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(A joint stock company incorporated in the People’s Republic of China with limited liability)
Stock Code: 0666
GLOBAL
OFFERING
瑞浦蘭鈞能源股份有限公司
REPT BATTERO Energy Co., Ltd.
瑞浦蘭鈞能源股份有限公司
REPT BATTERO Energy Co., Ltd.
Joint Sponsors, Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Joint Bookrunners and Joint Lead Managers
Joint Lead Managers


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IMPORTANT: If you are in any doubt about any of the contents of this prospectus, you should obtain independent professional advice.
REPT BATTERO Energy Co., Ltd.
ʮ̡
(A joint stock company incorporated in the People’ s Republic of China with limited liability)
GLOBAL OFFERING
Number of Offer Shares under
the Global Offering
: 116,070,200 H Shares
Number of Hong Kong Offer Shares : 11,607,200 H Shares (subject to
reallocation)
Number of International Offer Shares : 104,463,000 H Shares (subject to
reallocation)
Maximum Offer Price : HK$20.60 per H Share plus brokerage of
1%, SFC transaction levy of 0.0027%,
Stock Exchange trading fee of 0.00565%
and AFRC transaction levy of 0.00015%
(payable in full on application in Hong
Kong dollars and subject to refund)
Nominal value : RMB1.00 per H Share
Stock Code : 0666
Joint Sponsors, Overall Coordinators, Joint Global Coordinators,
Joint Bookrunners and Joint Lead Managers
Joint Bookrunners and Joint Lead Managers
Joint Lead Managers
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsib ility for the contents of
this prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever ar ising from or in reliance upon the whole
or any part of the contents of this prospectus.
A copy of this prospectus, having attached thereto the documents specified in “Appendix VII – Documents Delivered to the Registrar of Companies in Hon g Kong and Available on Display,”
has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies (Winding Up and Miscellaneous Provisions) O rdinance (Chapter 32 of the
Laws of Hong Kong). The Securities and Futures Commission and the Registrar of Companies in Hong Kong take no responsibility as to the contents of this p rospectus or any other documents
referred to above.
The Offer Price is expected to be determined by agreement between the Overall Coordinators (for themselves and on behalf of the Underwriters) and the C ompany on the Price Determination
Date, which is expected to be on or about Thursday, December 14, 2023 and, in any event, not later than 12:00 noon on Thursday, December 14, 2023. The Offe r Price is expected to be not
more than HK$20.60 per Offer Share and is expected to be not less than HK$18.20 per Offer Share, unless otherwise announced.
The Overall Coordinators (for themselves and on behalf of the Underwriters) may, where considered appropriate and with our consent, reduce the numbe r of Offer Shares being
offered under the Global Offering and/or the indicative Offer Price range below that stated in this prospectus (which is HK$18.20 to HK$20.60) at any t ime prior to the morning
of the last day for lodging applications under the Hong Kong Public Offering. In such a case, notices of the reduction in the number of Offer Shares being offered under the Global
Offering and/or the indicative Offer Price range will be published on the website of the Hong Kong Stock Exchange at www.hkexnews.hk and on the website of the Company at
www.chinarept.com . See “Structure of the Global Offering” and “How to Apply for the Hong Kong Offer Shares” for further details.
We are incorporated, and most of our businesses are operated, in the PRC. Potential investors should be aware of the differences in legal, economic and financial systems between the PRC
and Hong Kong and that there are different risk factors relating to investments in PRC-incorporated businesses. Potential investors should also be a ware that the regulatory framework in the
PRC is different from the regulatory framework in Hong Kong and should take into consideration the different market nature of the H Shares. Such differ ences and risk factors are set out
in the sections headed “Risk Factors,” “Appendix IV – Summary of Principal Legal and Regulatory Provisions” and “Appendix V – Summary of the Articles o f Association.” Potential investors
should consider carefully all the information set out in this prospectus and, in particular, the matters discussed in the abovementioned sections.
Prospective investors of the Hong Kong Offer Shares should note that the obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Ag reement to subscribe,
and to procure subscribers for, the Hong Kong Offer Shares, are subject to termination by the Joint Sponsors and the Overall Coordinators (for themsel ves and on behalf of the
Underwriters) if certain grounds arise prior to 8:00 a.m. on the Listing Date. See “Underwriting – Underwriting Arrangements and Expenses – Hong Kong Public Offering – Hong
Kong Underwriting Agreement – Grounds for Termination” for such grounds. It is important that you refer to that section for further details.
The Offer Shares have not been and will not be registered under the U.S. Securities Act or any state securities law in the United States and may not be offe red, sold, pledged or transferred
within the United States, except that Offer Shares may be offered, sold or delivered (a) in the United States solely to QIBs in reliance on Rule 144A or an other exemption from, or in a
transaction not subject to, the registration requirements of the U.S. Securities Act or (b) outside the United States in offshore transactions in rel iance on Regulation S.
Prior to making an investment decision, prospective investors should consider carefully all the information set out in this prospectus, including t he risk factors set out in “Risk Factors.” The
obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement are subject to termination by the Joint Sponsors and the Overall Coordinators (for themselves and
on behalf of the Underwriters) if certain grounds arise prior to 8:00 a.m. on the Listing Date. Such grounds are set out in “Underwriting.”
ATTENTION
We have adopted a fully electronic application process for the Hong Kong Public Offering. We will not provide printed copies of this prospectus to the p ublic in relation to the
Hong Kong Public Offering.
This document is available at the website of the Hong Kong Stock Exchange at www.hkexnews.hk and our website at www.chinarept.com . If you require a printed copy of this
prospectus, you may download and print from the website addresses above.
IMPORTANT
December 8, 2023


