, the small power market has a huge replaceable Stock market. Since April 2020, driven by the new national standard, demand for ToB terminals such as shared bicycles and takeaways has increased, and the electric bicycle market has recovered rapidly, driving overall sales. The increase in the output of electric bicycles will also release the corresponding demand for lithium-ion batteries, especially the high concentration of applications such as the ToB end, which is more suitable for the promotion of battery exchange modes, and further increases the demand for lithium-ion batteries. In addition, according to the data of the Institute of Lithium Battery Research and Development (GGII), the total output of lithium battery two-wheelers in 2020 is about 10.25 million, and the overall penetration rate is 27%. On another level, Baolixin's 'preference' for the low-speed smart travel market is also in line with its current strategic planning and business development. It is understood that Baolixin's predecessor, Jianrui Woneng, acquired Waterma during the 2016 wave of power lithium batteries and expanded aggressively. Two years later, the lithium battery giant was in a dilemma, and it gradually improved after the introduction of the new largest shareholder, Changde ZTE, at the end of 2019. Under the control of Gao Baoqing, the actual controller of Changde Zhongxing, Jianrui Woneng changed its name to 'Bao Lixin'. On October 30, 2020, Baolixin disclosed its first performance report. The company's business is recovering and its scale is significantly reduced. However, Baolixin is still 'going forward with a heavy load.' In addition to the cliff-like decline in performance, the net cash flow from operating activities in Baolixin's 2020 third quarter report is still negative. In such a situation, Baolixin is launching asset disposal while 'intensively' deploying its lithium battery business. In November 2020, Polysyn and Sanmenxia Municipal People’s Government signed the 'Strategic Cooperation Framework Agreement.' According to the agreement, Polysyn will establish a Northwest production base in Sanmenxia City, and the first phase will build 2GWh in the Sanmenxia City-Rural Integration Demonstration Zone. The power lithium battery project in China has an investment of 1.2 billion yuan.