Finance Association, May 24 (Reporter Zeng Chuchu) Due to the “rock bottom” of the price of lithium carbonate falling from 600,000 yuan/ton to 100,000 yuan/ton, Longpan Technology (603906.SH), a leading cathode materials company, has been losing money for five consecutive quarters. A Financial Services Association reporter learned from the company's shareholders' meeting today that in order to cope with the loss of cathode materials, the company's self-supply rate of lithium carbonate has increased this year. In order to obtain higher profits, overseas markets will be the focus of the company's future production expansion.

Longpan Technology held the 2023 Annual General Meeting of Shareholders this morning. Investors on site are still most concerned about whether the company's continued losses in cathode materials can improve this year.

In response, a person from the securities department of Longpan Technology said that the loss of lithium iron phosphate cathode materials, including new energy materials, was a common problem in the industry. Because lithium carbonate experienced a sharp and continuous price drop last year, the company would have a 1-2 month time gap between purchasing lithium carbonate and settlement of the finished product, causing inventory price losses and affecting gross profit.

“But this year the problem will be solved to a large extent.” The securities department source mentioned above said, firstly because the price of lithium carbonate is currently relatively stable, fluctuating slightly at a low level, and there will be no large-scale depreciation; second, the company's self-produced lithium carbonate production line in Yichun is climbing a slope and is about to reach full production. Self-produced lithium carbonate can stabilize the cost and quality of the company's raw materials; in addition, the company has also carried out some futures hedging work to reduce the impact of raw materials on the company's operations.

The Yichun lithium carbonate production line mentioned above refers to the Yichun Longpan Era project with an annual output of 40,000 tons of lithium carbonate. In the Yichun Longpan Era, Ningde Times and Longpan Technology held 30% and 70% of the shares respectively. The securities department source mentioned above told the Financial Federation reporter that at present, the mining source was stably supplied by the Jianxiawo mining area in Fengxin County during the Ningde era.

Judging from Longpan Technology's business situation in the first quarter, this year's Q1 net loss was 78 million yuan, which is already a loss reduction compared to last year's Q1 loss of 222 million yuan. The securities department source mentioned above said that the main reason for the year-on-year loss reduction in the first quarter was the impact on lithium carbonate prices, “because lithium carbonate fell from 600,000 to 300,000 last year, and although it also fell in the first quarter of this year, it probably fell from 100,000 to more than 90,000.” Another factor is that this year's capacity utilization rate increased sharply year on year, and the company's shipments reached a record high in March this year.

From an industry perspective, there is a phased oversupply of cathode materials. In the fourth quarter of last year, many lithium battery cathode materials lost money, many production expansion projects have already slowed down, while Longpan Technology has shifted the focus of production expansion overseas.

A Finance Association reporter learned that as of the first quarter of this year, the domestic production capacity of Longpan Technology's lithium iron phosphate cathode materials reached 242,500 tons/year. Other domestic production increase projects will be put into operation depending on market conditions. Indonesia's 30,000 tons/year lithium iron phosphate production line is undergoing trial production. This is also the only additional production capacity the company has added this year.

Regarding the current market situation of cathode materials, the securities department person mentioned above said that the company's current production capacity utilization rate can reach more than 85%, but the profit per ton is still being repaired. “The future focus is still on expanding overseas production capacity. At the current pace of overseas production capacity, Indonesia has already built 30,000 tons, and construction of 90,000 tons will begin in the second half of this year.”

“Because overseas markets still have great opportunities, profits are higher than domestic ones, and we are currently the only one with overseas production capacity, we really want to make good use of the time window of two to three years to occupy overseas markets.” The securities department source mentioned above said.

In addition, Lung ?$#@$ Technology's capital layout has also attracted attention. Longpan Technology previously announced that it plans to spend 100 million yuan to acquire Shandong Meiduo to set up a lithium battery recycling business. It is worth noting that the actual controller of Shandong Meiduo is Shi Junfeng, chairman of Longpan Technology, which has caused investors to doubt that it “buys its own assets at a high price.” In response, the person from the securities department mentioned above responded that in fact, Chairman Shi Junfeng actually paid 100 million dollars when Shandong Meiduo was founded. Currently, he also waits until Shandong Meiduo is fully loaded before it is fully delivered to the listed company. Shandong Meiduo is still in the equipment commissioning stage, and it is expected that electrode chips and black powder will be used as raw materials.