Author: Zheng Minfang
Edit: Songhe
Tsingshan Holding Group Co., Ltd. (hereinafter referred to as "Tsingshan Group"), known as the "King of Nickel", may be ushering in the first listing of its subsidiaries.
On the evening of December 14, Rept Battero (hereinafter referred to as "Rept Battero"), which is mainly engaged in power and energy storage batteries, submitted an IPO prospectus to the Hong Kong Stock Exchange. So far, the installed capacity of power batteries in China has ranked among the top ten. of companies have gone public or started the IPO process.
During the reporting period, Rept Battero revenue growth rate can be described as "a rapid pace". From 2019 to 2021, the operating income will be 233 million yuan, 907 million yuan, and 2.109 billion yuan respectively, and the three-year compound growth rate of revenue will be as high as 200.7%. Even so, Rept Battero is still in a state of loss, with losses of 112 million yuan, 53 million yuan and 804 million yuan respectively in the same period.
The reason for the loss may be related to the insufficient utilization rate of Rept Battero production capacity. As of the end of the third quarter of 2022, the cumulative battery production scale of Rept Battero in the year is only 9.5GWh, which is still significantly different from the designed annual production capacity of 32.7GWh.
As a member of Tsingshan Group, a large nickel industry giant, Rept Battero’s 51% shares are controlled by Evergreen Technology Co., Ltd. (hereinafter collectively referred to as “Tsingshan Group”), a subsidiary of Tsingshan Group. The only player.
Backed by the numerous nickel-cobalt-lithium mine resources under Tsingshan Group, Rept Battero raw material cost fluctuations have become relatively controllable, but this has also brought it a huge amount of related party transactions. Trade Wind (ID: TradeWind01) estimates based on the annual framework agreement between Rept Battero and Tsingshan Group that from 2023 to 2025, Rept Battero will purchase raw materials from Tsingshan Group at a maximum of more than 30 billion.
01
During ramp up of production capacity
The new energy battery track, which has been in a state of high prosperity in recent years, is being regarded as the goal of integrated development by more upstream and downstream enterprises in the industrial chain.
Since its establishment in October 2017, Rept Battero has focused on the business of power and energy storage batteries.
At present, Rept Battero power batteries have been adapted to traditional car companies such as SAIC-GM-Wuling and Dongfeng, and are also supplied to new power car companies such as Leap and Nezha. From 2019 to 2021, Rept Battero power batteries will generate revenue of 83 million yuan, 673 million yuan, and 982 million yuan respectively, accounting for 35.5%, 74.2% and 46.5% respectively.
Although the gap between its revenue scale and the leading CATL (300750.SZ) is as much as 91 times, it still ranks tenth among domestic power battery manufacturers with an installed capacity of 3.6GWh in the first three quarters of 2022. Due to the ramp-up of production capacity, Rept Battero power battery gross profit margin in the first half of 2022 is only 5%, which is significantly different from the 15.04% in the same period of Ningde era.
According to Rept Battero, the energy density of its power batteries has reached a relatively high level in the industry. For example, the volumetric energy density of its "Wending" battery launched in August 2022 can reach 450Wh/L, exceeding the current industry level of 400Wh/L. , and the cruising range can reach 700 kilometers.
Compared with power batteries with a higher degree of involution, Rept Battero seems to have more advantages in the field of energy storage. According to data from Frost & Sullivan, in the first three quarters of 2022, Rept Battero has already ranked third in China with an installed capacity of 5.9GWh of energy storage batteries. There are still significant gaps.
At present, Rept Battero energy storage batteries have been used in household energy storage, photovoltaic inverters and other scenarios.
"Rept's shipments are basically in the form of batteries or modules. The domestic TOP10 energy storage system integrations are all our customers. We have done a very wide range of home storage." Rept Battero Liu Sizeng, general manager of the energy storage system division, publicly stated in November this year.
In the first half of 2022, Rept Battero energy storage batteries generated revenue of 1.881 billion yuan, accounting for 46.8%. However, the gross profit margin in the same period was only -12%, but it has narrowed compared with the -16% gross profit margin in the first half of 2021.
The gross profit margins of the power battery and energy storage businesses are low or even negative, which may be related to the fact that Rept Battero is in the stage of ramping up its production capacity.
By the end of the third quarter of 2022, Rept Battero designed annual production capacity has reached 32.7GWh. However, in terms of installed capacity, the total production capacity of "power + energy storage" batteries in the first three quarters of 2022 is only 9.5GWh.