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IMPORTANT NOTICE TO INVESTORS
OF HONG KONG OFFER SHARES
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong
Public Offering.
This prospectus is available at the website of the Stock Exchange at
www.hkexnews.hk under the “ HKEXnews > New Listings > New Listing
Information ” section, and our website at www.chinarept.com.
We will not provide any physical channels to accept any application for the Hong
Kong Offer Shares by the public. The contents of the electronic version of this
prospectus are identical to the printed prospectus as registered with the Registrar of
Companies in Hong Kong pursuant to Section 342C of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance.
To apply for the Hong Kong Offer Shares, you may:
(1) apply online through the White Form eIPO service at www.eipo.com.hk ;o r
(2) apply electronically through the HKSCC EIPO channel and cause HKSCC
Nominees to apply on your behalf by instructing your broker or custodian
who is a HKSCC Participant to give electronic application instructions via
HKSCC’s FINI system to apply for the Hong Kong Offer Shares on your
behalf.
If you are an intermediary , broker or agent , please remind your customers, clients
or principals, as applicable, that this prospectus is available online at the website
addresses stated above.
See the section headed “How to Apply for the Hong Kong Offer Shares” for further
details of the procedures through which you can apply for the Hong Kong Offer Shares.
IMPORTANT
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Your application through the White Form eIPO service or the HKSCC EIPO channel
must be made for a minimum of 200 Hong Kong Offer Shares and in multiples of that number
of Hong Kong Offer Shares as set out in the table below.
If you are applying through the White Form eIPO service, you may refer to the table
below for the amount payable for the number of Hong Kong Offer Shares you have selected.
You must pay the respective amount payable on application in full upon application for Hong
Kong Offer Shares.
If you are applying through the HKSCC EIPO channel, you are required to pre-fund your
application based on the amount specified by your broker or custodian , as determined based
on the applicable laws and regulations in Hong Kong.
REPT BATTERO Energy Co., Ltd.
(HK$20.60 per Hong Kong Offer Share)
NUMBER OF HONG KONG OFFER SHARES THAT MAY BE APPLIED FOR
AND PAYMENTS
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
HK$ HK$ HK$ HK$
200 4,161.55 5,000 104,038.75 80,000 1,664,620.08 1,500,000 31,211,626.50
400 8,323.10 6,000 124,846.51 90,000 1,872,697.59 2,000,000 41,615,502.00
600 12,484.65 7,000 145,654.26 100,000 2,080,775.10 2,500,000 52,019,377.50
800 16,646.19 8,000 166,462.01 200,000 4,161,550.20 3,000,000 62,423,253.00
1,000 20,807.75 9,000 187,269.77 300,000 6,242,325.30 3,500,000 72,827,128.50
1,200 24,969.31 10,000 208,077.51 400,000 8,323,100.40 4,000,000 83,231,004.00
1,400 29,130.85 20,000 416,155.02 500,000 10,403,875.50 4,500,000 93,634,879.50
1,600 33,292.40 30,000 624,232.54 600,000 12,484,650.60 5,000,000 104,038,755.00
1,800 37,453.96 40,000 832,310.05 700,000 14,565,425.70 5,803,600
(1) 120,759,863.70
2,000 41,615.50 50,000 1,040,387.56 800,000 16,646,200.80
3,000 62,423.25 60,000 1,248,465.05 900,000 18,726,975.90
4,000 83,231.00 70,000 1,456,542.56 1,000,000 20,807,751.00
(1) Maximum number of Hong Kong Offer Share you may apply for.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee and AFRC
transaction levy. If your application is successful, brokerage will be paid to the Exchange Participants (as
defined in the Listing Rules) and the SFC transaction levy, the Stock Exchange trading fee and AFRC
transaction levy are paid to the Stock Exchange (in the case of the SFC transaction levy, collected by the Stock
Exchange on behalf of the SFC; and in the case of the AFRC transaction levy, collected by the Stock Exchange
on behalf of the AFRC).
No application for any other number of Hong Kong Offer Shares will be considered and
such an application is liable to be rejected.
IMPORTANT
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Hong Kong Public Offering commences ....................... .9:00 a.m. on Friday,
December 8, 2023
Latest time to complete applications under the
White Form eIPO service through the designated
website at www.eipo.com.hk (2). ........................ 1 1:30 a.m. on Wednesday,
December 13, 2023
Application lists open (3) ................................ 1 1:45 a.m. on Wednesday,
December 13, 2023
Latest time (a) to complete payment of White Form
eIPO applications by effecting internet banking
transfer(s) or PPS payment transfer(s) and
(b) apply through the HKSCC EIPO channel
(4) .......... .12:00 noon on Wednesday,
December 13, 2023
If you are instructing your broker or custodian who is a HKSCC Participant will submit
an EIPO application on your behalf through HKSCC’s FINI system in accordance with your
instruction, you are advised to contact your broker or custodian for the earliest and latest time
for giving such instructions, as this may vary by broker or custodian .
Application lists close
(3) .............................. .12:00 noon on Wednesday,
December 13, 2023
Expected Price Determination Date (5) .................................. Thursday,
December 14, 2023
Announcement of:
 the final Offer Price;
 the level of applications of the Hong Kong Public Offering;
 the level of indications of interest in the
International Offering; and
 the basis of allocation of the Hong Kong Offer Shares
to be published on the website of the
Stock Exchange at www.hkexnews.hk and
our website at www.chinarept.com (6) ............. o no r before 11:00 p.m. on Friday,
December 15, 2023
EXPECTED TIMETABLE (1)
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The results of allocations in the Hong Kong Public
Offering (with successful applicants’ identification
document numbers, where appropriate) to be made
available through a variety of channels as described
in the section headed “How to Apply for the Hong Kong
Offer Shares – Publication of Results,” including:
 on the website of the Stock Exchange at
www.hkexnews.hk and our website at
www.chinarept.com (6) respectively ..................... o no r before 11:00 p.m.
on Friday, December 15, 2023
 on the designated results of allocation website at
www.iporesults.com.hk (alternatively:
www.eipo.com.hk/eIPOAllotment )
with a “search by ID” function ..................... from 11:00 p.m. on Friday,
December 15, 2023 to 12:00 midnight
on Thursday, December 21, 2023
 from the allocation results telephone enquiry
line by at +852 2862 8555 between 9:00 a.m.
and 6:00 p.m. ........................... .from Monday, December 18, 2023 to
Thursday, December 21 2023
Despatch of H Share certificates in respect of wholly
or partially successful applications, or deposit of
H Share certificate into CCASS, on or before
(7) .......... .Friday, December 15, 2023
Despatch of White Form e-Refund payment (8)
instructions and refund cheques on or before ........... .Monday, December 18, 2023
Dealings in our H Shares on the Stock
Exchange expected to commence on ....................... .9:00 a.m. on Monday,
December 18, 2023
Notes:
(1) All dates and times refer to Hong Kong local time and dates unless otherwise stated.
(2) You will not be permitted to submit your application through the designated website at www.eipo.com.hk after
11:30 a.m. on the last day for making applications. If you have already submitted your application and obtained
an application reference number from the designated website before 11:30 a.m., you will be permitted to
continue the application process (by completing payment of application monies) until 12:00 noon on the last
day for making applications, when the application lists close.
(3) If there is a “black” rainstorm warning, a tropical cyclone warning signal number 8 or above and/or Extreme
Conditions in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Wednesday, December
13, 2023, the application lists will not open on that day. See the section headed “How to Apply for the Hong
Kong Offer Shares – Severe Weather Arrangements” for further details.
EXPECTED TIMETABLE (1)
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(4) If you instruct your broker or custodian who is an HKSCC Participant to give electronic application
instructions via FINI to apply for the Hong Kong Offer Shares on your behalf, you should contact your broke r
or custodian for the latest time for giving such instructions which may be different from the latest time as
stated above.
(5) The Price Determination Date is expected to be on or about Thursday, December 14, 2023. If, for any reason,
the Offer Price is not agreed on or before 12:00 noon on Thursday, December 14, 2023 the Global Offering
will not proceed and will lapse.
(6) None of the websites or any of the information contained on the websites forms part of this prospectus.
(7) The H Share certificates will only become valid evidence of title at 8:00 a.m. on the Listing Date, which is
expected to be on or around Monday, December 18, 2023 provided that the Global Offering has become
unconditional in all respects. Investors who trade our Shares on the basis of publicly available allocation
details before the receipt of the H Share certificates or before the H Share certificates become valid do so
entirely at their own risk.
(8) Applicants who have applied through White Form eIPO service for 1,000,000 or more Hong Kong Offer
Shares may collect any refund cheque(s) (where applicable) and/or H Share certificate(s) in person from our
H Share Registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor,
Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong from 9:00 a.m. to 1:00 p.m. on Monday,
December 18, 2023. Applicants being individuals who are eligible for personal collection may not authorise
any other person to collect on their behalf. If you are a corporate applicant which is eligible for personal
collection, your authorised representative must bear a letter of authorisation from your corporation stamped
with your corporation’s chop. Both individuals and authorised representatives must produce evidence of
identity acceptable to our H Share Registrar at the time of collection.
H Share certificates and/or refund checks for applicants who have applied through White Form eIPO service
for less than 1,000,000 Hong Kong Offer Shares and any uncollected H Share certificates and/or refund checks
will be dispatched by ordinary post, at the applicants’ risk, to the addresses specified in the relevant
applications.
White Form e-Refund payment instructions/refund cheques will be issued for the applicants who have applied
through White Form eIPO service in respect of wholly or partially unsuccessful applications and in respect
of wholly or partially successful applications pursuant to the Hong Kong Public Offering if the final Offer
Price is less than the Maximum Offer Price payable per Offer Share on application. Part of the applicant’s
Hong Kong identity card number or passport number, or, if the application is made by joint applicants, part
of the Hong Kong identity card number or passport number of the first-named applicant, provided by the
applicant(s) may be printed on the refund cheque, if any. Such data would also be transferred to a third party
for refund purposes. Banks may require verification of an applicant’s Hong Kong identity card number or
passport number before encashment of the refund cheques. Inaccurate completion of an applicant’s Hong Kong
identity card number or passport number may invalidate or delay encashment of the refund cheques.
Applicants who have applied through White Form eIPO service and paid their applications monies through
single bank accounts may have refund monies (if any) dispatched to the bank account in the form of White
Form e-Refund payment instructions. Applicants who have applied through White Form eIPO service and
paid their application monies through multiple bank accounts may have refund monies (if any) despatched to
the address as specified in their application instructions in the form of refund cheque(s) in favor of the
applicant (or, in the case of joint applications, the first-named applicant) by ordinary post at their own risk.
For applicants who have applied for Hong Kong Offer Shares through the HKSCC EIPO channel, H Share
certificate(s) will be issued in the name of HKSCC Nominees, deposited into CCASS and credited to their
designated HKSCC Participant’s stock account.
For applicants who have applied through HKSCC EIPO channel, their broker or custodian will arrange
refund to their designated bank account subject to the arrangement between them and their broker or
custodian .
Further information is set out in the sections headed “How to Apply for Hong Kong Offer Shares –
Despatch/Collection of H Share Certificates and Refund of Application Monies.”
The above expected timetable is a summary only. Y ou should see “Structure of the
Global Offering” and “How to Apply for the Hong Kong Offer Shares” for details of the
structure of the Global Offering, including the conditions of the Global Offering, and the
procedures for application for the Hong Kong Offer Shares.
If the Global Offering does not become unconditional or is terminated in accordance with
its terms, the Global Offering will not proceed. In such case, we will make an announcement
as soon as practicable thereafter.
EXPECTED TIMETABLE (1)
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IMPORTANT NOTICE TO INVESTORS
You should rely only on the information contained in this prospectus to make your
investment decision. The Hong Kong Public Offering is made solely on the basis of the
information contained and the representations made in this prospectus. Neither the
Company nor any of the Relevant Persons has authorized anyone to provide you with any
information or to make any representation that is different from what is contained in this
prospectus. Any information or representation not made in this prospectus must not be
relied on by you as having been authorized by the Company or any of the Relevant
Persons.
Page
Expected Timetable .................................................. i i i
Contents .......................................................... v i
Summary .......................................................... 1
Definitions ......................................................... 3 3
Glossary of Technical Terms ........................................... 5 6
Forward-Looking Statements ........................................... 6 4
Risk Factors ........................................................ 6 6
Information about this Prospectus and the Global Offering .................... 1 1 6
Directors, Supervisors and Parties Involved in the Global Offering .............. 1 2 1
Corporate Information ................................................ 1 2 9
History and Development .............................................. 1 3 2
Industry Overview ................................................... 1 7 4
Regulatory Overview ................................................. 1 9 8
Business .......................................................... 2 1 5
Financial Information ................................................. 3 2 6
CONTENTS
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Share Capital ....................................................... 4 1 3
Substantial Shareholders .............................................. 4 1 8
Relationship with the Controlling Shareholders ............................. 4 2 0
Connected Transactions ............................................... 4 2 7
Directors, Supervisors and Senior Management ............................. 4 3 8
Future Plans and Use of Proceeds ....................................... 4 5 8
Waivers from Strict Compliance with the Listing Rules ...................... 4 6 4
Underwriting ....................................................... 4 7 0
Structure of the Global Offering ........................................ 4 8 3
How to Apply for the Hong Kong Offer Shares ............................ 4 9 1
Appendix I – Accountants’ Report ................................ I - 1
Appendix II – Unaudited Pro Forma Financial Information ............. II-1
Appendix III – Taxation and Foreign Exchange ....................... III-1
Appendix IV – Summary of Principal Legal and Regulatory Provisions ..... I V - 1
Appendix V – Summary of the Articles of Association ................. V - 1
Appendix VI – Statutory and General Information ..................... VI-1
Appendix VII – Documents Delivered to the Registrar of Companies in Hong
Kong and Available on Display ..................... VII-1
CONTENTS
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This summary aims to give you an overview of the information contained in this
prospectus. As this is a summary, it does not contain all the information that may be
important to you. You should read this prospectus in its entirety before you decide to
invest in the Offer Shares. There are risks associated with any investment. Some of the
particular risks in investing in the Offer Shares are set out in the section headed “Risk
Factors” in this prospectus. You should read that section carefully before you decide to
invest in the Offer Shares.
OVERVIEW
We are a lithium-ion battery manufacturer in China. We focus on the R&D, manufacturing
and sales of lithium-ion EV battery products and ESS battery products. We were established by
Tsingshan Group and other Shareholders in October 2017 with an aim to expand into the
fast-growing and prospective new energy industry. We achieved bulk delivery for lithium-ion
batteries in April 2019. In 2022 and the six months ended June 30, 2023, we had a 8.8% and 5.7%
market share, ranking third and fourth, respectively, among lithium-ion battery manufacturers
globally in terms of global ESS battery installations
(1), and a 1.7% and 1.2% market share,
ranking tenth in both periods, of the EV battery products in China in terms of amount of
installation. Our EV battery products include LFP battery products and ternary lithium battery
products used in various types of passenger vehicles, commercial vehicles and special vehicles.
We have a diverse and balanced EV battery customer base, covering established automotive
companies as well as emerging EV manufacturers. Our ESS battery products are LFP battery
products for a broad range of household, commercial and industrial energy storage. Our ESS
battery customers primarily include household ESS integrators, photovoltaic inverter
manufacturers, system integrators and EPC firms. Our sales volume of battery products increased
significantly from 1.55GWh in 2020 to 16.61GWh in 2022, representing a CAGR of 227.4%. Our
sales volume of battery products increased significantly from 4.70GWh for the six months ended
June 30, 2022 to 7.77GWh for the six months ended June 30, 2023. Despite our growth in sales,
we are not yet profitable. See “Financial Information – Results of Operations” and “Business –
Business Sustainability.”
OUR PRODUCTS
We are mainly engaged in the design, R&D, manufacturing and sales of lithium-ion EV
battery products and ESS battery products. In 2020, 2021 and 2022 and the six months ended
June 30, 2022 and 2023, we generated 94.3%, 87.3%, 89.1%, 88.2% and 84.4% of our revenue
from the sales of EV and ESS battery products.
Note:
(1) installation(s): the volume of battery products installed in EVs or ESSs, usually expressed in electricity unit
of GWh or KWh.
SUMMARY
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EV Battery Products
Our EV battery products are produced and sold in the form of battery cells, battery
modules and battery packs depending on the needs of our customers. EV batteries that are
installed in EVs are typically battery packs.
ESS Battery Products
Our ESS battery products are primarily LFP battery products and are mainly produced and
sold in battery cells, battery modules and battery packs which include battery boxes, battery
racks and energy storage containers. Battery racks and energy storage containers can be
directly applied in various energy storage use cases.
For more details on our products, see “Business – Our Products.”
OUR CUSTOMERS
We have a diverse and balanced EV battery customer base, covering domestic and
overseas established automotive companies as well as emerging EV manufacturers. Our EV
battery customer base also covers an established vehicle company headquartered in
Netherlands, a luxury vehicle company headquartered in Germany and a U.S. EV manufacturer.
For commercial vehicles and special vehicles, we have established partnerships with various
leading producers of commercial vehicles, special vehicles and construction machineries to
further expand our customer base and our product range. Our EV battery products are also used
in overseas market including Middle East, Africa, Southeast Asia and India through direct
export and export by OEMs.
Our ESS battery customers primarily include household ESS integrators, photovoltaic
inverter manufacturers, system integrators and EPC firms. Our ESS battery products are used
in household, commercial and industrial applications worldwide, including China and overseas
markets such as the United States, Europe, Japan, Australia, India, Southeast Asia and Africa.
In each of 2020, 2021 and 2022 and the six months ended June 30, 2023, sales to our
largest customer for the respective periods accounted for 38.6%, 24.5%, 11.7% and 12.7% of
our revenue, respectively, while our five largest customers for the same periods accounted for
69.7%, 51.0%, 38.2% and 37.6% of our revenue, respectively. In 2022 and the six months
ended June 30, 2023, Tsingshan Group, our Controlling Shareholder, was one of our five
largest customers, accounting for 5.9% and 12.7% of our total revenue, respectively. Tsingshan
Group is expected to continue to be one of our five largest customers in 2023. The significant
increase in our sales to Tsingshan Group in 2022 and the six months ended June 30, 2023 was
primarily due to the arrangements between Yongqing Technology, the U.S. EV manufacturer
and us, under which we supplied battery components to Yongqing Technology which then
supplied the same to the U.S. EV manufacturer. See “Connected Transaction – Non-exempt
Continuing Connected Transactions – I. Products Sales Framework Agreement – Historical
Figures and Annual Caps.”
For more details on our customers, see “Business – Marketing, Sales and Customers.”
SUMMARY
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OUR RESEARCH AND DEVELOPMENT CAPABILITIES
Strong R&D capabilities are the key to our success. We have R&D centers in Shanghai
and Wenzhou, and an R&D center in Jiashan which is under construction, with 2,120 R&D
personnel as of June 30, 2023. The core members of our R&D team are highly experienced and
have extensive connections in the lithium-ion battery industry.
We have a series of technologies with advantages in terms of battery materials, battery
design and battery structure, production technique and equipment, which helped us build up a
product portfolio that is able to achieve safety, reliability and strong performance, while
improving production efficiency. We have the following R&D highlights:
 WenDing (“
ਪ௟”) technology . In August 2022, we launched prismatic batteries that
utilized our WenDing (“ ਪ௟”) technology, such technology can be applied to LFP
battery products as well as ternary lithium battery products to achieve strong
performance. Such technology could increase energy density of both LFP and
ternary lithium batteries.
 Easy-for-Tera cells (“ET
ڃ)”Our Easy-for-Tera cells (“ETڃare flat
batteries adopting high-speed winding, cutting or stacking integration technology,
which improves the efficiency of the production process and battery performance.
 V ersatile power station . Our versatile power station can be used in various use cases
such as electrical energy storage, vehicle charging and utility power backup.
 Semi-solid prismatic batteries . We have delivered prototypes of semi-solid prismatic
batteries to a luxury vehicle company in Europe, with whom we are conducting
battery performance tests. The semi-solid batteries technology can further increase
the mass-energy density and safety performance.
 Sodium-ion battery. We are in the process of developing sodium-ion batteries. Such
batteries are likely to reduce the cost of ESS batteries by lowering the dependence
on lithium as the cost of sodium is lower than lithium. As of the Latest Practicable
Date, we had completed the sample prototyping of sodium-ion battery, but had not
started to construct the relevant production lines yet. However, as a result of the
continuous decrease in prices of raw materials for lithium-ion batteries since early
2023, the advantage of sodium-ion batteries in cost reduction has declined and may
be lost at all if the prices of raw materials for lithium-ion batteries continue to
decrease in future. In consideration of the above, we will pay close attention to the
market trends and prospect of sodium-ion batteries and be more prudent in
allocating our research and development resources, constructing production lines
and rolling out sodium-ion battery products. In the foreseeable future, we plan to
continue the research and development of sodium-ion battery not only for its
potential of cost reduction, but also for its other features, for example, outstanding
performance in low-temperature environment. Based on the above, we expected to
complete the construction of relevant production lines in late 2025 subject to the
market condition.
For more details on our R&D, see “Business – Research and Development.”
SUMMARY
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--- page 13 ---
OUR EXISTING PRODUCTION FACILITIES
We currently have production facilities at Wenzhou, Zhejiang Province and Jiashan,
Zhejiang Province. Our production lines are designed to be compatible with the production of
different battery products. With some alterations, our EV battery production lines can be used
for the manufacture of ESS battery products with similar specifications and vice versa. Our
designed annual production capacity reached 4.2GWh as of December 31, 2020 and up to
December 31, 2021, and then reached 35.2GWh as of December 31, 2022 and up to June 30,
2023. In 2020, 2021, 2022 and the six months ended June 30, 2023, the overall utilization rate
of our production facilities was 50.3%, 86.4%, 73.9% and 49.4%, respectively. The increase in
our overall utilization rate from 2020 to 2021 was primarily due to improved production
efficiency after the ramp-up period in 2021. The decrease in our overall utilization rate from
2021 to 2022 was primarily due to the relatively lower utilization rates during the ramp-up
periods of the new production lines commissioned in both of our Wenzhou production facilities
and Jiashan production facilities in 2022. The decline of our utilization rate in the six months
ended June 30, 2023 was primarily due to the decrease in our sales volume, particularly for our
EV battery products mainly attributable to (i) the temporary slowdown in the EV industry in
China in early 2023, (ii) certain EV manufacturers did not place their orders in early 2023 in
consideration of the expected downward trend in raw material prices, and (iii) that we were
leaning our focus towards higher-end car models and the relevant products were still in the
process of being upgraded or developed. See “Business – Production – Existing Production
Facilities.”
OUR SUPPLIERS
Our suppliers are primarily raw material providers. We carefully select our suppliers and
require them to satisfy various assessment criteria. We only procure raw materials from the
suppliers listed on our qualified supplier catalog. All potential suppliers must pass our internal
supplier admission standard before entering into our qualified supplier catalog. We consider
several factors in the selection of suppliers, including but not limited to the potential supplier’s
material performance, supplies quality, prices offered, years of operation and quality control
accreditations. Potential key raw materials suppliers are subject to onsite inspection conducted
by us in order to evaluate their production processes, quality-control, and ESG related
performance indicator including carbon emission and pollution management. We also carry out
regular on-site audits and audits of qualified suppliers each year.
In each of 2020, 2021 and 2022 and the six months ended June 30, 2023, purchases from
our largest supplier for the respective periods accounted for 9.7%, 8.4%, 13.3% and 14.5% of
our total amount of purchase, respectively, while our five largest suppliers for the same periods
accounted for 36.8%, 33.2%, 44.3% and 52.0% of our total amount of purchase, respectively.
We believe that we have a good cooperation relationship with our key suppliers.
For more details on our suppliers, see “Business – Raw Materials, Components and
Suppliers.”
SUMMARY
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--- page 14 ---
OUR COMPETITIVE STRENGTHS
Our competitive strengths include:
 Emerging battery manufacturer in an expanding industry
 Strong R&D capabilities
 High-quality and diverse customer base
 Long-term, stable and cost-effective supply chain
 Strong mass production capability
 Experienced and dedicated team
 Commitment to green and sustainable development with high ESG standard
OUR DEVELOPMENT STRATEGIES
Our development strategies include:
 Further our dual-focus on EV and ESS batteries
 Devote to R&D
 Expand our production capacity steadily and orderly according to market demand
while pursuing cost leadership
 Ensure stable and cost-effective supply of raw materials
 Promote green and sustainable development with high ESG standards
COMPETITION
The global lithium-ion battery market is highly competitive and concentrated, and we
expect that the competition will be more intense in the future. According to the F&S Report,
the EV battery market is highly concentrated in China, with top five EV battery manufacturers
accounting for approximately 85.3% and 90.0% of total EV battery installation volume in
China in 2022 and the six months ended June 30, 2023, respectively. ESS market is still at the
initial stage of development. According to the F&S Report, the top five ESS battery
manufacturers accounted for approximately 63.4% and 64.6% of the global total ESS battery
installation volume in 2022 and the six months ended June 30, 2023, respectively.
SUMMARY
–5–


