Overweight ternary materials Wanhua Chemical merged with Zhuoneng lithium-ion battery

On March 15th, Wanhua Chemical (600309) announced a notice that it plans to absorb and merge its wholly-owned subsidiary Yantai Zhuoneng Lithium-ion Battery Co., Ltd. (referred to as 'Zhuoneng Li-ion Battery'). After the merger is completed, the independent legal personality of Zhuoneng Li-ion battery will be taken, and all assets of Zhuoneng Li-ion battery and all other rights and obligations will be undertaken by Wanhua Chemical. According to the data, Zhuoneng lithium-ion battery is mainly engaged in the development, production and sales of lithium-ion battery cathode materials. Wanhua Chemical officially incorporated 100% of Zhuoneng's lithium-ion battery equity into the bag in April 2020. Prior to the successful acquisition of the lithium battery material target, Wanhua Chemical had begun to expand the production of ternary cathode materials, and last year invested 1.16 billion yuan in the construction of an annual output of 10,000 tons of ternary cathode materials for lithium-ion batteries. According to news from the website of the People's Government of Meishan City, Wanhua Chemical’s “Ternary Materials Project with an Annual Production of 10,000 Tons of Lithium-ion Battery” has conducted the second EIA public announcement in October 2020. On February 24 this year, its environmental assessment document was accepted by the Meishan City Ecological Environment Bureau. Recently, Wanhua Chemical disclosed the publicity of the environmental impact assessment of the lithium-ion battery material research and development pilot project. The project leases Zhuoneng Li-ion battery's existing factory and workshops for research and development. According to relevant persons from Wanhua Chemical, it is important to use precursors as raw materials to develop cathode materials. The final performance must be matched with anode materials to make battery evaluations. The pilot test is also Around the ternary positive electrode, zirconia and other ceramic materials are developed for other needs. It is understood that the project has an investment of about 73.65 million yuan and is expected to be put into operation in June this year. It is another important project of Wanhua Chemical in the field of lithium batteries. Gaogong Lithium previously tracked that from the second half of 2018 to 2019, the growth rate of demand in important downstream industries such as light industry, real estate, and automobiles has slowed or declined, as well as the impact of factors such as the concentrated release of upstream production expansion in a short period of time. Wanhua Chemical is profitable Ability began to decline. Judging from the logic of Wanhua Chemical's entry into lithium battery cathode materials, it is important to meet its strategic needs to expand its diversified product portfolio and transform into the new chemical material industry. The 2020 annual report shows that Wanhua Chemical's total operating income in 2020 was 73.43 billion, an increase of 7.9% year-on-year; the net profit attributable to the parent was 10.04 billion, a year-on-year decrease of 0.9%, and the decline was narrower than the same period last year. It is worth noting that Zhuoneng's lithium-ion battery profits are still at a loss. In 2019, it achieved revenue of 19.435 million yuan and net profit loss of 34.7031 million yuan; in 2020, it achieved revenue of 6.5184 million yuan and net profit loss of 9,467,700 yuan. According to the statistics of Gaogong Lithium Battery, since 2020, domestic and foreign leading cathode material companies have started production expansion models to accelerate the release of new production. From the perspective of market size, the research data of the Institute of Lithium Battery Research and Development (GGII) shows that in 2020, my country’s lithium battery ternary cathode material shipments will be 236,000 tons, a year-on-year increase of 23%. GGII predicts that my country's ternary material market will remain an important demand direction for the cathode material market in 2021. However, as the market share of lithium iron phosphate materials increases, it will squeeze out part of the ternary materials market. Under this circumstance, Wanhua Chemical has once again increased its ternary materials and will face certain competitive pressure. The merger of Zhuoneng Li-ion batteries this time will help optimize the management structure and improve the efficiency of management and control. After the expansion of production, it is expected to make new breakthroughs in the field of cathode materials.