Rept Battero also regards the expansion of production capacity as the key to increasing income. In August of this year, Rept Battero has set a target of "200GWh production capacity in 2026", and even plans to achieve sales revenue of 100 billion yuan in 2027.
The realization of such a large-scale goal as scheduled is obviously a test of Rept Battero future production capacity and competitiveness.
02
Annual connected transactions may exceed 10 billion
Unlike BYD, Great Wall and other downstream OEMs promoting the listing of their battery business, the origin ofRept Battero comes from the incubation of domestic mining giant Tsingshan Group.
The prospectus shows that Tsingshan Group's main body controls 51% of Rept Battero shares, and this is also the first subsidiary of Tsingshan Group to embark on the IPO journey.
As the king of nickel mines, Tsingshan Group will occupy 22.22% of the global market with an annual output of 600,000 tons of nickel in 2021. It also has involvement in many fields such as mine development, stainless steel manufacturing, and shipping logistics.
What made Tsingshan Group "out of the circle" recently was undoubtedly the "Nickel Futures Squeeze War" on the London Metal Exchange (hereinafter referred to as "LME") in March 2022.
At that time, due to spot risk management, Tsingshan Group, which held a large number of short positions in Lunni, encountered a sharp rise in nickel prices within one day on the 8th of that month. Ton climbed to US$100,000/ton, which in turn triggered the risk of Tsingshan Group's liquidation. Out of risk prevention, the Lunjin Exchange even temporarily suspended the trading of all Lunni contracts.
Fortunately, by reaching an agreement with the counterparty and financial institutions, the liquidation crisis of Tsingshan Group was finally resolved smoothly.
Rept Battero is currently the only enterprise engaged in the battery business under Tsingshan Group. Relying on the resource endowment of shareholders, Rept Battero has obvious synergies with Tsingshan Group in the procurement of nickel, lithium, cobalt and other minerals required in the lithium battery field.
Since 2022, everything from power batteries to OEMs has been under the pressure of soaring lithium prices. For example, Frost & Sullivan estimates that the average price of lithium phosphate in 2022 will be 470 yuan, which is 15.16 times that of 2021.
Although backed by mining giants, it can achieve a certain degree of "early access to the moon" on the raw material side, but Rept Battero has not been able to avoid the final product price increase in 2022 when battery materials are skyrocketing.
In the first half of 2022, the average selling price of Rept Battero power battery was as high as 0.76 yuan/Wh, a year-on-year increase of 55.10%; the average selling price of energy storage batteries in the same period was 0.75 yuan/Wh, a year-on-year increase of 27.12%.
Tsingshan Group, as the controlling party, is also "preparing for a rainy day" in the supply of lithium mines. In November this year, it announced that it has reached a cooperation with the government of Zimbabwe, which has one of the largest hard rock lithium reserves in the world, to start the local lithium mining and processing business.
But also because of this upstream and downstream binding relationship, the scale of related transactions between Rept Battero and Tsingshan Group will gradually expand.
From 2020 to the first half of 2022, Rept Battero’s purchase of raw materials from Tsingshan Group will only be 16 million yuan, 212 million yuan, and 44 million yuan respectively. However, in the next three years, Rept Battero’s raw material purchases from Tsingshan Group or will rise further.
According to the framework agreement between the two, from 2023 to 2025, Rept Battero raw material purchases from Tsingshan Group can reach a maximum of 3.825 billion yuan, 11.125 billion yuan and 16.642 billion yuan respectively.
Since some customers of Rept Battero need the docking of Tsingshan Group, there are also large-scale related transactions with it on the sales side. According to the framework agreement between the two, sales to Tsingshan Group will reach 4.3 billion yuan in 2023.
In the context of the strict review of related party transactions in A-share IPOs, this may also explain the internal reason why Rept Battero did not choose A-share IPOs this time, and instead set the listing place as the Hong Kong stock market.
For example, BYD Semiconductor Co., Ltd. (hereinafter referred to as "BYD Semiconductor"), a blocked spin-off project of BYD (002594.SZ), recently withdrew its application materials during the registration process. Multiple information sources in the market pointed out that BYD Semiconductor and BYD The relatively large-scale related party transactions between them are the main reason for the failure of its IPO.
The market is waiting to see whether Rept Battero Hong Kong stock IPO journey will be smooth.