Amid concerns that rising lithium battery demand may trigger a new round of capacity shortages, the industry chain is seeing frequent activity. Previously, resource companies were more proactive in securing downstream partnerships, but now battery companies are actively extending their reach upstream.
CATL (300750.SZ/03750.HK) and Zhongchuang Xinhang (03931.HK), two major lithium battery manufacturers, have recently made moves. CATL invested RMB 2.635 billion to acquire a 12.95% stake in Tianhua New Energy (300390.SZ), becoming its second-largest shareholder after the transaction. Zhongchuang Xinhang plans to subscribe for approximately 5.02% of Shengxin Lithium Energy (002240.SZ) for RMB 945 million.
It is worth noting that although some market observers believe a new round of lithium rush is brewing, driven by demand growth in both the power and energy storage markets, the overall performance recovery of the entire industry chain remains to be seen. Furthermore, with losses not yet fully alleviated and debt burdens looming, well-established leading companies have an opportunity to invest and position themselves at this juncture.
Shengxin Lithium Energy terminates its Hong Kong IPO and raises funds through private placement.
According to the latest announcement from Shengxin Lithium Energy, the company plans to introduce Zhongchuang Innovation Aviation and Huayou Holdings Group as strategic investors by issuing A-shares to specific targets.
The total amount of funds raised in this offering (including issuance expenses) will not exceed RMB 3.2 billion. Zhongchuang Innovation Aviation plans to subscribe for RMB 945 million, which will give it approximately 5.02% of the company's shares after the offering. Huayou Holdings Group plans to subscribe for RMB 1.1275 billion, which will give it approximately 5.99% of the company's shares after the offering. Additionally, Shengxin Lithium Energy's controlling shareholder, Shengtun Group, plans to subscribe for RMB 1.1275 billion.
Shengxin Lithium Energy's main business is lithium mining and beneficiation, and the production and sales of basic lithium salts and lithium metal products. The company's 2025 semi-annual report shows that Shengxin Lithium Energy currently has lithium resource projects in Sichuan, China, and in Zimbabwe and Argentina; it also has lithium product production bases in Sichuan, China, and Indonesia, including a 142,000-ton lithium salt project and a 3,000-ton lithium metal project. Currently, it has an annual lithium salt production capacity of 137,000 tons and an annual lithium metal production capacity of 500 tons.
From a performance perspective, Shengxin Lithium Energy's current situation is not optimistic. Following a sharp 188.51% year-on-year decrease in net profit attributable to shareholders of the listed company to -622 million yuan last year, the company continued its downward trend in the first half of this year, with a further 349.88% year-on-year decline to -841 million yuan. The third quarter saw a slight improvement, with quarterly revenue of 1.481 billion yuan, a year-on-year increase of 61.07%; net profit attributable to shareholders of the listed company was 88.7191 million yuan, a year-on-year increase of 132.30%.
However, even with the boost from the third quarter, Shengxin Lithium Energy's performance in the first three quarters of this year was still unsatisfactory. Revenue for the first three quarters was 3.095 billion yuan, a year-on-year decrease of 11.53%; net profit attributable to shareholders of the listed company was -752 million yuan, a year-on-year decrease of 62.96%. The company's asset impairment losses reached 322 million yuan.
Shengxin Lithium Energy mentioned that, affected by factors such as the industry's supply and demand pattern, the market price of lithium salt products rebounded in the third quarter, and the Indonesian factory began to sell and ship products. The company's operating performance in the third quarter increased compared with the same period last year, and turned from loss to profit compared with the second quarter of this year.
Furthermore, it is worth noting that while incurring losses, Shengxin Lithium Energy's debt-to-asset ratio reached 50.35%, a ten-year high. As of the end of September this year, Shengxin Lithium Energy's short-term borrowings reached 4.583 billion yuan, and its non-current liabilities due within one year amounted to 1.513 billion yuan, totaling 6.096 billion yuan.
On October 31, Shengxin Lithium Energy also announced that it had decided to terminate its plan to issue H shares and list on the main board of the Hong Kong Stock Exchange. Back in August of last year, Shengxin Lithium Energy's board of directors approved a resolution regarding the issuance of H shares. At that time, the company stated that pursuing a Hong Kong listing would advance its globalization strategy, broaden its international financing channels, and enhance its international brand image and overall competitiveness.
Having terminated its Hong Kong IPO, Shengxin Lithium Energy has opted for a private placement as another way to alleviate its financial pressure. In its latest announcement, Shengxin Lithium Energy also stated that the total funds raised, after deducting issuance expenses, are intended to be used to supplement working capital and repay debts.
Shengxin Lithium Energy believes that the strategic introduction of Zhongchuang Innovation Aviation and Huayou Holdings Group will provide strategic support for the company.
Zhongchuang Innovation Aviation is a downstream customer of Shengxin Lithium Energy. In the first half of 2025, Zhongchuang Innovation Aviation's power battery installations reached 21.8 GWh, a year-on-year increase of 22.7%, ranking fourth globally and third domestically; its energy storage cell shipments also achieved significant growth, ranking fourth globally.
