Fulin Precision Gains After CATL Invests USD455 Million in Chinese Battery Materials Supplier

(Yicai) Jan. 14 -- Fulin Precision’s shares rose after the Chinese supplier of raw materials for power batteries said Contemporary Amperex Technology, the world's biggest maker of lithium batteries, will invest CNY3.2 billion (USD455 million) in the company, making it the second-largest shareholder.Fulin Precision [SHE: 300432] closed up 7.9 percent at CNY20.17 (USD2.89) per share in Shenzhen today, after earlier soaring by as much as 18.3 percent. CATL's stock [SHE: 300750] fell 1.4 percent to CNY353.98 (USD50.76).Fulin Precision, which is also in precision auto parts, will issue new shares to CATL at CNY13.62 apiece, a discount of about 27 percent on yesterday’s closing price, the Mianyang-based firm announced yesterday. The deal will give CATL a 12 percent stake in Fulin Precision.The funds will be allocated across several projects. More than CNY2.7 billion will be invested in lithium iron phosphate cathode materials, CNY400 million (USD 57.3 million) in two new-energy vehicle component lines, CNY200 million in robotics parts manufacturing, and CNY100 million in the production of key components for low-altitude aircraft power systems.The LFP project investment will be undertaken by Shenghua New Material, a joint venture between CATL and Fulin Precision, which is 51 percent owned by CATL. Fulin Precision plans to inject CNY2.7 billion into a project company formed by Shenghua to manage construction and operation of a proposed new plant.Fulin Precision announced that investment plan on Jan. 5, in which Shenghua will invest CNY6 billion to build a new plant in Ordos, Inner Mongolia Autonomous Region. The facility will be able to produce 500,000 tons a year of high-end LFP cathode materials for energy storage systems to meet rising demand from CATL.Shenghua has long been one of CATL’s main suppliers of LFP cathode materials. To support capacity expansion, CATL has provided financial backing since last March, including equity investments and advance payments to fund daily operations and growth initiatives.In September, Fulin Precision said CATL would raise its stake in Shenghua to 51 percent from 18.7 percent through a CNY2.1 billion deal aimed at beefing up its research, development, manufacturing, and market expansion for high-quality LFP cathode materials.Surging demand for LFP batteries in the energy storage market is pushing Chinese producers of lithium battery materials to expand their cathode production capacity, while battery manufacturers such as CATL are deepening ties with key suppliers to secure stable access to raw materials.CATL has also placed a major long-term order valued at about CNY120 billion (USD17.2 billion) with Ronbay New Energy Technology, the latter announced yesterday. CATL will buy from Ronbay 3.05 million tons of LFP cathode materials from this quarter through 2030, it said.Editor: Futura Costaglione