Source: Prospectus

Source | LiveReport Big Data

Abstract: Rui Pu Lan Kwan submitted a prospectus to the Hong Kong Stock Exchange on June 30, 2023. The company is a manufacturer of lithium-ion power battery products and energy storage battery products. The co-sponsors are Morgan Stanley and CITIC Securities. Revenue in 2022 was 14.65 billion yuan (compound annual growth rate of 301.87%), net loss was 450 million yuan, and R&D expenses accounted for 170.29%.

LiveReport learned that REPT BATTERO Energy Co., Ltd. (hereinafter referred to as “Ruipu Lan Jun”), founded in 2017, submitted a listing application on the Hong Kong Stock Exchange on June 30, 2023 to be listed on the Hong Kong Main Board. This is the second time the company has submitted a listing application. The co-sponsors are Morgan Stanley and CITIC Securities.

The company is a lithium-ion battery manufacturer in China, focusing on R&D, manufacturing and sales of lithium-ion power battery products and energy storage battery products. In 2022, in terms of global energy storage battery installed capacity, the company held 8.8% of the market share and ranked third, while the company ranked 10th among Chinese power battery products with a 1.7% market share in terms of installed capacity. It ranks sixth among Chinese manufacturers in terms of total installed capacity of lithium-ion batteries (including power batteries and energy storage batteries) for new energy applications in the world.

The company's battery product sales volume increased sharply from 1.55 GWh in 2020 to 16.61 GWh in 2022, with a compound annual growth rate of 227.4%.

Power battery products:

Source: Prospectus

Energy storage battery products:

Source: Prospectus

competitive advantage

• A rapidly growing battery producer in a booming industry

• Strong R&D strength

• High quality and diverse customer base

• Long-term stable, low-cost supply chain

• Strong large-scale manufacturing capabilities

• A dedicated management team with entrepreneurial spirit and rich industry experience

• Committed to green sustainability and high ESG standards

Company Information:

Official website: https://www.chinarept.com

Company address: Room A205, Building C, No. 205, Binhai 6th Road, Airport New District, Longwan District, Wenzhou, Zhejiang, China

Hong Kong address: Room 2, LG, 1st floor, Guanhua Centre, 61 Mok Tsim Sha Tsui Road, Kowloon, Hong Kong

Financial analysis

2020, 2021, 2022 for the 3 years ended December 31, 2022:

Revenue was approximately RMB 910 million, RMB 2.11 billion and RMB 14.65 billion respectively, with a compound annual growth rate of 301.87%;

Gross profit was approximately RMB 110 million, -320 million yuan, and RMB 1.09 billion respectively, with a compound annual growth rate of 212.98%;

R&D was approximately RMB -70 million, -250 million yuan, and -770 million yuan respectively, with a compound annual growth rate of 224.92%;

Net profit was approximately RMB50 million, -800 million yuan and -450 million yuan respectively, with a compound annual growth rate of 190.89%;

Gross margins are about 12.25%, -15.40%, and 7.43%, respectively;

R&D accounted for about 136.48%, 30.53%, and 170.29% of losses, respectively.

Source: LiveReport Big Data

Over the past three years, the company's revenue has grown rapidly, and the compound annual growth rate has tripled; due to the rapid rise in raw material prices in 2021, the company was unable to adjust sales prices in a timely manner, and profitability was affected. Gross margin was negative in 2021, gross profit turned into a profit in 2022, net loss narrowed, and R&D expenses accounted for 170.29%.

As of April 30, 2023, the company had cash accounts of $3,068 billion, restricted cash of $2,318 billion, accounts receivable of $5,061 billion, inventories of $2,888 billion, and total current liabilities of $10.767 billion.

Industry prospects

Given the increase in demand for downstream electric vehicles, the global and Chinese power battery markets are facing strong growth, and it is expected that the trend will continue to be strong in the near future. The global annual installed capacity of power batteries increased from 63.8 GWh in 2017 to 504.5 GWh in 2022, with a compound annual growth rate of 51.2%, and is expected to grow further to 2597.1 GWh in 2027, with a compound annual growth rate of 38.8% between 2022 and 2027.

Source: Prospectus

The annual installed capacity of power batteries in China increased from 36.1 GWh in 2017 to 294.6 GWh in 2022, with a compound annual growth rate of 52.2%. It is expected to reach 1648.6 GWh by 2027, with a compound annual growth rate of 41.1% from 2022 to 2027.

