Hunan Corun New Energy Co., Ltd. Business Report FY ended Dec. 2022

Financial Overview

(CNY millions)

	FY ended Dec. 31, 2022	FY ended Dec. 31, 2021	Change (%)
Sales	3,785.83	3,085.57	22.69
Operating income	256.47	43.08	495.33
Ordinary income	252.19	44.74	463.68
Net income	199.94	5.17	3,767.31

Business trends

Batteries

Drive battery for HEV
-In the fiscal year ended December 2022, sales in the HEV drive battery business of its subsidiary Corun PEVE Automotive Battery Co., Ltd., which produces battery modules, grew 7.64% year-over-year (y/y).

Materials

1. HEV battery materials
-In the fiscal year ending December 2022, the company’s subsidiary Changde Liyuan New Material Co., Ltd. sold 2,790,200 square meters of nickel foam for HEVs, equivalent to about 423,800 vehicles. This was a y/y increase of 9.09%, representing sales of about CNY 298 million, a y/y increase of 35.92%.

-Hunan Copower EV Battery Co., Ltd.'s positive and negative plate materials for HEVs achieved sales equivalent to414,500 vehicles, a y/y increase of 13.47%, with sales revenue of about CNY1.537 billion, a y/y increase of 32.85%.

2. Lithium battery material
-The Company's subsidiary, Yichun Liyuan New Energy Co., Ltd., acquired 51% equity of Jinfeng Lithium Industry. Jinfeng Lithium aims to produce 10,000 tons of lithium carbonate by the end of June 2023 and to increase its lithium carbonate production capacity by another 20,000 tons by the end of December 2023; by the end of 2023, Jinfeng Lithium's lithium carbonate production capacity is expected to reach 30,000 tons.

-The Company's subsidiary, Corun Hybrid Technology Co., Ltd., acquired 30% equity of Jiangxi Dingsheng New Materials Technology Co., Ltd. Dingsheng New Materials already has brine production facilities to produce 5,000 tons of lithium carbonate per year.

-The company completed the acquisition of the equity of Yifeng County Donglian Company, which owns mining rights to four underground lithium mining facilities.

-The company signed an agreement with China Three Gorges Technology Co., Ltd. (Three Gorges Technology). The two companies have agreed to jointly build a national engineering research center for advanced energy storage materials. Corun and Three Gorges Technology will cooperate in key technology and equipment fields such as nickel materials, lithium materials, sodium materials, high-capacity battery materials, fuel cell materials, new materials for conventional batteries, and energy storage battery manufacturing. (From a press release dated March 13, 2023)

New projects

-Hunan Corun New Energy Co., Ltd. (Corun) announced the formation of a new subsidiary company. The new company will be established by each shareholder of Changde Liyuan New Material Co., Ltd. (Changde Liyuan), a subsidiary of Corun, in proportion to the percentage of shares held by each shareholder. The name of the new company will be Yichun Liyuan New Materials Co., Ltd. (Yichun Liyuan). The new company will procure, produce, and sell lithium ore, lithium battery materials, and lithium battery cells. The new company will undertake the construction of a 30,000-ton battery lithium carbonate material plant, a 60,000-ton high-power lithium iron phosphate cathode material plant, and a 3 GWh lithium battery electrode sheet plant in Yifeng County, which will be operated by Corun. (From a press release dated June 25, 2022)

-Hunan Corun New Energy Co., Ltd. (Corun) announced that it has signed a project contract with the Yifeng county government in Yichun city, Jiangxi province. Corun or its affiliated companies will run investment projects in the industrial park of Yifeng county government. The project names are: “30,000 tons of battery-grade lithium carbonate materials project”, “60,000 tons of high-power lithium iron phosphate cathode materials project”, and “hybrid power technology platform project”. The total investment of the above projects will exceed CNY 3.5 billion. After a project is approved, it will be completed and become fully operational within 24 months. (From a press release dated June 25, 2022)

Investments

-The company announced that its subsidiary, China Hybrid System Co., Ltd. (CHS), intends to sign a capital increase agreement with Jiangxi Yifeng Tong'an Mining Product Development Co., Ltd. Under the agreement, CHS will increase capital in Jiangxi Dingsheng New Materials Technology Co., Ltd. for the development of hybrid system technology, aiming to build a high-tech company integrating lithium ore, lithium battery materials, hybrid power and hybrid energy storage technology. Corun is making strategic adjustments to return to the main business of batteries, focusing on nickel-metal hydride (Ni-MH) batteries, lithium batteries, other batteries and their materials. This capital increase will help introduce strategic investors for CHS’s hybrid assembly system business, so that CHS can thrive independently. (From a press release dated April 12, 2022)

R&D Expenditure

	FY ended Dec. 31, 2022	FY ended Dec. 31, 2021	FY ended Dec. 31, 2020
R&D Expenditure (CNY millions)	59.76	99.56	88.64
R&D expenses as percent of Sales (%)	1.58	3.26	3.48

-By the end of 2022, the company had 79 R&D staff members, accounting for 3.4% of the total number of employees.

R&D structure

-Corun has realized the layout of the entire industrial chain of nickel-metal hydride batteries and nickel foam raw materials. It has successively established five R&D centers and seven industrial bases, forming a complete industrial chain.

R&D Centers	Main business	Year founded	Location	Shareholding (%)	Other shareholdings
National Engineering Research Centre for Advanced Energy Storage Materials Co., Ltd.	R&D activities on nickel-battery materials, lithium-battery materials, supercapacitor-battery materials, fuel cell materials, etc.	2010	Changsha, Hunan	87.50	Jinchuan Jidan Company Limited 6.25% Central South University Education Foundation 6.25%
Corun CHS Japan Technology Research Co., Ltd.	Development of HEV systems	2016	Nagoya, Japan	-	-

Patents

-In 2022, the company has applied for 28 domestic patents in China and 3 international patent. The Company has 738 domestic patents and 17 international patents, totaling 755 existing patents. (From the 2022 Annual Report)