1MC (ASX) Ann: Shanshan Completes $22.4 Million Placement

Originally posted by Sungar ↑

https://finance.sina.com.cn/stock/relnews/cn/2019-08-09/doc-ihytcitm7896922.shtml

Established in 1989, the Shanshan Group has ushered in another key crossroads.

"Since last year, we have made major strategic adjustments and invested all manpower, material resources and financial resources into the main business of lithium-ion materials. The core objective is to occupy the market with cost-effective advantages, scale advantages and technological advantages, and to lead the formulation of global industry technical standards. Zheng Yonggang, Chairman of the Board of Directors of Shanshan Holdings, told the Shanghai Securities Journal that “the current global capacity of lithium-ion materials is rapidly gathering in China, and China’s production capacity is rapidly gathering in Shanshan. We are committed to becoming a leader in the new energy industry globally. First, I would rather withdraw."

Recently, Shanshan’s subsidiary Shanshan Technology’s 100,000-ton lithium battery anode material Baotou integrated base was officially put into operation. According to Zheng Yonggang, this is the world's largest base material for lithium battery anode materials, indicating the ambition of Shanshan to compete for new energy industry.

"For the non-new energy business, we can sell all of them. We split the clothing last year and just sold the Shanshan Business Group in July this year. For the non-lithium materials business in the new energy industry, we will also be strategic. Enter, such as the increase in the Australian lithium mine company Altura, but not their own control, mainly to participate in shares." Zheng Yonggang said.

When Zheng Yonggang was in the midst of the clothing business, the ancestors stepped into the lithium battery industry and showed extraordinary strategic vision and determination. Nowadays, in the face of changes in the macro situation and the emergence of industrial opportunities, Zheng Yonggang quickly adjusted his strategy and cleaned up all non-cores. business. This may be the core gene that Shanshan can stand up and develop for a long time.

Anode material expansion capacity

On August 3, Shanshan Science and Technology 100,000 tons of lithium ion battery anode material Baotou integrated base Phase I project was officially put into operation. It is understood that the base was started in April 2018 with a total investment of 3.8 billion yuan. After being completed and put into production, it can produce 60,000 tons of graphite anode material and 40,000 tons of carbon-coated graphite anode material, and has an annual capacity of 50,000 tons of graphitization processing.

Li Fengfeng, chairman of Shanshan Technology, told the Shanghai Securities Journal that Shanshan Technology has established six production bases in Shanghai, Ningbo, Ningde and Baotou, and has a national enterprise technology center and a world-leading research and development technology team. Customer supply chain. The completion and commissioning of Baotou Base will effectively fill the gap in the production capacity of anode materials and realize the overall improvement of the company's cost control capability, capacity delivery capability and product quality capability.

Back in the history, Shanshan cut into the lithium battery new energy industry is beginning with the anode material. In 1999, Shanshan Technology was established. The company industrialized the preparation technology of “mesophase carbon microspheres” with independent intellectual property rights, breaking the foreign technical blockade and market monopoly, and realizing the localization of lithium ion battery anode materials.

Li Fengfeng told reporters: "The current reshuffle period of the new energy industry is a major opportunity for us. In the first half of the year, Shanshan Technology's revenue reached a new high, profit growth was obvious, and risk assets were stable. In the second half of the year, we were in the market, supply The planning of the chain, technology, quality, and production capacity has been formulated to fully embrace the market."

Shanshan's 2018 annual report shows that the company's negative electrode business has shown a steady upward trend. The annual sales volume reached 33,900 tons, an increase of 9.69% year-on-year; the main business income was 1.938 billion yuan, up 30.74% year-on-year; The net profit of shareholders was 109 million yuan, up 7.88% year-on-year. As of the disclosure date of the annual report, the company has a production capacity of 80,000 tons of negative electrode materials.

The reporter reviewed the research data of the Institute of Advanced Research and Development of Lithium Power Research (GGII). In 2018, the total shipment of lithium battery anode materials in China was 192,000 tons, a year-on-year increase of 31.2%. Driven by the growth of the power battery market, the shipment of artificial graphite was 133,000 tons, up 32.74% year-on-year; the shipment of natural graphite was 45,800 tons, up 19% year-on-year. Among them, Shanshan Technology's anode material shipments ranked second in the industry.

GGII also proposed that the competition in the anode material market will further intensify in the next three years, and the low-end repetitive capacity will be eliminated. Enterprises with core technologies and advantageous customer channels will be able to achieve significant development and market concentration will be further enhanced. Zheng Yonggang said that Baotou Base has further consolidated Shanshan Technology's leading position in the field of lithium battery anodes.

Win at a price point

"We are 100,000 tons this year, and next year, the next year, we will expand production capacity more quickly, and we will quickly grasp the pricing power of the industry with scale and cost performance. Global lithium battery looks at China, China lithium battery looks at Shanshan. This is us. The goal." Zheng Yonggang told reporters.

Checking Shanshan's 2018 annual report, its lithium battery material industry comprehensive production capacity is in the leading position in the industry. As of the disclosure date of the annual report, the company has a capacity of 60,000 tons of cathode materials, 80,000 tons of anode materials and 40,000 tons of electrolytes.

