From May 27th to November 12th, the share price of Yongtai Technology (002326. SZ) (hereinafter referred to as the former compounding) has increased by 5.5 times in less than half a year, making it one of the super demon stocks in the recent A-share market of China.
On November 14, Yongtai Technology released another news that its subsidiary will get a stake from CATL (300750.SZ). Many people thought that Yongtai Technology would start a surge mode when its subsidiary received CATL’s favor.
However, the stock opened 3.98% higher on Nov. 15 and then quickly dropped, eventually eating a falling board. By the end of the day, the stock price closed at 63.1 yuan per share, with a full-day turnover of 3.51 billion yuan and the latest total market value of 55.311 billion yuan.
Yongtai Technology’s Subsidiary Receives Investment from CATL
After years of development, the company’s main products can be divided into three categories according to end-use applications, including pharmaceuticals, pesticides, and lithium and other materials.
Among them, pharmaceutical products cover key fluorine-containing intermediates, pharmaceutical APIs and preparations in the fields of cardiovascular, diabetes, central nervous system, anti-infection and anti-virus; pesticide products mainly include fluorine-containing herbicides, fungicides and insecticides intermediates, as well as pesticide APIs and preparations; lithium and other materials products mainly include lithium battery materials (lithium hexafluorophosphate, lithium difluorosulfonyl imide, etc.), fluorine-containing liquid crystal intermediates, etc.
Looking specifically at the announcement on November 14, Yongtai Technology said that its holding subsidiary Shaowu Yongtai High-tech Materials Co., Ltd. (hereinafter referred to as “Yongtai High-tech”) shareholder Pingtan Yingke Hengtong Management Consulting Partnership (Limited Partnership) (hereinafter (Referred to as “Yingke Hengtong”) intends to transfer its 25% equity of Yongtai Gaoxin to CATL at a price of 500 million yuan.
The company waived its right of first refusal for the above-mentioned equity transfer. Therefore, after the completion of the above equity transfer, Yongtai Technology will hold 75% of the shares of Yongtai High-Tech and CATL will hold the remaining 25% of the shares.
It is worth mentioning that CATL’s shareholding is actually a “bargain”.
It is reported that, as the main carrier of Yongtai Technology’s lithium and other materials business, its lithium hexafluorophosphate and lithium bis(fluorosulfonyl)imide projects have achieved large-scale sales.
And as of September 30, 2021, the company’s total assets of 713 million yuan, net assets of 505 million yuan, the first three quarters of this year’s revenue of 530 million yuan, net profit reached 264 million yuan, compared to last year’s annual loss of 7,517,100 yuan to make great progress.
You know, as new energy vehicles continue to burn in recent years, the market and lithium battery-related assets that can be sought after. CATL spent 500 million yuan to get a 25% stake in Yongtai High-Tech, which means the company’s valuation is 2 billion yuan, while the net profit of Yongtai High-Tech in the first three quarters reached 264 million yuan, a rough estimate of the price of CATL’s stake is relatively cheap.
It is worth noting that the net profit of Yongtai High-Tech in the first three quarters of this year increased significantly and the price of lithium materials soared. It is reported that the price of lithium hexafluorophosphate has risen from 105,000 yuan/ton at the beginning of the year to nearly 500,000 yuan/ton today, almost six times the average price of 85,000 yuan/ton in the third quarter of last year, setting a new record high price.
It is also due to the price surge of lithium materials that Yongtai Technology achieved revenue of 3.273 billion yuan in the first three quarters of 2021, an increase of 32.25% year-on-year, and achieved net profit attributable to the mother company of 375 million yuan, an increase of 65.25% year-on-year, and net profit after deduction of 411 million yuan, an increase of 200.79% year-on-year.
Yongtai Technology and CATL have been cooperating for a long time
As we all know, CATL is a global lithium battery giant, with a market share ranking among the top, benefiting from the industry boom, the company’s stock price and market value this year is soaring, gaining the title of CATL, with some momentum to catch up with Kweichow Moutai.
While Yongtai Technology’s lithium business is in the upstream of lithium batteries, its lithium hexafluorophosphate and lithium bis(fluorosulfonyl)imide (LiFSI) is the key material for electrolyte. For example, lithium hexafluorophosphate as a lithium-ion battery electrolyte, and lithium-ion power batteries are currently divided into two main categories, one is lithium iron phosphate batteries, one is ternary high nickel lithium-ion batteries, either type, need to get electrolyte, and then use lithium hexafluorophosphate, and is an irreplaceable lithium-ion battery electrolyte in the near to medium term.
The same belongs to the lithium industry chain, Yongtai Technology and CATL actually have long cooperation.
It is reported that on August 3 this year, Yongtai Technology disclosed a purchase agreement with CATL, under which CATL will purchase lithium hexafluorophosphate, lithium bis(fluorosulfonyl)imide (LIFSI) and vinylidene carbonate (VC) products from the company.
According to the agreement, CATL will purchase a minimum quantity of 24,150 tons of lithium hexafluorophosphate from YPT during the period from July 31, 2021 to December 31, 2026; for lithium bis(fluorosulfonyl)imide (LIFSI), CATL will purchase a minimum quantity of 3,550 tons within the next year, and a minimum quantity of 80% of YPT’s actual production capacity from 2023 to 2026; in addition, after YPT’s vinylidene carbonate (VC) is in production and reaches 200 tons/month, CATL’s minimum purchase quantity will not be less than 200 tons/month during the agreement period.
Both parties agreed that within 10 days after the signing of the agreement, CATL shall make an advance payment of RMB 600 million to YPT based on the procurement volume of lithium hexafluorophosphate, lithium bis(fluorosulfonyl)imide (LIFSI) and vinylidene carbonate (VC).
As mentioned above, Yongtai High-Tech is the main carrier of Yongtai Technology’s lithium materials business segment. From this point of view, Yongtai Technology gives up its right of first refusal and gives up part of its equity in Yongtai High-Tech to CATL, which is actually beneficial to bind this major downstream customer in depth.
Yongtai Technology also disclosed in the announcement that the introduction of new industrial investors in its subsidiary Yongtai High-Tech is beneficial to the company’s deepening cooperation with downstream manufacturers in the field of lithium batteries. The company gave up the right of first refusal for this equity transfer based on the overall consideration of the company’s long-term development strategy and business planning.
Conclusion
Looking ahead, under the background of China’s “carbon neutrality”, the high prosperity of new energy vehicles will continue, and Yongtai Technology, as a supplier of key electrolyte materials, is in short supply.
At the end of 2020, the company’s existing capacity of lithium hexafluorophosphate is about 2,000 tons/year, and the 6,000 tons/year expansion project is expected to be put into operation by the end of 2021.
In addition, although the prospect of Yongtai Technology is worthy of expectation, the company’s share price has gone up by 5.5 times in a short period of time, which has largely deviated from the company’s fundamentals. This time, although the subsidiary got CATL shares, its share price did not rise instead of eating to stop the meaning of the funds to take advantage of the good shipments, which may be a more dangerous signal. Source