--- page 15 ---
The market demand for our products is affected by the market demand for the end
products where our batteries are used. Entering into 2023, the EV industry experienced
slowdown in its growth. Combined with the impact from decrease in raw materials since early
2023, the prevailing market price for EV battery products experienced rapid decrease. Under
such circumstances, the competition in EV battery market has been significantly intensified.
The competitive landscape in ESS battery market has also becoming increasingly challenging
as a result of its rapid development in recent years. As a result, our market share of the EV
battery products in China in terms of amount of installation decreased from 1.7% in 2022 to
1.2% in the six months ended June 30, 2023, and our market share among lithium-ion battery
manufacturers globally in terms of global ESS battery installation decreased from 8.8% to
5.7%. However, leveraging our competitive strengths such as our strong R&D capabilities and
high-quality products, combined with the ability to quickly roll out large-scale production
capacity and the pursuit of dual-focus strategy on EV and ESS batteries, we believe we are
well-positioned to capture growth opportunities in the industry.
BUSINESS SUSTAINABILITY
We were established in 2017. Since our inception, we have achieved significant growth.
Our total revenue increased significantly from RMB907.0 million in 2020 to RMB2,109.1
million in 2021, and further to RMB14,647.8 million in 2022, representing a CAGR of 301.9%.
Our total revenue increased by 64.2% from RMB4,016.6 million in the six months ended
June 30, 2022 to RMB6,594.8 million in the six months ended June 30, 2023. We sold
1.55GWh, 3.30GWh and 16.61GWh of our battery products in 2020, 2021 and 2022,
respectively, representing a CAGR of 227.4%. Our sales volume of our battery products
increased by 65.3% from 4.70GWh in the six months ended June 30, 2022 to 7.77GWh in the
six months ended June 30, 2023.
We recorded gross profits of RMB111.1 million in 2020 with a gross profit margin of
12.2%, while it turned into gross losses of RMB324.9 million in 2021 with a negative gross
profit margin of 15.4%. Such change was primarily due to (i) a rapid increase in purchase price
of raw materials in 2021, and (ii) the fact that we were not able to timely adjust our selling
prices of EV and ESS battery products in response to the rapid increase in purchase prices of
raw materials. We managed to turn the gross losses in 2021 into gross profits of RMB1,088.3
million with a gross profit margin of 7.4% in 2022, primarily due to (i) our adjustment of prices
of our battery products, (ii) our further improved production efficiency, and (iii) our improved
product offering. We managed to turn the gross losses in the six months ended June 30, 2022
into gross profits of RMB267.2 million in the six months ended June 30, 2023, primarily due
to that we managed to turn the gross losses into gross profits for our ESS battery products in
the six months ended June 30, 2023 primarily due to the decrease in unit direct labor costs as
a result of our improved production efficiency for our ESS battery products. However, in the
six months ended June 30, 2023, we recorded net provision for impairment losses of
inventories of RMB264.7 million, as the net realizable value of our inventories lower than their
costs due to the decrease in average selling prices of our EV and ESS battery products as a
result of the rapid decrease in raw material prices after entering into 2023. See “Financial
Information – Selected Balance Sheet – Inventories.”
SUMMARY
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--- page 16 ---
In 2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023, we recorded
net losses of RMB53.3 million, RMB804.2 million, RMB450.8 million, RMB705.5 million and
RMB919.7 million, respectively, primarily attributable to (i) low utilization rate resulting from
production capacity expansion, (ii) raw material prices fluctuation, (iii) product mix and
pricing strategy, (iv) operational expenditure and (v) the EV industry market conditions in
early 2023. In particular, we recorded a net loss in 2020, primarily as our ESS battery products
were sold at loss, which offset part of the gross profit from the sales of our EV battery products,
as well as the various operating expenses we incurred. We recorded a net loss in 2021,
primarily due to the gross loss we recorded for both of our EV and ESS battery products as a
result of the rapid increase in raw material prices in 2021, as well as the various operating
expenses we incurred. We recorded a net loss in 2022, primarily as our ESS battery products
were sold at a loss in the first half of 2022, which offset part of the gross profit from the sale
of both EV and ESS battery products in the second half of 2022, as well as the various
operating expenses we incurred. We recorded a net loss in the six months ended June 30, 2023,
primarily due to the temporary slowdown in the EV industry in the first half of 2023, which
resulted in (i) the recognition of gross losses from our EV battery products, (ii) the net
impairment losses on financial assets we recorded in the first half of 2023, mainly attributable
to the provision for impairment losses of trade receivables we prudently recorded for certain
EV battery products customers on an individual basis, in consideration of their operating
performance, liquidity position and our communication with them on the payment schedules,
and (iii) the significant increase in our operating expenses attributable to the increase in R&D
expenses as a percentage of our revenue from 6.4% in the six months ended June 30, 2022 to
7.7% in the six months ended June 30, 2023. See “Business – Business Sustainability.”
We recorded net operating cash outflows in 2021 and 2022, which were primarily
attributable to our net losses for the respective year/period as well as significant increases in
various working capital balances as our scale of operations grew, including trade and bills
receivables, inventory and restricted cash, partially offset by significant increases in trade and
bill payables.
In light of the continuous market competition in the lithium-ion battery industry in the
second half of 2023, we expect to record net loss in 2023. Against such backdrop, we will need
to set out our product prices more competitively in the short term in consideration of market
share growth. We believe that we will be able to become profitable and generate operating cash
inflow in 2025, and we plan to achieve that through the following in addition to our adjustment
of product prices:
 Improving production efficiency. We have taken several initiatives in recent years to
improve our production efficiency. We will continue to utilize our production
technologies, equipment and machinery, and further optimize our production
processes and techniques to improve our production efficiency and aim to reduce the
consumption of raw materials per Wh through improvement of production
efficiency. In addition, as we accumulate experience in EV and ESS battery
manufacturing, our workforce would become more familiar with the operation and
management of production lines, which will also contribute to production efficiency
improvement.
SUMMARY
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--- page 17 ---
 Strengthening Resilience to Raw Material Cost Fluctuations. As we expand our
business and production scale, we will need more raw materials. In response to the
rapid and sharp fluctuation in raw material prices, we have historically taken and
going forward will continue to take measures such as (i) strategic cooperation with
major suppliers of raw materials to primarily lock the quantity of our key raw
materials in advance based on our prudent estimation of market trend and according
to our production plan, to ensure that the Group would have sufficient supply for its
production needs. Such agreements mostly did not lock the price of the relevant raw
materials and will subject to periodic review and adjustments based on the
prevailing market price, (ii) utilization of our price adjustment mechanism in our
sales agreement to pass down the increased prices to our customers, and (iii)
leveraging on our advantages among the supply chain from Tsingshan Group’s
network to help our suppliers source feedstock materials, such as lithium carbonate.
However, we may not have strong bargaining power with customers and suppliers,
and may not be able to effectively mitigate the impact of raw material price
fluctuations despite all the measures being put in place.
 Increasing Sales Revenue. Going forward, we aim to continue our dual-focus
strategy and strategically allocate our production capacity for both EV and ESS
battery products to capitalize on the expected strong growths in both areas. In
particular, we plan to further increase our sales through (i) improved product
offerings and increasing bargaining power, and (ii) optimizing customer base and
improving product mix.
 Forming Economies of Scale. Higher margins are typically associated with the
economies of scale. As we grow our operational scale and achieve better economies
of scale, we expect our operation expenses, largely of relatively fix nature, to
account for a decreasing proportion of our revenue.
See “Business – Business Sustainability” for further details.
SUMMARY
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--- page 18 ---
RESULTS OF OPERATIONS
The table below summarizes our results of operations with selected items of our
consolidated statement of profit or loss and as percentages of our total revenue for the years
indicated.
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
Revenue .................................. 906,986 100.0% 2,109,144 100.0% 14,647,778 100.0% 4,016,575 100.0% 6,594,794 100.0%
Cost of sales .......................... (795,888) (87.8)% (2,434,024) (115.4)% (13,559,490) (92.6)% (4,157,865) (103.5)% (6,327,560) (95.9) %
Gross profit/(loss) .................. 111,098 12.2% (324,880) (15.4)% 1,088,288 7.4% (141,290) (3.5)% 267,234 4.1%
Selling and distribution
expenses............................... (34,036) (3.8)% (72,346) (3.4)% (320,795) (2.2)% (98,897) (2.5)% (157,715) (2.4)%
Administrative expenses .......... (34,007) (3.7)% (160,612) (7.6)% (346,787) (2.4)% (151,759) (3.8)% (239,655) (3.6)%
R&D expenses......................... (72,716) (8.0)% (245,558) (11.6)% (767,685) (5.2)% (257,142) (6.4)% (505,246) (7.7)%
Loss before tax ....................... (53,279) (5.9)% (804,209) (38.1)% (450,798) (3.1)% (705,472) (17.6)% (918,106) (13.9)%
Loss for the year/period ........ (53,279) (5.9)% (804,209) (38.1)% (450,823) (3.1)% (705,472) (17.6)% (919,734) (13.9)%
Attributable to:
Owners of the parent ........... (40,843) (4.5)% (717,227) (34.0)% (354,121) (2.4)% (609,030) (15.2)% (710,215) (10.8)%
Non-controlling interests...... (12,436) (1.4)% (86,982) (4.1)% (96,702) (0.7)% (96,442) (2.4)% (209,519) (3.2)%
Non-IFRS Measure
To supplement our consolidated statements of profit or loss that are presented in
accordance with IFRS, we also use adjusted EBITDA as a non-IFRS measure, which is not
required by, or presented in accordance with, IFRS. We believe that this non-IFRS measure
facilitates comparisons of operating performance from period to period by eliminating
potential impacts of certain items. We believe that this measure provides useful information to
investors and others in understanding and evaluating our consolidated statements of profit or
loss in the same manner as they help our management. However, our presentation of adjusted
EBITDA (non-IFRS measure) may not be comparable to similar item measures presented by
other companies. The use of this non-IFRS measure has limitations as an analytical tool, and
you should not consider it in isolation from, or as substitute for analysis of, our consolidated
statements of profit or loss or financial condition as reported under IFRS.
SUMMARY
–9–