On the positive side, the subsidiary Shanshan Energy started the annual production of 100,000 tons of cathode material project in Changsha High-tech Zone. The first phase of the first phase of 10,000 tons of projects has been put into trial production at the end of 2018, with an annual output of 5,000 tons of high nickel. The workshop has also started and is expected to be put into production in 2019. In 2018, Shanshan Energy achieved a main business income of 4.66 billion yuan, a year-on-year increase of 9.49%, and a net profit of 515 million yuan.

In terms of electrolytes, in 2016, Shanshan shares joined hands with Juhua Co., Ltd. to build Shanshan New Materials (Zhangzhou) Co., Ltd. on the basis of the original Dongguan Shanshan. Shanshan New Materials has an existing electrolyte capacity of 60,000 tons and lithium hexafluorophosphate capacity of 6,000 tons, and independently develops and produces a number of special additives.

At the same time, Ningbo Liwei Energy Co., Ltd., a joint venture between Shanshan and Sequoia Capital, mainly produces batteries and PACK. On May 23, 2019, the first phase of the subsidiary Levieng 10GWh power battery was put into operation, mainly producing soft packs. And cylindrical lithium-ion battery, the product will be used in electric passenger cars, electric bicycles, power storage and other fields.

This year, Shanshan shares also entered the upstream of the industrial chain by means of the acquisition of equity, stabilized the upstream raw material supply of the company's lithium battery cathode materials business, and reduced the production cost and operational risk of the company's lithium battery cathode materials business.

On July 22 this year, Shanshan announced that the company intends to subscribe for 8.6% of the Australian lithium mining company Altura for 109 million yuan. Earlier, Shanshan had acquired 11.83% of Altura for 120 million yuan. Shanshan said that the project has great potential for lithium mine development and high purity of mining, which meets the requirements for material consistency of vehicle power batteries.

"In the short term, subsidies for new energy vehicles will decline, and the growth rate of new energy vehicles (sales) will not be too large. But in the medium term, the exit of subsidy policies also means the maturity of the market, as well as the huge market space and market competition. "Zheng Yonggang believes that "the new energy revolution has arrived. The development cycle of lithium battery is at least 20 years old and has 20 times of room for growth."

In the competition, how does Shanshan win? "Value for money, the core is still cost-effective with core technology advantages. After expanding capacity in the future, we may continue to cut prices and master pricing power." Zheng Yonggang said.

In addition to lithium-ion materials, Zheng Yonggang also saw another major application market for lithium batteries - energy storage. "Energy storage technology is a new outlet for the new energy industry. Once the technology breakthrough, this market is bigger than the new energy vehicle. Shanshan has been stocking for nearly 20 years and has a good chance to stand at the commanding heights of the industry. The future will also actively promote the layout of the energy storage market."

“One plus one reduction” promotes transformation

Do additions while doing additions. In July, Shanshan Group sold 100% of the shares of Shanshan Commercial Group to Vipshop at a price of 2.9 billion yuan. Shanshan Business Group is one of the top outlet chains in China, and has opened five outlets.

For this transaction, Zheng Yonggang said: "Selling outlets, many people feel that it is a pity, I think they should sell, they should do new energy. In addition, other assets not related to new energy are also sold. People's energy is limited, we just want to focus on new energy and do the main business."

Check out Shanshan's 2018 annual report, the company's operating income of 8.853 billion yuan. Among them, the core product lithium battery cathode material, anode material, electrolyte accounted for nearly 80%. The proportion of clothing has fallen from over 60% 10 years ago to less than 8%.

In June 2018, Shanshan shares split the apparel business segment into Hong Kong. "Not many people are wearing suits now. The clothing industry has changed. Although the feelings are deep, they must withdraw." Zheng Yonggang said.

For the non-material business in the lithium battery industry, the strategy adopted by Zheng Yonggang is strategic entry, but not holding.

Founded in 2009, Levico is a supplier of battery and PACK systems to the new energy vehicle and energy storage markets. At present, the company has established two production bases in Cangzhou and Ningbo and a complete battery function and environmental laboratory. In 2020, it will have an annual production capacity of 10GWh lithium-ion battery.

In 2018, Levi can introduce Sequoia Capital's strategic investment. At present, Sequoia has become a controlling shareholder of Levico, and Shanshan has chosen to retreat as a shareholder.

"Based on the battery material technology and scale advantage of Shanshan, and the layout of Sequoia Capital in the downstream industry, Levi can obtain effective resources at a lower cost, and form close cooperation and binding with the upstream and downstream industry chains to provide complete power. Battery products and solutions." Zhuang Wei, chairman of Shanshan, told reporters.

Zheng Yonggang said that this is a period of rapid transformation of old and new kinetic energy. New thinking needs new thinking. Private enterprises should abandon the traditional model of greed and seek more and concentrate on cultivating their core competitiveness. Strong and lasting. "You can no longer use old ideas, old methods, old tune, and what to do 'aircraft carrier'. It must be adjusted, and it can't be slow. I started to transform 20 years ago, so I can catch up with the new energy."

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Love the article and the translation it gives a great insight into the culture of the company.
AJM has a business partner/ customer for a very long time, nothing predatory in his words.
They won't be letting AJM fall over because of debt.
Love the mention of the quality of AJM Li.

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Ann: Shanshan Completes $22.4 Million Placement, page-77

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