Source: Prospectus

Lithium iron phosphate batteries dominate the energy storage battery market with a market share of over 90%. pursuantFrost SullivanAccording to the data, the annual installed capacity of global energy storage batteries increased from 2.4 GWh in 2017 to 119.3 GWh in 2022 at a compound annual growth rate of 121.4%. The annual installed capacity of energy storage batteries is expected to continue to grow at a compound annual growth rate of 53.7% from 2022 to 2027, reaching 1023.1 GWh by 2027.

Source: Prospectus

Industry status

The lithium-ion battery industry, especially the power battery market, is highly concentrated in China, with the top ten producers accounting for more than 90% of China's total installed capacity in 2021. According to Frost & Sullivan's data, in terms of the installed capacity of lithium-ion batteries for new energy applications, the company ranked 10th in the world and 6th among Chinese manufacturers in 2022. In terms of the installed capacity of power batteries, the company ranked 10th in the installed capacity of power batteries in China. In terms of the installed volume of energy storage batteries, the company ranked 3rd in 2022, while the company ranked 1st in terms of the compound annual growth rate of installed capacity from 2019 to 2021.

Source: Prospectus

Comparing IPOs of companies in the same industry

The companies selected for comparison in the same industry are Ningde Times (300750.SZ) and China Innovation Airlines (03931.HK).

Ningde Times is the world's leading new energy innovation technology company. It has the highest shipment volume of power batteries in the world and the largest shipment volume of lithium energy storage batteries in the world. The core technology is R&D and manufacturing capabilities for the entire industry chain in the field of power and energy storage batteries, materials, batteries, battery systems, battery recycling, etc. The main business is R&D, production and sales of power battery systems and energy storage systems for new energy vehicles. The Ningde Era is the main supplier of power batteries for the vast majority of autonomous car companies, new power companies, and joint ventures. The production capacity in the first half of this year was 154.25 GWh, and the production capacity under construction exceeded 100 GWh. The company was listed on the A-share GEM in June 2018. It is currently the most weighted stock in the GEM index.

China Innovation Aviation is mainly engaged in the development, production, sales and market application development of lithium-ion power batteries, battery management systems, energy storage batteries, and related integrated products and lithium battery materials. The 2022 H1 power battery market share is 7th in the world, 3rd in China, and independent third-party power battery companies rank second in China. China Innovation Aviation's customers include GAC Aian, Changan New Energy, Zero Run, Xiaopeng, and SAIC-GM-Wuling. The planned effective production capacity for 2022 and 2023 will reach 35 GWh and 90 GWh, respectively. The company was listed on the main board of the Hong Kong Stock Exchange on October 6, 2022.

Source: LiveReport Big Data

Major shareholders

Mr. Xiang Guangda, Qingshan Group and Yongqing Technology are regarded as controlling shareholders of the company. Yongqing Technology holds 62.6% of the shares (including about 50.4% direct equity and about 12.2% indirect interest held through Wenzhou Jinglithium). Qingshan Group (the world's top 500, the world's largest stainless steel manufacturer and nickel metal producer) owns 51% of Yongqing Technology's shares, while Mr. Xiang ultimately controls 57.5% of the shares of Qingshan Group.

Furthermore, SAIC Motor Group is the company's largest external strategic investor, holding 8.69% of the shares through Qingdao SAIC Motor, which holds 49.95% of the shares; Yangyuan Drinks (603156.SH) holds 2.63% of the shares through Wuhu; Tianjin Haihe (IDG Capital Entity) holds 0.99% of the shares; Ping An of China (601318.SH, 02318.HK) holds 0.99% of the shares through Ping An Investment; and Zhongwei Shares (300919.SZ) holds 0.99% of the shares.

Source: Prospectus

Management situation

The board currently consists of 12 directors, including 3 executive directors, 5 non-executive directors, and 4 independent non-executive directors.

Dr. Cao Hui, 44, is an executive director, chairman and president, responsible for setting the strategic direction of the Group and the daily management of the company. Dr. Cao has over 20 years of experience in the lithium-ion battery industry and has worked for the Shanghai Space Power Research Institute and Shanghai Aerospace Power Technology Co., Ltd. Central South University obtained bachelor's and master's degrees in non-ferrous metal metallurgy, doctorate degrees in materials physics and chemistry from the Shanghai Institute of Microsystems and Information Technology of the Chinese Academy of Sciences, and was rated as a researcher by the Shanghai Space Administration's Professional and Technical Job Review Committee.