--- page 19 ---
We define adjusted EBITDA (non-IFRS measure) as loss for the year adding back income
tax expenses, financial cost, depreciation and amortization and share incentive expense, and
deducting interest income. The share incentive expense is non-cash equity-settled employee
related expense arising from grant of share incentive awards.
Y ear Ended December 31,
Six Months Ended
June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
Loss for the year .................... (53,279) (804,209) (450,823) (705,472) (919,734)
Income tax expenses ................ – – 25 – 1,628
Finance cost .............................. 22,775 32,659 188,925 78,178 113,114
Interest income.......................... (2,523) (9,211) (96,071) (14,093) (67,166)
Depreciation and amortization... 89,441 166,371 514,280 168,516 420,519
Share incentive expense ............ – 42,608 133,637 63,912 77,127
Adjusted EBITDA
(non-IFRS measure) ............. 56,414 (571,782) 289,973 (408,959) (374,512)
Adjusted EBITDA margin (non-
IFRS measure)....................... 6.2% (27.1)% 2.0% (10.2)% (5.7)%
Summary of Results of Operations
We recorded negative adjusted EBITDA (non-IFRS measures) of RMB571.8 million in
2021, primarily attributable to our gross losses and operating expenses in 2021. We managed
to record positive adjusted EBITDA (non-IFRS measures) of RMB290.0 million in 2022. Such
change was primarily because we managed to turn gross losses in 2021 into gross profits in
2022. However, due to (i) the gross losses of our EV battery products, and (ii) our increased
operating expenses and impairment losses on financial assets, we recorded negative adjusted
EBITDA (non-IFRS measures) of RMB374.5 million with negative adjusted EBITDA margin
(non-IFRS measure) of 5.7% in the six months ended June 30, 2023, which decreased from
negative adjusted EBITDA (non-IFRS measures) of RMB409.0 million with negative adjusted
EBITDA margin (non-IFRS measure) of 10.2% in the six months ended June 30, 2022
primarily due to the fact that we managed to turn the gross losses of RMB141.3 million in the
six months ended June 30, 2022 into the gross profits of RMB267.2 million in the six months
ended June 30, 2023.
Our revenue increased significantly from RMB907.0 million in 2020 to RMB2,109.1
million in 2021, and further to RMB14,647.8 million in 2022. Such strong increase was
primarily due to (i) the rapid development of both EV and ESS industry in PRC and globally,
(ii) our continuous efforts to expand our customer base, (iii) the rapid expansion of our
production capacity, and (iv) our adjustment of prices of both of our EV and ESS battery
products. Our revenue increased from RMB4,016.6 million in the six months ended June 30,
2022 to RMB6,594.8 million in the six months ended June 30, 2023, primarily due to the
significant increase in our sales of ESS battery products, attributable to (i) the rapid
development of ESS industry in PRC and globally, (ii) our continuous efforts to expand our
customer base, and (iii) our strategic allocation of more production capacity to our ESS battery
products enabled by our dual-focus strategy and in response to the rapid development of global
ESS industry.
SUMMARY
–1 0–


