Tianqi Lithium (09696.HK): Subsidiary to Invest RMB 150 Million for 79.22 Million Shares in Sunwoda Power; Deepens Downstream Industry Chain Cooperation

NewTimeSpace News: Tianqi Lithium Corporation (stock code: 9696) issued a voluntary announcement on July 24 regarding its wholly-owned subsidiary's external investment and signing of a Capital Increase Agreement.

According to the announcement, based on the company's strategic development needs, the company's wholly-owned subsidiary Tianqi Lithium (Shehong) Co., Ltd. ("Shehong Tianqi") intends to sign the "Sunwoda Power Technology Co., Ltd. Capital Increase Agreement" (the "Capital Increase Agreement") with Sunwoda Power Technology Co., Ltd. ("Sunwoda Power" or "Target Company"), Sunwoda Huizhou New Energy Co., Ltd. ("Huizhou Sunwoda", "Target Company's Largest Shareholder"), Wang Mingwang, and Wang Wei (individually or collectively referred to as "Sunwoda Power's Actual Controllers" or "Target Company's Actual Controllers"), and intends to use RMB 150 million of self-owned funds to subscribe for 79,218,106 new shares of Sunwoda Power (the "Transaction"). Another investor participating in this capital increase, Sungrow Power Supply Co., Ltd. ("Sungrow"), intends to subscribe for 345,919,064 new shares of Sunwoda Power.

The announcement disclosed that the main terms of the Capital Increase Agreement are as follows: Shehong Tianqi agrees to subscribe for 79,218,106 new shares of Sunwoda Power for RMB 150 million (the "Capital Increase Funds") in accordance with the terms and conditions agreed in the Capital Increase Agreement; of which, RMB 79,218,106 will be credited to Sunwoda Power's registered capital, and the remaining capital increase funds will be credited to Sunwoda Power's capital reserve. Sunwoda Power and Sunwoda Power's actual controllers shall cause existing shareholders to confirm in shareholders' meeting resolutions or similar documents the waiver of their pre-emptive rights under applicable laws, the company's articles of association, or any other matters in respect of this Transaction.

The announcement stated that prior to this Transaction, Huizhou Sunwoda held 3,829,367,035 shares of the Target Company, representing 27.18% of the Target Company's total share capital, and is the Target Company's largest shareholder. Mr. Wang Mingwang and Mr. Wang Wei are persons acting in concert and the actual controllers of listed company Sunwoda Electronic Co., Ltd. ("Sunwoda Electronic"). Sunwoda Electronic indirectly holds 27.18% of the Target Company's equity through its subsidiary Huizhou Sunwoda. Given that the remaining shareholding of the Target Company other than Sunwoda Electronic and its actual controllers is highly dispersed, Sunwoda Electronic and its ultimate controllers have an absolutely dominant position at the shareholder level of the Target Company.

After this Transaction, Huizhou Sunwoda's shareholding ratio will decrease to 26.38%, Sungrow's shareholding ratio will increase to 4.78%, and Shehong Tianqi's shareholding ratio will be 0.55%.

The announcement disclosed that Sunwoda Power is a globally leading comprehensive new energy technology enterprise integrating R&D, production, and sales of battery cells, modules, battery management systems (BMS), and battery packs (PACK), committed to providing scenario-based power battery and energy storage solutions, with registered capital of RMB 14,090,154,880.

The announcement stated that Shehong Tianqi's proposed strategic investment of RMB 150 million of self-owned funds to subscribe for 79,218,106 new shares of Sunwoda Power aligns with the company's vertical integration development strategy and the trend of upstream-downstream industry chain linkage development. Furthermore, this Transaction will deepen the company's cooperation with the downstream industry chain, opening up new tentacles and channels for business expansion, which is conducive to the company exploring opportunities for industry chain circular development while practicing the vertical integration development strategy. From the perspective of the company's long-term strategic direction, this Transaction is expected to have a positive impact on the company's future business development.

The announcement also included risk warnings. As the completion of this Transaction is subject to the satisfaction of the conditions precedent set out in the Capital Increase Agreement, this Transaction may or may not proceed. In addition, HEV battery technology has high technical thresholds. Although Sunwoda Power has established technological advantages and competitive barriers, it still faces the risk of being caught up by competitors. While Sunwoda Power has accumulated unique competitive advantages in both power and energy storage, subsequent actual performance realization and profitability still depend on customer demand, raw material prices, business models, production capacity construction progress, etc., and there is a risk of development falling short of expectations. The Capital Increase Agreement for this Transaction has not yet been signed.

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