Hunan Corun New Energy Co., Ltd. Business Report FY ended Dec. 2023

Financial Overview

(CNY millions)

	FY ended Dec. 31, 2023	FY ended Dec. 31, 2022	Change (%)
Sales	3,711.41	3,785.83	(1.97)
Operating income	(166.14)	256.47	-
Ordinary income	(170.78)	252.19	-
Net income	(135.69)	199.94	-

Factors

1. In 2023, the sales volume of the company's main products in the nickel-hydrogen battery material business declined, resulting in a certain year-over-year decline in the operating income of related products. The income from its trading business and other businesses also declined.
2. In 2023, the company laid out the lithium battery material business, and the initial investment in the expansion of lithium mines and the construction of lithium carbonate production lines was large. At the same time, affected by the decline in the lithium carbonate market, the gross profit margin of lithium battery material products declined.
3. In 2023, new investments and increased financing needs led to an increase in financial expenses compared with the previous year.
4. Affected by the sharp drop in the market price of lithium carbonate raw materials, the company made provisions for depreciation of lithium carbonate inventory and impairment of mining rights.
5. The investment income of the joint-stock company Jiangxi Dingsheng New Materials Technology Co., Ltd. declined.

Operational Status

Nickel-metal hydride battery materials
-In 2023, HEV nickel foam achieved sales revenue of approximately CNY 252 million; HEV positive and negative electrode sheets achieved sales revenue of approximately CNY 1.479 billion.

Lithium battery materials
-Subsidiary Yichun Liyuan New Energy Co., Ltd. acquired a 51% stake in Jinfeng Lithium. Jinfeng Lithium officially began production and sales operations, achieving sales revenue of CNY 221 million in 2022 and producing and selling 7,112 tons of lithium sulfate solution (i.e. brine). The goal was to put 10,000 tons of lithium carbonate into production by the end of June 2023, and to increase the production capacity of 20,000 tons of lithium carbonate by the end of December 2023. It is expected that by the end of 2023, Jinfeng Lithium will have a production capacity of 30,000 tons of lithium carbonate. Jinfeng Lithium's lithium battery material products will achieve operating income of CNY 187 million in 2023.

-The company signed a joint construction agreement with Three Gorges Technology Co., Ltd. (Three Gorges Technology) on the platform of the National Engineering Research Center for Advanced Energy Storage Materials. The two parties will cooperate in key technologies and equipment such as nickel series materials, lithium series materials, sodium series materials, supercapacitor battery materials, fuel cell materials and new traditional battery materials. (Excerpt from Koliyuan Official WeChat Account on March 13, 2023)

Change of office location

-The company announced that according to its corporate strategic plan, it will relocate its headquarters from No. 348 West Tongzipo Road, Yuelu District, Changsha City, Hunan Province to Room 401-406, Building 1 and 2, Chenzhou Strategic Emerging Industrial Park, East Linyi Avenue, Chenzhou High-Tech Industrial Park, Chenzhou City, Hunan Province. (From a Corun SSE press release dated August 15, 2023)

New projects

-The company announced the completion of the construction of main plant buildings of its 30,000 tons per year battery-grade lithium carbonate project. All devices for the first phase with an annual battery-grade lithium carbonate capacity of 10,000 tons have been in place, with installation and debugging 90% complete and official production expected in late July 2023. (From a Corun press release dated June 29, 2023)

R&D Expenditure

	FY ended Dec. 31, 2023	FY ended Dec. 31, 2022	FY ended Dec. 31, 2021
R&D Expenditure (CNY millions)	32.83	59.76	99.56
R&D expenses as percent of Sales (%)	2.15	1.58	3.26

-By the end of 2023, the company had 131 R&D staff members, accounting for 5.95% 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	-	-