Clou electronics plans to buy 2.557 billion yuan of cobalt to enter the lithium battery market on a large scale

Because of the material assets reorganization, Clou electronic (002121, SZ) suspended on May 2. But it resumed trading on May 4. After opening it began to shock, closed at 8.59 yuan per share, with May 3 flat.

Clou electronic announcement said that it planned to acquire 65.57% of the shares of Ganzhou Tengyuan cobalt industry new materials co., LTD. (hereinafter referred to as "Tengyuan cobalt industry") owned by the actual controller, Luo Jie, Xie Fubiao and Wu Yanghong (the three are in the same action).At the proposed valuation of 3.9 billion yuan for a 100% stake in the company, the acquisition would cost about 2.557 billion yuan.

It is worth mentioning that Tengyuan cobalt industry has updated its prospectus in January 2018 for its IPO on the SME board of the Shenzhen stock exchange. The company is mainly engaged in the research and development, production and sales of cobalt and copper products, according to its prospectus. As of June 30, 2017, the company has an operating income of about 831 million yuan, a net profit of about 274 million yuan and a net profit margin of nearly 33%.

According to the 2017 annual report of Clou electronics, its operating income is about 4.376 billion yuan, and the net profit attributable to shareholders of the listed company is about 459 million yuan, with a net profit margin of about 9.54%.If the acquisition of the table, the profitability of Clou electronics will be greatly enhanced, while the cost of batteries will be greatly reduced.

Since 2009, the company has been expanding into energy-storage batteries, a market that is now exploding. Although lead-carbon energy storage technology has been relatively mature, the lithium battery energy storage market is bound to usher in rapid development as the cost of lithium battery decreases and the energy density increases. In November 2017, the guideline on promoting energy storage technology and industrial development (hereinafter referred to as the guideline) jointly issued by five ministries and commissions of the state explicitly supports the direct connection of energy storage systems to power grids. According to market data, the global scale of battery energy storage system will reach $6.81 billion by 2022, with a compound annual increase rate of up to 37%.

According to the 2017 financial report, Clou electronics has completed the delivery of over 330MWh and off-grid energy storage system projects. During the reporting period, Clou-sports obtained a land use right of about 59,800 square meters in the west area of Guangming high-tech industrial park in Shenzhen, in order to expand its production capacity.

In addition, the company has increased its strategic focusing on battery technology and terminal vehicle operations. The company's board of directors and the general meeting of shareholders have approved the acquisition of Shanghai Kanai new energy co., LTD., which has been heavily involved in the ternary battery market in 2017.Wang enters the field of new energy passenger cars

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