--- page 20 ---
We recorded gross profits of RMB111.1 million in 2020 with a gross profit margin of
12.2%, while it turned into gross losses of RMB324.9 million in 2021 with a negative gross
profit margin of 15.4%. Such change was primarily due to (i) a rapid increase in purchase price
of raw materials in 2021, and (b) the fact that we were not able to timely adjust our selling
prices of EV and ESS battery products in response to the rapid increase in purchase prices of
raw materials. We managed to turn the gross losses in 2021 into gross profits of RMB1,088.3
million with a gross profit margin of 7.4% in 2022, primarily due to (i) our adjustment of prices
of our battery products, (ii) our further improved production efficiency, and (iii) our improved
product offering. We managed to turn the gross losses in the six months ended June 30, 2022
into gross profits of RMB267.2 million in the six months ended June 30, 2023, primarily due
to that we managed to turn the gross losses into gross profits for our ESS battery products in
the six months ended June 30, 2023.
We managed to achieve a decrease in operating expenses as a percentage of our total
revenue in 2022 of 9.8%, as compared to 15.5% in 2020 and 22.6% in 2021, primarily due to
the benefit of economies of scale and improvement of our production and management
efficiency. The operating expenses as a percentage of our total revenue increased from 12.7%
in the six months ended June 30, 2022 to 13.7% in the six months ended June 30, 2023,
primarily due to the increase in R&D expenses as a result of an overall increase in our R&D
activities to meet customers’ demands, such as large capacity batteries, and maintain our
competitive advantages in the lithium-ion battery industry by continuing providing cost-
effective and demand-satisfying battery products.
Our losses for the year increased from RMB53.3 million with negative net profit margin
of 5.9% in 2020 to RMB804.2 million with negative net profit margin of 38.1% in 2021,
primarily due to the facts that (i) our gross profits turned into gross losses in 2021, and (ii) an
increase in operating expenses attributable to the overall growth of our business. Our losses for
the year decreased from RMB804.2 million in 2021 with negative net profit margin of 38.1%
to RMB450.8 million in 2022 with negative net profit margin of 3.1%, primarily due to the
facts that (i) we managed to turn our gross losses in 2021 into gross profits in 2022, and (ii)
a decrease in operating expenses as a percentage of our total revenue in 2022 as compared to
that in 2021. Our losses for the period increased from RMB705.5 million in the six months
ended June 30, 2022 to RMB919.7 million in the six months ended June 30, 2023, primarily
due to (i) the gross losses for our EV battery products in the six months ended June 30, 2023,
mainly attributable to the decrease in selling prices and the increase in manufacturing costs as
a result of the temporary slowdown in the EV market in China in early 2023, (ii) the significant
increase in our operating expenses in the six months ended June 30, 2023, mainly attributable
to the increase in R&D expenses in both absolute amount and as a percentage of our total
revenue, and (iii) the increase in impairment losses on financial assets, mainly attributable to
the impairment losses of trade receivables we prudently recorded for certain EV battery
products customers on an individual basis.
See “Financial Information – Principal Components of Statement of Profit or Loss
and Other Comprehensive Income – Gross Profit/(Loss) and Gross Profit Margin” and
“– Period-to-Period Comparison of Results of Operations.”
SUMMARY
–1 1–


--- page 21 ---
Revenue by Product – Usage
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
EV battery products .... 673,192 74.2% 981,507 46.5% 4,642,801 31.7% 1,662,547 41.4% 1,247,794 18.9%
LFP EV battery
products ............... 527,739 58.2% 879,564 41.7% 4,222,740 28.8% 1,378,006 34.3% 946,475 14.4%
Ternary lithium EV
battery products ... 145,453 16.0% 101,943 4.8% 420,061 2.9% 284,541 7.1% 301,319 4.5%
ESS battery products... 182,105 20.1% 859,459 40.7% 8,400,597 57.4% 1,881,473 46.8% 4,320,526 65.5%
LFP ESS battery
products .............. 177,408 19.6% 859,459 40.7% 8,398,738 57.3% 1,879,811 46.8% 4,317,794 65.5%
Ternary lithium ESS
battery products .. 4,697 0.5% – – 1,859 0.0% 1,662 0.0% 2,732 0.0%
Other businesses
Sales of wastes (1) .... 43,744 4.8% 251,167 11.9% 796,789 5.4% 456,113 11.4% 165,218 2.5%
R&D services (2) ....... 6,299 0.7% 7,188 0.4% 22,308 0.2% 11,347 0.3% 12,316 0.2%
Others (3) ................. 1,646 0.2% 9,823 0.5% 785,283 5.3% 5,095 0.1% 848,940 12.9%
Subtotal ...................... 51,689 5.7% 268,178 12.8% 1,604,380 10.9% 472,555 11.8% 1,026,474 15.6%
Total ........................... 906,986 100.0% 2,109,144 100.0% 14,647,778 100.0% 4,016,575 100.0% 6,594,794 100.0%
Notes:
(1) The sales of wastes primarily include revenue from sales of used raw materials such as the low concentration
crude NMP, and other wastes such as wasted aluminum foil, wasted copper foil and wasted cells. See “Business
– Marketing, Sales and Customers – Our Customers.” Starting in July 2022, instead of selling crude NMP, we
consigned third-party companies to process the crude NMP, and thus no revenue was recognized from the sales
of crude NMP from then on. Under the new arrangement, the processing fees of the crude NMP were included
in inventories and recorded as our cost of sales when relevant battery products are sold. Therefore, as the
revenue from sales of crude NMP as wastes constituted a substantial majority of the revenue from sales of
wastes before adopting the new arrangement, we expect the revenue contribution from sales of wastes as a
percentage of our total revenue to decrease significantly going forward.
(2) The revenue from provision of R&D services refers to charges on the customers for the upfront R&D services
for the purpose of developing customized battery products.
(3) Others mainly include revenue from sales of battery components.
SUMMARY
–1 2–


