Zhaoxin shares invest in lithium battery upstream resource benefits gradually

It can be seen that the “ambition” of Zhaoxin’s intention to upgrade and stabilize the company’s position in the lithium resource industry upstream of the power battery industry chain has become increasingly apparent. The vertical layout of the upstream resource materials of lithium battery is also expected to form a good synergy effect of the industrial chain.

Zhaoxin shares cross-border layout in the field of deep processing of lithium and lithium salt products in Salt Lake, and the investment benefits gradually emerged.

Zhaoxin shares (002256) first quarter report showed that the company achieved revenue of 170 million Yuan, an increase of 30.51%; net profit of 31.27 million Yuan, an increase of 28.13%.

Zhaoxin said that the main reason for driving the company's performance growth in the first quarter was the investment income from new investment projects.

It is understood that Zhaoxin has three core businesses of new energy, fine chemicals and biodegradation. In 2017, the company's new energy business added the development and application of salt lake lithium resources and deep processing of lithium salt products.

In November 2017, Zhaoxin’s announcement showed that the company will subscribe for and increase its capital of 20% equity of Shanghai Zhongli with RMB 125 million; and subscribe for and increase 16.67% equity of Jintai Potash by RMB 200 million.

Among them, Shanghai Lithium's main products are battery -grade high-purity lithium carbonate, lithium dihydrogen phosphate, lithium hydroxide and other lithium salt products, and have an annual output of 8,000 tons of battery-grade lithium salt products workshop. Jintai Potassium Fertilizer owns salt lake resources of about 473 square kilometers (19.96 square kilometers of mining rights and 274.89 square kilometers of exploration rights) in Balen Mahai Lake, and has the technology and production capacity of lithium extraction from salt lake.

In December 2017, Zhaoxin and its shareholding company Jintai Potash and Ganfeng Lithium signed the “Investment Agreement”, and the three parties will jointly establish Qinghai Zhaofeng. The shares of Zhaoxin, Jintai Potash and Ganfeng Lithium are 50%, 5% and 45% respectively.

According to the agreement, Qinghai Zhaofeng will invest 7,000 tons of battery-grade lithium carbonate production line and 10,000 tons of anhydrous lithium chloride production line in the first phase. It will mainly supply raw materials from Jintai Potash, and Ganfeng Lithium will be responsible for capacity planning and product production. At the same time, Ganfeng Lithium will be responsible for 100% underwriting the lithium salt products produced by Qinghai Zhaofeng.

With the rapid development of electric vehicles, the demand for lithium batteries is strong, and the demand for lithium salt products, which are the core raw materials for lithium batteries, has increased significantly. This has also led to the rapid increase in revenue and net profit of Zhaoxin.

In addition, recently, in addition to the planned acquisition of the remaining 80% stake in Shanghai Lithium, Zhaoxin also intends to purchase the entire share capital of Yancheng Xingchuang and Hengchuang Ruineng through a combination of issuing shares and/or paying cash.

Among them, Yancheng Xingchuang is mainly engaged in the recycling of lithium battery resources; Hengchuang Ruineng is mainly engaged in the recycling of power batteries for new energy electric vehicles.

It can be seen that the “ambition” of Zhaoxin’s intention to upgrade and stabilize the company’s position in the lithium resource industry upstream of the power battery industry chain has become increasingly apparent. The vertical layout of the upstream resource materials of lithium battery is also expected to form a good synergy effect of the industrial chain.

Zhaoxin said that due to the income generated by the new investment projects, it is estimated that the net profit for the first six months of 2018 will reach 63.162 million to 82.11 million Yuan, a year-on-year increase of 0%-30%.

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