On December 28, 2022, Nations Technologies announced that its subsidiary Inner Mongolia Sinuo New Material Technology had entered into a guaranteed supply agreement with Tianjin Lishen Battery. Nations Technologies is a supplier for TCMs, security chips, and RF chips. It is listed on the Innovation Board of the Shenzhen Stock Exchange. Sinou specializes in anode materials used in Li-ion batteries. As for Lishen, it manufactures batteries and battery systems for a wide range of applications such as consumer electronics and electric cars.
Under the agreement, Sinou will provide Lishen with 4,800 tons in 2023, 7,200 tons in 2024, and 14,400 tons in 2025. Sinou is therefore guaranteed to meet a total demand of 26,400 tons from Lishen during the three-year period. No price has been set for this deal, but both parties will probably negotiate the transaction price and quantity on a periodic basis.
Earlier on October 29, 2022, Sinou secured an annual procurement contract from Gotion Hi-Tech. For the year 2023, Sinou is to provide Gotion with around 16,800 tons of graphite products. Both parties will set the transaction price and quantity on a monthly basis.
Besides semiconductor components, Nations Technologies has taken on anode materials as one of its main businesses. Sinou as its holding subsidiary is in charge of the manufacturing of anode materials, including the graphitization process. Nations Technologies acquired a 70% stake in Sinou for RMB 1.336 billion in December 2017. To further optimize Sinou’s balance sheet, Nations Technologies announced on March 15, 2022, that it was going to inject RMB 150 million into the holding subsidiary through debt equity swap. Of the RMB 150 million, RMB 15.9374 million was allocated to the company’s registered capital, and RMB 134.0626 million was allocated to the company’s capital reserve.
Around the same time, Sinou’s other shareholders made some contributions. Huayou Cobalt as a shareholder injected RMB 7.897 million, which was in proportion to its stake in the company. Of the 7.897 million, RMB 838,800 went to the company’s registered capital, and the remaining RMB 7.0559 million went to the company’s capital reserve. Posco Chemical, which is another shareholder, gave up its pre-emption rights in this round of capital increase that saw Sinou’s registered capital rise from RMB 100 million to RMB 117 million.
Regarding capacity expansion, Nations Technologies disclosed on March 25, 2022, that Sinou had inked an agreement with the government of Suizhou and the administrative committee of the Suizhou Hi-Tech Industry Development Zone for the joint development of an integrated manufacturing project. The project will have a total production capacity of 100,000 tons per year for anode materials used in Li-ion automotive power batteries. Suizhou is prefecture-level city in China’s Hubei Province. The total investment in the project is set around RMB 3 billion. Regarding development schedule, the project is divided into two phases and set to be fully built within five years. The first phase will comprise 50,000 tons per year and take around eight months to complete. The construction of the first phase will start within three months after Sinou has finished acquiring the land for the project. If everything goes smoothly, then the second phase will begin within one year after the completion of the first phase.
In terms of financial performance, Nations Technologies posted around RMB 934 million in realized revenue for the first three quarters of 2022. This figure represents a year-on-year increase of 53.3%. For the same period, the company’s net profit attributable to shareholders came to around RMB 3.02 million.
This article is a translation of a Chinese article posted by Wendy at TrendForce. It contains information that is either sourced from other news outlets or accessible in the public domain. Some Chinese names are transcribed into English using Hanyu Pinyin.