--- page 22 ---
During the Track Record Period, revenue from sales of our EV and ESS battery products
increased rapidly. In 2020, as some of our EV battery products passed the verification
processes required by our EV manufacturer customers, we allocated our increased production
capacity to satisfy the increasing demand from such EV manufacturers, which resulted in a
larger revenue contribution from our EV battery products as compared with that of our ESS
battery products. In 2021, as part of our dual-focus strategy, we increased our sales to ESS
manufacturer customers to pursue the growth potential, and thus the revenue contribution from
sales of ESS battery products increased to a level similar to sales of EV battery products. In
2022, as a result of the continuous expansion of our production capacity and customer bases,
the sales of both of our EV and ESS battery products increased significantly as compared with
those in 2021. In particular, the sales of our ESS battery products surpassed the sales of our
EV battery products in 2022, primarily due to (i) our further expansion of effective production
capacity by 476.8% from 4.2GWh in 2021 to 24.5GWh in 2022, (ii) our allocation of more
increased production capacity to our ESS battery products to meet the increasing downstream
demands for our ESS battery products, and (iii) the strong demands for our ESS battery
products for both household and commercial industrial applications. The revenue from others
increased significantly from RMB9.8 million to RMB785.3 million in 2022, primarily due to
a significant increase in sales of battery components since the second half of 2022 as we
established cooperation with a U.S. EV manufacturer in relation to the sales of battery
components. See “Financial Information – Period-to-Period Comparison of Results of
Operations.”
The proportion of revenue generated from EV battery products decreased from 74.2% in
2020 to 31.7% in 2022, primarily due to our strategic allocation of more resources to develop
our ESS battery products in response to the increase in market demands for our ESS battery
products against the background of rapid development of global ESS industry. The proportion
of revenue generated from EV battery products decreased from 41.4% in the six months ended
June 30, 2022 to 18.9% in the six months ended June 30, 2023. Such decrease was primarily
due to the decrease in sales volume of our EV battery products, which was primarily because
(i) the temporary slowdown in the EV industry in China in early 2023, as a result of the decline
in EV subsidies and the competition from ICE vehicles, directly affected the market demands
for EVs, (ii) some EV manufacturers did not place their orders for EV batteries in early 2023
because they expected the price of EV batteries to further decrease as the price of lithium
carbonate decreased and the expectation that such decrease may continue, (iii) we were leaning
our focus towards higher-end car models and the relevant products were still in the process of
being upgraded or developed, and (iv) the sales return of approximately RMB157 million of
our EV battery products from one of our major customers. Such customer was a designated EV
battery pack supplier of an EV manufacturer that directly requested the use of our products, and
the reason for the sales return was that the EV manufacturer upgraded its car models in
response to the market demands and thus changed the demands for our EV battery products.
We have established business relationship with such customer since 2019, and it was among the
top five largest customers in 2020, 2021 and 2022. We negotiated with the customer and
accepted the sales return in consideration of long-term strategic cooperation with it and the EV
manufacturer, and that those EV battery products could be compatible for other similar car
models in the markets and ready for resales after limited adjustment. Such sales return was
SUMMARY
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--- page 23 ---
one-off in nature and was the result of commercial negotiation and was not due to any product
defects of ours and there was no dispute between us and the customer in relation to such sales
return. Our relationship with the customer and the EV manufacturer was unaffected by the sales
return and we continue to provide EV battery products for such EV manufacturer afterwards.
Going forward, we will continue to leverage on the flexibility of our dual-focus strategy to
allocate our resources to our EV and ESS battery products in response to the fluctuation in
market demands for our EV and ESS battery products, which may directly affect the revenue
contribution from sales of our EV and ESS battery products. See “Business – Business
Sustainability – Product Mix and Pricing Strategy.”
Our other businesses mainly include sales of wastes, sales of battery components and
R&D services. We sold wastes such as low concentration crude NMP which was produced
during the production of our lithium-ion battery products during the Track Record Period. We
provide R&D services to our customers for product development, the scope of which primarily
entails customizing our battery products to meet the specification requirement for relevant EV
models.
Revenue by Product – Battery Type
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
LFP battery products .. 705,148 77.7% 1,739,022 82.5% 12,621,477 86.2% 3,257,817 81.1% 5,264,269 79.8%
Ternary lithium
battery products ...... 150,149 16.6% 101,944 4.7% 421,921 2.9% 286,203 7.1% 304,051 4.6%
Other businesses......... 51,689 5.7% 268,178 12.8% 1,604,380 10.9% 472,555 11.8% 1,026,474 15.6%
Total .......................... 906,986 100.0% 2,109,144 100.0% 14,647,778 100.0% 4,016,575 100.0% 6,594,794 100.0%
During the Track Record Period, we generated a substantial majority of revenue from
sales of LFP battery products. The exponential growth of revenue from our LFP battery
products during the Track Record Period was mainly attributable to (i) our increased sales
volume of ESS battery products, the substantial majority of which were LFP battery products
as LFP batteries are safer and more cost-effective compared to ternary batteries and are widely
used for energy storage uses in the industry, and (ii) the preference of LFP battery products of
our EV manufacturer customers due to the lower cost and higher battery safety of LFP battery
products. While ternary batteries demonstrate characteristics such as high energy density and
long driving range, they are typically more expensive due to the use of resources such as nickel
and cobalt as compared to LFP batteries. See “Financial Information – Principal Components
of Statement of Profit or Loss and Other Comprehensive Income – Revenue – Revenue by
Product – Battery Type.”
SUMMARY
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Revenue by Region
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
PRC(1) ................... 904,476 99.7% 2,091,700 99.2% 14,480,096 98.8% 3,905,432 97.2% 6,218,709 94.3%
Overseas (1)(2) ........ 2,510 0.3% 17,444 0.8% 167,682 1.2% 111,143 2.8% 376,085 5.7%
Total ..................... 906,986 100.0% 2,109,144 100.0% 14,647,778 100.0% 4,016,575 100.0% 6,594,794 100.0%
Notes:
(1) Based on the location of our customer who signed the sales and purchase agreements with us. Some of our PRC
customers are ESS system integrators that export their products integrating our battery products to overseas
end users.
(2) Mainly include Indonesia, Australia, Morocco, Turkey, India, Brazil, Poland and Belgium.
Sales Volume and Average Selling Price of Battery Products
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
Sales
volume
Average
selling
price
Sales
volume
Average
selling
price
Sales
volume
Average
selling
price
Sales
volume
Average
selling
price
Sales
volume
Average
selling
price
(GWh) (RMB/Wh) (GWh) (RMB/Wh) (GWh) (RMB/Wh) (GWh) (RMB/Wh) (GWh) (RMB/Wh)
Product type – Usage
EV battery products ........ 1.24 0.54 1.87 0.52 6.13 0.76 2.20 0.76 1.82 0.69
LFP EV battery
products ................... 1.05 0.50 1.73 0.51 5.66 0.75 1.87 0.74 1.44 0.66
Ternary lithium EV
battery products ....... 0.19 0.76 0.14 0.67 0.48 0.88 0.34 0.85 0.38 0.78
ESS battery products....... 0.31 0.59 1.43 0.60 10.48 0.80 2.50 0.75 5.95 0.73
LFP ESS battery
products .................. 0.31 0.57 1.43 0.60 10.48 0.80 2.49 0.75 5.94 0.73
Ternary lithium ESS
battery products ...... 0.01 0.53 – – 0.00 0.88 0.00 0.82 0.01 0.38
Total .............................. 1.55 0.55 3.30 0.56 16.61 0.79 4.70 0.75 7.77 0.72
Product type – Battery
type
LFP battery products....... 1.35 0.52 3.14 0.55 16.13 0.78 4.36 0.75 7.38 0.71
Ternary lithium battery
products....................... 0.20 0.75 0.16 0.64 0.48 0.88 0.34 0.85 0.39 0.78
Total .............................. 1.55 0.55 3.30 0.56 16.61 0.79 4.70 0.75 7.77 0.72
SUMMARY
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--- page 25 ---
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
Sales
volume
Average
selling
price
Sales
volume
Average
selling
price
Sales
volume
Average
selling
price
Sales
volume
Average
selling
price
Sales
volume
Average
selling
price
(GWh) (RMB/Wh) (GWh) (RMB/Wh) (GWh) (RMB/Wh) (GWh) (RMB/Wh) (GWh) (RMB/Wh)
Location of customer
PRC ................................ 1.55 0.55 3.29 0.55 16.46 0.78 4.61 0.74 7.29 0.71
Overseas ........................ 0.00 0.99 0.01 1.08 0.15 1.08 0.09 1.23 0.48 0.78
Total .............................. 1.55 0.55 3.30 0.56 16.61 0.79 4.70 0.75 7.77 0.72
Cost of Sales
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
Cost of Sales for Battery
Products
Raw material costs ............ 537,106 67.5% 1,662,019 68.3% 10,835,792 79.9% 3,088,802 74.3% 4,369,968 69.1%
Manufacturing costs .......... 139,676 17.6% 318,550 13.0% 830,035 6.1% 344,068 8.3% 663,962 10.5%
Direct labor costs .............. 71,224 8.9% 174,614 7.2% 499,924 3.7% 254,631 6.1% 286,346 4.5%
Cost of Sales for Other
Businesses
Other costs ........................ 47,882 6.0% 278,841 11.5% 1,393,739 10.3% 470,364 11.3% 1,007,284 15.9%
Total.................................. 795,888 100.0% 2,434,024 100.0% 13,559,490 100.0% 4,157,865 100.0% 6,327,560 100.0%
Raw materials costs remained as the largest component of our cost of sales throughout the
Track Record Period. Manufacturing costs and direct labor costs as a percentage of our total
cost of sales decreased throughout the Track Record Period primarily due to (i) the increase in
raw materials costs as a result of the increase in purchase price of raw materials, and (ii) the
improvement of production efficiency and economies of scale. Our other costs increased during
the Track Record Period, primarily due to (i) our increased sales of wastes which was in line
with our increased production volume of battery products, and (ii) a significant increase in
sales of battery components since the second half of 2022. See “Financial Information –
Principal Components of Statement of Profit or Loss and Other Comprehensive Income – Cost
of Sales” and “Financial Information – Period-to-Period Comparison of Results of Operations.”
SUMMARY
–1 6–


--- page 26 ---
Gross Profit/(Loss) and Gross Profit Margin by Product – Usage
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
(in RMB thousands, except for percentages)
(unaudited)
EV battery products................ 130,434 19.4% (103,289) (10.5)% 146,207 3.1% 83,107 5.0% (32,083) (2.6)%
LFP EV battery products ... 118,840 22.5% (69,175) (7.9)% 102,555 2.4% 51,974 3.8% (12,671) (1.3)%
Ternary lithium EV battery
products ......................... 11,594 8.0% (34,114) (33.5)% 43,652 10.4% 31,133 10.9% (19,412) (6.4)%
ESS battery products .............. (23,143) (12.7)% (210,928) (24.5)% 731,441 8.7% (226,586) (12.0)% 280,129 6.5%
LFP ESS battery products .. (22,555) (12.7)% (210,928) (24.5)% 734,892 8.8% (221,712) (11.8)% 282,139 6.5%
Ternary lithium ESS
battery products ............. (588) (12.5)% 0 0.0% (3,451) (185.6)% (4,874) (293.3)% (2,010) (73.6)%
Other businesses..................... 3,807 7.4% (10,663) (4.0)% 210,640 13.1% 2,189 0.5% 19,188 1.9%
Total....................................... 111,098 12.2% (324,880) (15.4)% 1,088,288 7.4% (141,290) (3.5)% 267,234 4.1%
During the Track Record Period, we recorded gross profits for our EV battery products
in 2020, 2022 and the six months ended June 30, 2022. We recorded gross losses for our EV
battery products in the six months ended June 30, 2023, primarily due to (i) the temporary
slowdown in the EV industry in early 2023 and the increasing competition in the EV industry,
which negatively affected our EV battery products sales volume and gross profit margin, and
(ii) the higher unit manufacturing costs attributable to the decrease in sales of our EV battery
products, while the fixed costs did not decrease to the same extent. We managed to turn the
gross losses of our ESS battery products in 2021 and the six months ended June 30, 2022 into
gross profits in 2022 and the six months ended June 30, 2023, primarily attributable to (i) our
adjustment of prices of our ESS battery products in response to the fluctuation of raw material
prices, which was also in line with the prevailing market trends according to the F&S Report,
(ii) our further improved production efficiency, and (iii) our improved product offering. See
“Financial Information – Principal Components of Statement of Profit or Loss and Other
Comprehensive Income – Gross Profit/(Loss) and Gross Profit Margin – Gross Profit/(Loss)
and Gross Profit Margin by Product – Usage.”
SUMMARY
–1 7–


