Financial Services Association, May 20 (Reporters Zeng Chuchu and Liu Yue) As the US market continues to introduce policies related to China's lithium battery industry chain going overseas, Kodaly (002850.SZ), a power battery precision structural parts supplier tied to the Ningde era (300750.SZ), chose to build a factory in the US. A relevant person in the company said that the decision was only made with a clear order.

Kodaly announced today that the company plans to jointly invest in the establishment of Kodaly America Limited (“Kodaly USA”), its wholly-owned subsidiary Kodaly Hungary Co., Ltd. (“Kodaly America”) and invest in the construction of an American new energy power battery precision structural parts production base, with a total investment of no more than 49 million US dollars (equivalent to 354 million yuan), of which the company's investment ratio is 85% and Kodali Hungary's investment ratio is 15%. All funding sources are the company's own capital.

According to the announcement, Kodaly's US new energy power battery precision structural parts project will produce precision structural parts for power and energy storage batteries, all of which will achieve an annual output value of about 70 million US dollars (equivalent to 506 million yuan) after delivery. The forecast is based on current market judgment, and there is a risk that it will not be able to meet the expected output value target due to changes in the market environment.

It is worth noting that this is the first time that Kodaly has invested in setting up a company in the US, and because it is deeply affected by policies, the US market can be described as “difficult” for Chinese lithium battery companies to go overseas. Previously, the US Inflation Act (IRA) imposed tax credits on electric models using Chinese battery modules, and the US White House also announced last week that it would impose tariffs on electric vehicles and other Chinese products.

In response, the Financial Services Association reporter telephoned Kodali's securities department as an investor. A relevant company source said: We had already done a lot of risk assessments before this (announcement). (Compared) this (IRA) bill has been reviewed (audited) for a long time; this is something that has been decided for a long time. Decisions are made only when there is a clear order.

Kodaly also stated in the announcement that the main business of Kodaly in the United States is the research, development and manufacture of battery structural parts and the research and manufacture of their molds. Establishing the US Kodali and investing in the construction of a production base is of positive significance in expanding the company's share of the international market and enhancing the competitiveness of the enterprise. However, it was also mentioned that during the actual operation of this project, it may face risks such as changes in domestic and foreign political and economic environments. There is a possibility that domestic and foreign markets, financing environment and policies, international political environment and economic situation will change in the future, and the investment plan for this project may be adjusted according to the actual situation in the future.

Judging from Kodali's previous new construction projects, most of the production expansion projects corresponding to downstream customers, the company's annual report shows that the current layout and positioning of local subsidiaries reflect their strategic plans to localize production and radiate surrounding customers. They have formed production base layouts in key regions of the domestic lithium battery industry, such as East China, South China, Central China, Northeast China, Northwest China, and Southwest China, effectively radiating surrounding downstream customers.

In August of last year, Kodali responded to investors' plans in North America, saying that the company and customers have always communicated with their needs and plans to build a factory in North America. On the premise of ensuring safety, ensuring effective investment, and ensuring good returns, the company will prepare and choose the right time to lay out production capacity.

According to information, Kodali is an R&D and manufacturing company for precision battery structural parts and automotive structural parts. It is closely tied to the Ningde era. The 2023 report shows that its top five customers account for 74.88% of revenue. In 2022, Kodali signed a strategic cooperation agreement with Ningde Times to accelerate the implementation of overseas cooperation to build a production base for battery structural components and achieve global supporting cooperation between the two sides. Regarding the restrictions of the US IRA, Ningde Era chose the “LRS model”. For example, if an American battery factory cooperates with Ford, Ford will fully own and operate it, while Ningde Times will provide patent licenses, technology, and service support.

From an industry perspective, under the “internal volume” of the lithium battery industry chain last year, precision battery structural parts maintained a rapid growth trend. According to statistics from the Advanced Industrial Research Institute (GGII), China's lithium battery structural parts market is expected to reach about 47.7 billion yuan in 2023. Apart from the increase in shipments of power batteries and energy storage batteries, the increase in overseas market demand is also an important driving factor.