The announcement stated that Zhongchuang Aviation will further increase its lithium product procurement, ensuring its own raw material needs while helping Shengxin Lithium Energy expand its sales scale and improve its sales performance. After becoming a strategic investor in Shengxin Lithium Energy, Zhongchuang Aviation will fully leverage its advantages to actively assist Shengxin Lithium Energy in cooperating with high-quality companies in the industry, including but not limited to market access, channels, branding, technology, resources, and investment and financing, providing strategic support for Shengxin Lithium Energy's business expansion.
Huayou Holdings Group is also a leading enterprise in the lithium battery industry chain, with several holding companies including Huayou Cobalt (603799.SH). Shengxin Lithium Energy stated that its business layout complements that of Huayou Holdings Group, and the cooperation between the two parties can enhance upstream resource security and cost control. Through its equity participation in Shengxin Lithium Energy, Huayou Holdings Group can further enhance its lithium resource and lithium salt product supply and improve its new energy industry landscape; Shengxin Lithium Energy, through strategic cooperation, can secure high-quality downstream customers, increase product consumption channels, and ensure stable sales.
Furthermore, Shengxin Lithium Energy also mentioned that Huayou Holdings Group has established a broad international customer network, including cooperation with several leading new energy vehicle companies, which will help Shengxin Lithium Energy further expand its downstream market and increase product penetration. After becoming a strategic investor in Shengxin Lithium Energy, Huayou Holdings Group will fully leverage its own advantages to actively assist Shengxin Lithium Energy in cooperating with high-quality companies in the industry, including but not limited to market access, channels, branding, technology, resources, and investment and financing, providing strategic support for Shengxin Lithium Energy's business expansion.
CATL will become the second largest shareholder of Tianhua New Energy.
On October 31, Tianhua New Energy disclosed that its actual controllers, Pei Zhenhua and Rong Jianfen, signed a "Share Transfer Agreement Regarding Suzhou Tianhua New Energy Technology Co., Ltd." with CATL. Pei Zhenhua and Rong Jianfen intend to transfer a total of 107,582,325 unrestricted shares of the company, representing 12.95% of the total shares, to CATL through an agreement transfer. The transfer price is RMB 24.49 per share, for a total transfer price of RMB 2,634,691,139.
In fact, CATL was already a shareholder of Tianhua New Energy, holding 0.59% of the shares. After this share transfer, CATL's shareholding in Tianhua New Energy increased to 13.54%, making it the second largest shareholder. Tianhua New Energy stated that introducing strategic investors through an agreement transfer will further optimize the company's shareholder structure, and this share transfer will not result in a change of the company's actual controller or controlling shareholder.
It's worth noting that Tianhua New Energy (formerly known as "Tianhua Ultra-Clean" before its name change in 2023) has been established for nearly 30 years and was listed on the Shenzhen Stock Exchange's ChiNext board in 2014. At that time, it was engaged in the research, development, production, and sales of anti-static ultra-clean technology products. After listing, it acquired 100% equity of Yushou Medical through mergers and acquisitions, expanding its business scope to the field of medical device products, producing new disposable medical device products such as self-destructing, safety, and high-pressure injectors.
In 2018, the company decided to ride the wave of the new energy industry, venturing into lithium battery cathode materials through a joint investment with CATL in Yibin Tianyi Lithium Industry Science and Technology Innovation Co., Ltd. (hereinafter referred to as "Tianyi Lithium"). Pei Zhenhua, the company's chairman and actual controller, previously told the media that although it had become a "mini-giant" in the industry, the ceiling of market demand was a major concern, making entry into new industries imperative. In the first half of this year, the company's lithium battery materials business accounted for nearly 88% of its total revenue.
However, similar to Shengxin Lithium Energy, Tianhua New Energy's current performance is also not good. In the first three quarters of this year, the company's revenue was 5.571 billion yuan, an increase of 2.17% year-on-year; net profit attributable to shareholders of the listed company was 32.8656 million yuan, a decrease of 96.44% year-on-year; and net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was -97.7498 million yuan, a decrease of 116.20% year-on-year.
According to the company's official website, Tianhua New Energy's lithium battery division, Tianyi Lithium Industry, primarily researches, develops, produces, and sells a series of lithium battery materials, including battery-grade lithium hydroxide and battery-grade lithium carbonate, used in new energy vehicles and energy storage. The company has three major lithium salt production bases located in Yibin and Meishan cities in Sichuan Province and Yichun city in Jiangxi Province, with a planned total production capacity of 260,000 tons by 2026.
Tianhua New Energy's upstream raw material layout remains relatively weak. Currently, it mainly has long-term purchase and sales agreements with upstream lithium concentrate producers such as Pilgangoora, AMG, AVZ, and Global Lithium, forming a raw material supply system. However, in December last year, Tianhua New Energy announced that its wholly-owned subsidiary, Yichun Shengyuan, won the mining rights for ceramic clay (lithium-containing) in the Jinzifeng-Zuojiali mining area of Fengxin County, Jiangxi Province, for 2.51 billion yuan. It is understood that the open-pit mining area of this mine contains 206.257 million tons of ceramic clay (lithium-containing) ore, but the average lithium oxide grade of the mine is only 0.30%.