--- page 27 ---
Gross Profit/(Loss) and Gross Profit Margin by Product – Battery Type
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
(in RMB thousands, except for percentages)
(unaudited)
LFP battery product....... 96,286 13.7% (280,103) (16.1)% 837,446 6.6% (169,738) (5.2)% 269,468 5.1%
Ternary lithium battery
products ..................... 11,005 7.3% (34,114) (33.5)% 40,202 9.5% 26,259 9.2% (21,422) (7.0)%
Other businesses............ 3,807 7.4% (10,663) (4.0)% 210,640 13.1% 2,189 0.5% 19,188 1.9%
Total.............................. 111,098 12.2% (324,880) (15.4)% 1,088,288 7.4% (141,290) (3.5)% 267,234 4.1%
During the Track Record Period, the gross profit or loss from the sales of our LFP battery
products was primarily affected by (i) the fluctuation in purchase prices of raw materials, (ii)
the release of the benefit of economies of scale as the result of our expansion of production
capacity, (iii) the prevailing industry trend, and (iv) product mix, particularly in different
battery capacity. The gross profit or loss from the sales of our ternary lithium battery products
experienced stronger fluctuation during the Track Record Period, primarily due to (i) the
relatively small production volume of our ternary lithium battery products as a result of the
then limited production capacity and we were yet to form economies of scale, and (ii) the
strong fluctuation in purchase prices of cathode materials of ternary lithium battery products.
See “Financial Information – Principal Components of Statement of Profit or Loss and Other
Comprehensive Income – Gross Profit/(Loss) and Gross Profit Margin – Gross Profit/(Loss)
and Gross Profit Margin by Product – Battery Type.”
Gross Profit/(Loss) and Gross Profit Margin by Region
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
(in RMB thousands, except for percentages)
(unaudited)
PRC .............................. 109,805 12.1% (333,607) (15.9)% 1,071,086 7.4% (161,011) (4.1)% 210,764 3.4%
Overseas ....................... 1,293 51.5% 8,727 50.0% 17,202 10.3% 19,721 17.7% 56,470 15.0%
Total ............................. 111,098 12.2% (324,880) (15.4)% 1,088,288 7.4% (141,290) (3.5)% 267,234 4.1%
SUMMARY
–1 8–


--- page 28 ---
During the Track Record Period, sales to overseas customers were more profitable than
sales to domestic customers primarily because the products we sold to overseas were mainly
customized ESS battery packs that commanded higher selling prices and resulted in a higher
gross profit margin. In 2022, the gross profit margin for the sales to overseas decreased from
51.5% in 2020 and 50.0% in 2021 to 10.3% in 2022, primarily because (i) the competitive
prices we offered to our overseas customers in 2022 due to the increasing competition in
overseas markets and in consideration of obtaining more market share, and (ii) the rapid
increase in raw material prices in 2022. Our gross profit margin for sales to overseas customers
decreased from 17.7% in the six months ended June 30, 2022 to 15.0% in the six months ended
June 30, 2023, primarily due to our adjustment of selling prices in response to the increasing
competition. See “Financial Information – Principal Components of Statement of Profit or Loss
and Other Comprehensive Income – Gross Profit/(Loss) and Gross Profit Margin – Gross
Profit/(Loss) and Gross Profit Margin by Region.”
Key Regulatory Developments and Industry Updates
Considering the automobile industry’s significant contribution to global carbon
emissions, the significant increase in global EV sales in 2022 was a success of the global
decarbonization process. Furthermore, international conferences such as the COP27 2022, the
UN climate change conference suggest that the EV market growth is not likely to be a one-off
phenomenon. The continuation of global EV adoption in the future is expected to positively
affect the Group’s business operations and outlook.
In terms of EV market in China, the PRC government published the Announcement on the
Continuation of the V ehicle Purchase Tax Exemption Policy for New Energy V ehicles on
September 2022, which means the tax relief on EV purchases will continue to be in effect,
driving the growth of the EV market, and in turn the outlook of the Group. On June 19, 2023,
the PRC government published the Announcement on Extending and Optimizing the V ehicle
Purchase Tax Exemption Policy for New Energy V ehicles , according to which, EVs purchased
from January 1, 2024, to December 31, 2025, will be exempted from vehicle purchase tax, with
a maximum tax exemption of RMB30,000 for each new energy passenger vehicle, and for new
energy vehicles purchased from January 1, 2026, to December 31, 2027, the vehicle purchase
tax will be reduced by half, with a maximum tax reduction of RMB15,000 for each new energy
passenger vehicle. On the other hand, the termination of EV subsidy on December 31, 2022 had
an adverse effect on the EV markets. Affected by the termination of the EV subsidies and the
overall downward of global macro-economies, there was a temporary slowdown in the growth
of China’s EV market in early 2023. However, the impact from the termination of EV subsidy
is not expected to be substantial over the long term, considering (i) the increase in EV sales
volume from 6.8 million units in 2022 to 18.1 million units as expected in 2027, with a CAGR
of 21.3%, (ii) the maturity of the overall EV markets in China with more advanced
manufacturing technology, more comprehensive domestic supply chain, expansion of
production scale, intensified competition among EV manufacturers which could lead to the
overall decrease in costs of EVs to mitigate the impact of termination of subsidy, (iii) the high
consumer demand, and (iv) the overall supportive policies in favor of the development of EVs
in China, for example the above-mentioned extended tax relief, despite the decline and
SUMMARY
–1 9–


--- page 29 ---
termination of subsidies. As a result, even after the decline and termination of the EV subsidies,
the China’s EV market still maintained a relatively high growth rate, and our Directors are of
the view that such positive trend is expected to continue after China’s EV industry undergoes
short term adjustment. We have seen a sign of recovery for the growth rate of EV sales volume
in China since the second quarter of 2023. According to the F&S Report, the sales volume of
EVs in China in the second quarter of 2023 reached 2.2 million units, representing a
year-on-year growth rate of 60.9%.
Based on (i) the market analysis on the current and future trends, drivers, challenges,
opportunities, policies and regulations of the EV industry in China as set out above; and (ii)
the Joint Sponsors’ discussion with Frost & Sullivan, which has represented to the Joint
Sponsors that, based on its independent research, the impact from the termination of EV
subsidy is not expected to be substantial over the long term, nothing material has come to the
Joint Sponsors’ attention that would lead them to cast doubts on the Directors’ view above.
In terms of ESS market, authorities in China published policies such as Guidance on
Promoting the Development of Energy Electronics Industry and The Implementation Plan on
Promoting the High-Quality Development of New Energy in the New Era which encouraged the
development of clean energy projects, ESS batteries and relevant technologies. Since 2016, the
U.S. government have extended the investment tax credit for both grid-scale and residential
ESS. In May 2022, the European Commission presented the REPowerEU Plan to deal with the
global energy market disruption caused by the Russian-Ukrainian War, which aimed to help EU
save energy, produce clean energy and diversify its energy supplies. It also recognized that
energy storage played a key role in ensuring security of supply and supporting renewables
integration, reducing the need for pollutant gas power plants. Driven by the favorable policy
environment, the global ESS battery market is emerging with vast growth potential. Such
favorable policies are expected to bring more opportunities to the ESS market and will hence
have a positive impact on our business outlook and financial performance.
In terms of raw materials, the average price for lithium carbonate decreased rapidly in
2023 as compared to that in 2022, primarily due to the temporary slowdown in the EV market
since early 2023. According to the F&S Report, the average price for lithium carbonate
decreased from an average of RMB496,100 per ton in 2022 to RMB333,100 per ton in the six
months ended June 30, 2023, which further decreased to RMB239,900 per ton in the three
months ended September 30, 2023. According to the same source, the average price for the
cathode material for LFP battery products decreased from RMB157,800 per ton in 2022 to
RMB112,900 per ton in the six months ended June 30, 2023, which further decreased to
RMB82,500 per ton in the three months ended September 30, 2023. As a result, there is an
industry-wide decrease in prices of lithium-ion battery products in the nine months ended
September 30, 2023.
See “Industry Overview” for further details.
SUMMARY
–2 0–


--- page 30 ---
The Impact of Raw Material Price Fluctuation
The prices of raw materials directly affect our cost of sales and our gross profit. In 2020,
2021 and 2022 and the six months ended June 30, 2022 and 2023, costs of raw materials
accounted for 67.5%, 68.3%, 79.9%, 74.3% and 69.1% of our cost of sales for the respective
periods and 59.2%, 78.8%, 74.0%, 76.9% and 66.3% of our revenue for the respective periods.
The price of raw material, particularly lithium carbonate, a key raw material for cathode
materials for LFP battery products, experienced significant fluctuation during the Track Record
Period.
Increase of lithium carbonate and LFP cathode material prices during 2020 to 2022. The
price for lithium carbonate experienced significant increase from 2020 to 2022. Such increase
was primarily due to a shortage in the supplies of lithium carbonate since the last quarter of
2020 resulting from the rising demand for lithium battery products. According to the F&S
Report, the average price for lithium carbonate increased from RMB47,100 per ton in 2020 to
RMB131,100 per ton in 2021 and further increased to RMB496,100 per ton in 2022. As a
result, the average price for cathode material for LFP battery products increased significantly
from RMB37,300 per ton in 2020 to RMB157,800 per ton in 2022. The unit cost of raw
materials for our battery products increased from RMB0.35 per Wh in 2020 to RMB0.50 per
Wh in 2021 and further increased to RMB0.65 per Wh in 2022.
In response to the rapid price increase, in November 2021, with major customers that
entered into fixed price framework sales agreement with us, we started to adjust our pricing by
entering into supplemental agreements with them. As the increasing trend of raw material
prices persisted, in the second quarter of 2022, we started to introduce price adjustment
mechanism into our contracts with customers in response to fluctuations in raw material prices.
Such practice was also an industry norm in 2022, according to the F&S Report. As a result, we
managed to record gross profit for our battery products in the second half of 2022.
Decrease of lithium carbonate and LFP cathode material prices in 2023. Entering into
2023, there was a temporary slowdown in the EV industry in China, and the average price for
lithium carbonate decreased rapidly as compared to that in 2022. According to the F&S Report,
the average price for lithium carbonate decreased from RMB461,200 per ton in the six months
ended June 30, 2022 to RMB333,100 per ton in the six months ended June 30, 2023, which
further decreased to RMB239,900 per ton in the three months ended September 30, 2023. As
a result, the average price for cathode material for LFP battery products decreased from
RMB152,200 per ton in the six months ended June 30, 2022 to RMB112,900 per ton in the six
months ended June 30, 2023, and further decreased to RMB82,500 per ton in the three months
ended September 30, 2023. The unit cost of raw materials for our battery products decreased
from RMB0.66 per Wh in the six months ended June 30, 2022 to RMB0.56 per Wh in the six
months ended June 30, 2023.
SUMMARY
–2 1–


