On June 12, Guangdong Songfa Ceramics made an announcement stating its intention to acquire a stake in Anhui EVPS Power Battery from Ningbo EVPS Energy Storage System. The percentage of the stake would be no less than 51% and no more than 76.92%.
In this transaction, Lin Daofan, a major shareholder of Songfa Ceramics, would transfer his stake of 2.1.10% in Songfa Ceramics to EVPS Energy Storage at a price of RMB 625 million.
The parties that are involved in the deal have impressive backgrounds. The top three shareholders of EVPS Energy Storage are Sequoia Capital, Shanshan, and the Industrial Fund of Donyang SASAC. Sequoia Capital is a major investment firm that has a strong presence in China’s industries. Shanshan is a long-established leading supplier for cathode materials in China’s industry for Li-ion batteries.
Fu Xin, a partner within Sequoia Capital and the chairman of EVPS Energy Storage, pointed out that EVPS Power Battery is the “sole” Chinese energy storage company that Sequoia Capital has invested in so far. He added that EVPS Energy Storage possesses significant technological advantages.
As its name indicates, EVPS Power Battery mainly develops, manufactures, and sells Li-ion batteries used in light vehicles and energy storage equipment. Its core offerings are series-26700 cylindrical cells, pouch cells, and blade cells. Its energy storage batteries are widely adopted for portable energy storage equipment, residential energy storage equipment, telecommunication equipment, and base stations. Its vehicle power batteries are used in urban transportation vehicles and industrial logistics vehicles. In particular, EVPS Power Battery provides solutions that replace traditional lead-acid batteries across various applications.
As of the end of 2022, EVPS Power Battery had set up eight smart production lines for Li-ion batteries in Chuzhou, a city in China’s Anhui Province. Together, their production capacity came to 4GWh per year. This year, the company has initiated the second-phase expansion in Chuzhou. The second-phase expansion is further divided into two sections, each comprising 3GWh per year. The first section is scheduled for completion within this year.
As for Songfa Ceramics, its controlling shareholder is Hengli Group. Established on May 18, 1994, Hengli Group is a conglomerate that is involved in oil refining, petrochemicals, polyester materials, and textiles. Hengli Group is the third largest private enterprise in China, and its current vice chairperson is Fan Hongwei, who has been dubbed “the richest woman in China”.
Hengli Group has made significant investments in developing businesses related to new energy materials. Kanghui New Material, a subsidiary of Hengli Group’s listed subsidiary Hengli Petrochemical, focuses on Li-ion battery separators. Currently, Kanghui’s first operating production line in Yingkou (China’s Liaoning Province) has a production capacity of 440 million square meters per year.
Additionally, Kanghui is setting up a new production site in Nantong (China’s Jiangsu Province). The site will have 1.2 billion square meters per year for wet separators and 600 million square meters per year for dry separators. Kanghui plans to have the site gradually enter operation in the first quarter of 2024
The main business of Songfa Ceramics is the manufacturing of a wide of ceramic products, including ceramic wares for everyday use, fine porcelain wares, and wine bottles. Its products are exported mostly to Southeast Asia, Europe, and North America. For 2022, Songfa Ceramics posted RMB 271 in revenue, showing a year-on-year drop of 32.79%. Its net profit attributable to shareholders came to negative RMB 171 million, though this figure also reflected a year-on-year increase of 44.81%. The company’s EPS stood at negative RMB 1.37. As of the end of 2022, the company’s net assets attributable to shareholders amounted to RMB 192 million, down by 47.01% year on year. The company’s asset-liability ratio was 67.68%.
In view of a steady decline in its core businesses over recent years, Songfa Ceramics is searching for new avenues of growth. This latest investment deal would make EVPS Power Battery a holding subsidiary of Songfa Ceramics. Afterwards, Songfa Ceramics would be able to leverage EVPS Power Battery’s resources to build a core business related to Li-ion energy storage batteries.
Songfa Ceramics stated that EVPS Power Battery is dedicated to the R&D, manufacturing, and sales of batteries used in energy storage equipment and light vehicles. It is also a leading company in the energy storage market. Given the growing global demand for energy storage technologies, EVPS has excellent growth prospects. Songfa Ceramics anticipates an expansion of the scale of its business operations and an improvement in its overall competitiveness following the completion of this transaction.
This article is a translation of a Chinese article posted by 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.