Dr. Wu Yanjun, 48, executive director and secretary of the board of directors, is responsible for formulating the Group's corporate development strategy, foreign cooperation, financing and investment. He has worked for Kashang Yingke Metals (Shanghai) Co., Ltd., Vale Mining (China) Co., Ltd., Shanghai Jinyan Business Consulting Office (general partnership), Shanghai Dingtang Metal Materials Co., Ltd., Guangdong Century Qingshan Nickel Co., Ltd., Qingtuo Group Co., Ltd., and Shanghai Qingshan Trading Co., Ltd. Bachelor of Science degree in metal materials and heat treatment from Central South University of Technology (now known as Central South University), master's degree in materials science from Central South University, and doctorate degree in microelectronics and solid state electronics from Shanghai Jiao Tong University.

Ms. Huang Jiehua, 41, is an executive director and financial director, responsible for the Group's accounting and financial management. Worked for Ruipu Technology Group Co., Ltd. College degree in accounting from Zhejiang University of Economics and Trade.

Mr. Hu Xiaodong (formerly known as Hu Dong), 49 years old, non-executive director. He has served as Deputy Secretary of the Taishun County Committee of Wenzhou City of the Communist Party of China and District Governor of Lucheng District Government of Wenzhou City, etc., and Wenzhou Mingcheng Construction Investment Group Co., Ltd. A Chinese secretarial college degree from the Department of Administration at Wenzhou University, a bachelor's degree in law from Peking University, and a master's degree in economic management from the CPC Central Party School.

Mr. Wang Haijun, 54 years old, non-executive director. He has worked for Shanghai Dingxin, Zhe****shan Iron & Steel Co., Ltd., Qingshan Holding Group Shanghai International Trade Co., Ltd., the Liquid Hydrogen Liquid Oxygen Rocket Engine Research Laboratory of the Beijing Institute of Aerospace Propulsion, the Beijing Representative Office of Italy's Danieli Company, and the Shanghai Representative Office. Master's degree in aerospace propulsion from the China Launch Vehicle Technology Research Institute.

Ms. Xiang Yangyang, 33, is a non-executive director. He has worked for Shanghai Dingxin's Strategic Investment Department, Citibank Singapore, and Golden Harbour International Pte Ltd. He has a bachelor's degree in economics and business from Brandeis University (Brandeis University) and a candidate for the financial CEO program at Tsinghua University's Wudaokou School of Finance.

Mr. Wei Yong, 50 years old, non-executive director. He has worked for SAIC Motor Group (600104.SH), SAIC Motor Hong Kong Investment Co., Ltd., Shanghai Automobile Industry (Group) Co., Ltd., SAIC Motor Group Investment Management Co., Ltd., and the Research Office of the Shanghai Municipal Committee of the Communist Party of China. A bachelor's degree in economics in insurance from the Department of Finance, Shanghai University of Finance and Economics, and a master's degree in economics from Shanghai University of Finance and Economics, majoring in monetary banking.

Mr. Yu Xinhua, 48 years old, is a non-executive director. Worked for IDG Capital, mainly responsible for investment in advanced technology and intelligent manufacturing industries. He has a bachelor's degree in heat processing technology and equipment from Zhejiang University, and is ranked as one of the top investors in China by Forbes China's Top 100 Venture Investors and China Investment China's Top 100 Venture Investors.

Pre-IPO financing

Source: LiveReport Big Data

Intermediary team

According to statistics from Jieli Trading Bao, Ruipu Lan Jun's intermediary team has a total of 8 companies, including a total of 2 sponsors. The data for nearly 10 sponsorship projects is average; the company has a total of 2 lawyers, and comprehensive project data is average. Overall, the intermediary team's historical data performance is average.

Source: LiveReport Big Data

Sponsor underwriting history

The first-day breakout rate of Morgan Stanley's recent sponsorship was 34.17%;

The first-day breakout rate of CITIC Securities's recent sponsorship was 0%.

Source: LiveReport Big Data

Analysis of public opinion

Currently, an investigation of Ruipu Lanjun Energy Co., Ltd. through the Tianyan Research website revealed that it has the following risk tips:

Of the three own risks, one was an invention patent dispute with the Ningde Era (300750.SZ), and the other two were civil disputes such as labor arbitration;

Among the peripheral risks, Shanghai Ruipuqing Innovation Energy Co., Ltd., which the company invests in, has been sued for a computer software copyright infringement dispute;

Of the 44 warning reminders, the main ones are personnel changes (corporations, investors, key personnel, etc.), business information changes, etc.

Overall, the company's various risks fall within a relatively normal range, and there is no large-scale negative public opinion on the Internet.