1. Fulin Precision and Contemporary Amperex Technology signed a long-term cooperation agreement, and the latter promised to purchase at least 0.14 million tons of lithium iron phosphate cathode material from it every year for the next three years. 2. 0.14 million tons of lithium iron phosphate is more than three times the sales volume of the company last year.
On August 12, Caixin reported that Fulin Precision (300432.SZ), with a market value of over 7 billion yuan, signed a long-term cooperation agreement with Contemporary Amperex Technology. "Ning Wang" agreed to pay advance payment to support the construction of its Jiangxi base, and promised to purchase at least 0.14 million tons of lithium iron phosphate cathode material from its subsidiary every year for the next three years.
Fulin Precision announced tonight that its subsidiary Jiangxi Shenghua signed a "Business Cooperation Agreement" with Contemporary Amperex Technology recently. According to the strategic cooperation plan of both parties and future market demand, the two parties agreed to establish a mechanism for long-term cooperation in lithium iron phosphate material verification and production, jointly developing the new energy market.
According to the agreement, Contemporary Amperex Technology agreed to pay a certain amount of advance payment to Jiangxi Shenghua to support the construction of its Jiangxi base (with an annual capacity of 0.075 million tons); Jiangxi Shenghua promised to complete the construction of Jiangxi base on time and achieve an annual production capacity of 0.075 million tons of lithium iron phosphate cathode material that meets the production requirements of Contemporary Amperex Technology.
In addition, Jiangxi Shenghua promised to supply Contemporary Amperex Technology according to the commitment agreement from 2025 to 2027, and reserved for Contemporary Amperex Technology. When Jiangxi Shenghua has products with comprehensive advantages, Contemporary Amperex Technology promised to purchase at least 0.14 million tons per year from Jiangxi Shenghua from 2025 to 2027, and the delivery plan for each year will be signed by both parties in a supplement agreement before October 1 of the previous year.
In fact, Contemporary Amperex Technology is also a major shareholder of Jiangxi Shenghua. In 2022, it subscribed to Jiangxi Shenghua's newly registered capital of 1.44 billion yuan to further accelerate the construction of Jiangxi Shenghua's lithium iron phosphate project in Sichuan Shihong.
However, Fulin Precision announced tonight that it plans to repurchase 20% of Jiangxi Shenghua's equity held by minority shareholders Contemporary Amperex Technology and Changjiang Morning Road, with a transfer price of RMB 196 million and RMB 193 million respectively, for a total of RMB 389 million. After the transaction is completed, the company's shareholding in Jiangxi Shenghua will increase from 56.27% to 96.27%.
Public information shows that Fulin Precision is mainly engaged in the manufacture of lithium battery auto parts and accessories and lithium battery cathode materials business. From the perspective of historical sales, 0.14 million tons of lithium iron phosphate is more than three times the sales volume of the company last year. Fulin Precision said during the institutional research in May that the company sold 0.0452 million tons of lithium iron phosphate last year and 0.0173 million tons in the first quarter of this year. In the second quarter, the capacity utilization rate of the company's lithium iron phosphate business increased rapidly. While the company's production and sales increased, it further strengthened its cost reduction and efficiency improvement, and will further increase its efforts to improve the operating performance of the lithium iron phosphate business.
In addition, the domestic market share of Contemporary Amperex Technology's lithium iron phosphate power batteries is still rising. According to the data of the Power Battery Alliance, the company's domestic market share of power batteries from January to June 2024 was 46.4%, a year-on-year increase of 3 percentage points. Among them, the company's domestic market share of lithium iron phosphate power batteries was 37.2%, a year-on-year increase of 2.1 percentage points, ranking first.
From the perspective of the industry, according to Mysteel data, China's production of lithium iron phosphate was 0.198 million tons in July 2024, an increase of 1% month-on-month. Institutions predict that in August, supported by energy storage orders, downstream demand will rebound slightly, and the production of lithium iron phosphate will reach 0.2078 million tons.