On September 25, China Shengsheng Lithium continues to increase its layout in the silicon-carbon anode material industry.

On the evening of September 24, China Shengsheng Lithium announced that the company plans to invest in Jiangsu Pushida Environmental Technology Co., Ltd. through its own funds of 39.999999 million yuan, subscribing to Pushida's privately placed shares at a price of 6.50 yuan per share.

After this investment, China Shengsheng Lithium will directly hold 6.1538 million shares of Pushida, with a shareholding ratio of 14.68%.

China Shengsheng Lithium stated that this investment aims to seize the opportunity of the growing demand for high-capacity anode materials for new energy vehicles and the rapid development of the energy storage market, further improve the company's industrial layout in the field of new lithium battery anode materials, integrate the advantages in the silicon-carbon anode field of both the company and Pushida, and strengthen the integration of the industrial chain upstream and downstream.

It is introduced that Pushida, the intended investment target, is mainly engaged in the research, production, and sale of high-performance activated carbon, hard carbon, silicon-carbon precursor porous carbon, and other products. Its net income attributable to the parent company in 2023 was 6.3636 million yuan, and in the first half of 2024, it was 2.5055 million yuan.

In recent years, China Shengsheng Lithium has expanded into fields such as catalysts, carrier carbon, and new energy anode materials, and in the second half of 2023, it added the production and sale of hard carbon and silicon-carbon precursor porous carbon products.

In response, China Shengsheng Lithium frankly stated, "Hard carbon and silicon-carbon precursor porous carbon products are key materials for silicon-carbon anodes, requiring continuous research and development, downstream testing, customer introduction, and a series of processes. The technical barriers are high, with significant uncertainties. In addition, after successful research and development, the products still need market promotion, customer development, and other market-oriented activities to bring in substantial income. If the target company ultimately fails to successfully research and produce products that meet market demands and have cost advantages, and continuously iterate and upgrade them, it may lead to a decline in the competitiveness of the target company, affecting its subsequent development."

Huasheng Lithium Battery's main business is the research, production, and sales of electrolyte additives for lithium batteries. Looking at the performance, the company has been facing losses since 2023. In the first half of this year, Huasheng Lithium achieved revenue of 0.203 billion yuan, a year-on-year decrease of 13.87%; the net income attributable to shareholders of the listed company was -72.5233 million yuan, compared to 19.6567 million yuan in the same period of the previous year, showing a turnaround from profit to loss.

There has been volatility in the performance of the electrolyte's main business. In 2023, the revenue from Huasheng Lithium's VC (vinyl carbonate) product was approximately 0.328 billion yuan, a year-on-year decrease of 32.95%; the revenue from the FEC (fluoroethylene carbonate) product was approximately 0.153 billion yuan, a year-on-year decrease of 51.90%. In terms of gross margin, Huasheng Lithium's comprehensive gross margin in 2023 was 11.26%, a decrease of 35.53 percentage points year-on-year. Specifically, the gross margin of the VC product was 11.86%, a decrease of 34.30 percentage points year-on-year; the gross margin of the FEC product was 9.03%, a decrease of 40.14 percentage points year-on-year.

With the contraction of the main business' gross margin, Huasheng Lithium has been continuously expanding the anode material in recent years.

In December 2022, Huasheng Lithium and its controlling subsidiary Huaying New Energy jointly established the subsidiary Huasheng Lianying. They invested in and constructed the 'annual production of 0.2 million tons of low-energy high-performance lithium battery anode material project' in Jiangyin High-tech Zone, with the first phase of 0.05 million tons of project planned to be completed and put into operation by the end of 2024. According to the latest institutional research, the company is progressing with the construction of this project.

In terms of research and development, apart from the electrolyte project, Huasheng Lithium currently has multiple anode material research projects underway. In terms of progress, they have already completed the hundred-kilogram-scale production and small-scale trial sales of new silica oxide materials. They have achieved over 600mAh/g of silicon-carbon composite anode material, finalized the interface modification and modification routes of silicon-carbon, determined the mixing method and amount, prepared batch high-capacity silicon-based anode material, and sent samples to customers.

The current competition in the lithium battery industry continues to intensify, with lithium battery companies facing significant performance pressures. However, in comparison, anode material companies such as Bethelray, Ningbo Shanshan, and Hunan Zhongke Electric all saw a quarter-on-quarter increase in net income attributable to the parent company in the second quarter.

Data from GGII shows that in the first half of 2024, China's anode material shipments were 0.94 million tons, a year-on-year increase of 29%. In the first half of the year, anode material prices remained weak, but compared to other lithium battery materials, anode material clearance started earlier.