--- page 31 ---
Against this backdrop, the selling prices of our battery products decreased rapidly in the
first half of 2023. Meanwhile, the relevant costs of raw materials did not decrease to the same
extent as there was a lag of time before the decrease in market prices of raw materials leads
to a decrease in our own cost of sales. In the six months ended June 30, 2023, we recorded net
provision for impairment losses of inventories of RMB264.7 million, as the net realizable value
of our inventories is lower than their costs due to the decrease in selling prices of our battery
products. See “Financial Information – Selected Balance Sheet – Inventories.” According to the
F&S Report, the impairment loss of inventories resulted from the rapid decrease in prices of
raw materials was not specific to us, and the peers in the industry also faced similar problems.
To mitigate the impact from the decrease in prices of raw materials in the first half of 2023,
we took a more prudent procurement strategy of raw materials and implemented a refined
inventory management including reducing the stock-up amount and maintaining a lower level
of raw material inventories, as well as closely monitoring the market trend of raw material
prices. We also paid close attention to the market condition of raw materials and maintained
close relationship with our suppliers to monitor the market trend of raw material prices.
Despite such procurement and inventory management strategies, we recorded a gross loss for
our EV battery products in the first half of 2023.
In long-term, to facilitate our overall business growth and increase our output, we will
procure more raw materials in absolute amount. However, in the short term, to mitigate the
impact of raw materials price fluctuations, we also need to adjust our stock-up amount and
inventory levels from time to time based on certain factors including (i) our production plan
in response to the changes in market demand for our battery products and (ii) the trend of raw
material prices.
There is no guarantee that we will not experience such significant fluctuation in raw
material prices in the future. We cannot assure you that we will always be able to adjust our
selling prices in a timely manner to fully pass down the costs increase to our customers and
secure raw material supplies at favorable prices when raw material prices increase, on the one
hand. On the other hand, when raw material prices decrease, there is no assurance that we can
always maintain the selling prices of our products at a level that is favorable to us. We may not
have strong bargaining power with customers and suppliers, and may not be able to effectively
mitigate the impact of raw material price fluctuations despite all the measures being put in
place. Our business and our results of operations have been materially affected by the
fluctuation in raw material prices in the past, and may be materially and adversely affected in
the future if we fail to mitigate the risks associated therewith. See “Risk Factors – We are
Exposed to Risks Relating to Price Fluctuations of Raw Materials.”
FINANCIAL POSITION
Set forth below is a summary of our historical statement of financial position.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
Non-current assets.......................... 1,500,213 5,150,963 10,002,704 14,423,643
Current assets................................. 1,154,994 3,873,676 16,438,699 13,945,798
Total assets..................................... 2,655,207 9,024,639 26,441,403 28,369,441
Current liabilities ........................... 2,122,156 6,430,044 10,399,482 10,889,018
Net current assets/(liabilities) ....... (967,162) (2,556,368) 6,039,217 3,056,780
Non-current liabilities .................... 203,938 351,715 4,590,348 6,871,457
Net assets ....................................... 329,113 2,242,880 11,451,573 10,608,966
Non-controlling interests ................ 100,761 213,889 702,626 493,107
SUMMARY
–2 2–


--- page 32 ---
Our net current liabilities increased from RMB967.2 million as of December 31, 2020, to
RMB2,556.4 million as of December 31, 2021 primarily due to (i) an increase in trade and bills
payables mainly attributable to our increased procurement of raw materials in line with our
increased production capacity, and (ii) an increase in amount due to related parties mainly
including the loans and related interests due to related parties mainly used for our expansion
plans. Our net current liabilities of RMB2,556.4 million as of December 31, 2021 turned into
net current assets of RMB6,039.2 million as of December 31, 2022, primarily due to (i) an
increase in current assets, including (a) an increase in inventories in line with our business
growth, (b) an increase in trade and bills receivables as a result of our business growth, (c) an
increase in due from related parties as a result of our increased sales to our related parties, (d)
an increase in restricted cash as a result of our increasing use of bills to settle with our
suppliers, and (e) an increase in cash and cash equivalent mainly as a result of the Pre-IPO
Investment; and (ii) a decrease in amounts due to related parties due to our repayment of
amount due to our related parties. Our net current assets decreased from RMB6,039.2 million
as of December 31, 2022 to RMB3,056.8 million as of June 30, 2023, primarily due to (i) a
decrease in current assets, mainly including decrease in trade and bills receivables primarily
due to the settlement of trade receivables with our customers, amount due from related parties
primarily due to the decrease in sales to our related parties, and cash and cash equivalents, and
(ii) an increase in current liabilities, mainly including increase in other payables and accruals
mainly attributable for our increased payables for purchase of property, plant and equipment
in relation to our production expansion plan, and the interest-bearing bank borrowings for
financing our production expansion plan. See “Financial Information – Liquidity and Capital
Resources – Net Current Assets/Liabilities” and “– Indebtedness – Loans and Related Interests
Due to Related Parties.”
Our net assets increased from RMB151.4 million as of January 2020 to RMB329.1
million as of December 31, 2020, primarily due to an amount of RMB231.0 million as a result
of the business combination under common control, which was partially offset by the total
comprehensive loss for the year of RMB53.3 million. Our net assets increased from RMB329.1
million as of December 31, 2020 to RMB2,242.9 million as of December 31, 2021, primarily
due to (i) contribution from shareholders of RMB2,615.0 million, which consisted of capital
contributions of RMB900 million from several shareholders in August 2021 and capital
contributions of RMB1,715 million from two shareholders in November 2021, (ii) contribution
from non-controlling interests of RMB243.9 million, and (iii) share incentive plan expenses of
RMB42.6 million, which was partially offset by (i) the loss for the year of RMB804.2 million,
and (ii) an amount of RMB183.5 million as a result of the business combination under common
control for the acquisition of BatteroTech Shanghai. Our net assets increased from
RMB2,242.9 million as of December 31, 2021 to RMB11,451.6 million as of December 31,
2022, primarily due to (i) contribution from shareholders of RMB8,940.8 million, which
consisted of proceeds received from issuing shares of RMB2,900 million in April and May
2022, RMB460.0 million in July 2022 and RMB5,580.8 million in August and September 2022,
(ii) contribution from non-controlling interests of RMB588.0 million, and (iii) share incentive
plan expenses of RMB133.6 million, which was partially offset by (i) the loss for the year of
RMB450.8 million, and (ii) the amount of RMB2.9 million for the acquisition of non-
controlling interests. Our net assets decreased from RMB11,451.6 million as of December 31,
2022 to RMB10,609.0 million as of June 30, 2023, primarily due to losses of RMB919.7
million, which was partially offset by the share incentive plan expenses of RMB77.1 million.
See “Consolidated Statements of Change of Equity” in Accountants’ Report in Appendix I to
this prospectus.
SUMMARY
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CASH FLOWS
The table below sets forth our cash flows for the periods indicated.
Y ear Ended December 31,
Six
Months
Ended
June 30,
2020 2021 2022 2023
(in RMB thousands)
Net cash flows generated
from/(used in) operating
activities ................................. 176,548 (1,957,294) (2,230,473) 453,497
Net cash flows used in
investing activities.................. (689,374) (2,920,950) (3,981,731) (3,902,802)
Net cash generated from
financing activities ................. 631,197 5,307,490 10,531,636 2,570,166
Net increase in cash and
cash equivalents ................... 118,371 429,246 4,319,432 (879,139)
Net foreign exchange
difference................................ (2,005) 4,831 1,123 (471)
Cash and cash equivalents at
beginning of the year/period... 30,064 146,430 580,507 4,901,062
Cash and cash equivalents at
end of the year/period .......... 146,430 580,507 4,901,062 4,021,452
Our net operating cash outflows in 2021 and 2022 were primarily attributable to our net
losses for the respective periods as well as significant increases in various working capital
balances as our scale of operations grew, including trade and bills receivables, inventory and
restricted cash, partially offset by significant increases in trade and bill payables.
For a more detailed cash flow analysis, please see “Financial Information – Cash Flows.”
SUMMARY
–2 4–


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KEY FINANCIAL RATIOS
Y ear Ended/As of December 31,
Six
Months
Ended/
As of
June 30,
2020 2021 2022 2023
Return on assets (1) .......................... (2.0)% (8.9)% (1.7)% (3.2)%
Return on equity (2) ......................... (16.2)% (35.9)% (3.9)% (8.7)%
Gearing ratio (3) ............................... 293.0% 142.5% 40.9% 67.6%
Current ratio (4) ............................... 0.5 0.6 1.6 1.3
Quick ratio (5) .................................. 0.4 0.5 1.3 1.0
Notes:
(1) Return on assets is calculated based on the total profit/(loss) for the relevant year/period divided by the ending
balance of total assets and multiplied by 100%.
(2) Return on equity is calculated based on the total profit/(loss) for the relevant year/period divided by the ending
balance of total equity and multiplied by 100%.
(3) Gearing ratio is calculated based on the interest-bearing bank borrowings, lease liabilities and loans and related
interests due to related parties divided by the ending balance of total equity and multiplied by 100%.
(4) Current ratio is calculated based on the total current assets divided by the total current liabilities as at the end
of the respective year/period.
(5) Quick ratio is calculated as total current assets less inventories divided by the total current liabilities as at the
end of the respective year/period.
Our gearing ratio decreased from 293.0% as of December 31, 2020 to 142.5% as of
December 31, 2021, primarily due to a significant increase in our total equity attributable to
the capital increase, and further decreased to 40.9% as of December 31, 2022 primarily due to
a significant increase in our total equity attributable to the proceeds from Pre-IPO Investment.
Our gearing ratio increased from 40.9% as of December 31, 2022 to 67.6% as of June 30, 2023
primarily due to the increase in our interest-bearing bank borrowings and the decrease in our
total equity primarily attributable to the loss we recorded. See “Financial Information – Key
Financial Ratios – Gearing Ratio.”
Our current ratio increased from 0.5 as of December 31, 2020 to 0.6 as of December 31,
2021, primarily due to an increase in inventories, an increase in trade and bills receivables, and
an increase in restricted cash, which further increased to 1.6 as of December 31, 2022 primarily
due to an increase in inventories, an increase in trade and bills receivables, an increase in
amount due from related parties, an increase in restricted cash, an increase in cash and cash
equivalent and a decrease in amount due to related parties. However, our current ratio
SUMMARY
–2 5–


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decreased from 1.6 as of December 31, 2022 to 1.3 as of June 30, 2023 primarily due to a
decrease in trade and bills receivables, a decrease in amount due from related parties, and a
decrease in cash and cash equivalents. See “Financial Information – Key Financial Ratios –
Current Ratio.”
Our quick ratio increased from 0.4 as of December 31, 2020 to 0.5 as of December 31,
2021, and further to 1.3 as of December 31, 2022. However, our quick ratio decreased from 1.3
as of December 31, 2022 to 1.0 as of June 30, 2023. The trend of our quick ratio was generally
in line with the current ratio as disclosed above. See “Financial Information – Key Financial
Ratios – Quick Ratio.”
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
As at the Latest Practicable Date, Yongqing Technology was interested in approximately
62.6% of the total issued Shares, comprising approximately 50.4% direct interest and
approximately 12.2% indirect interest through Wenzhou Jingli, whose general partner is Ruitu
Energy, a wholly-owned subsidiary of Yongqing Technology. Yongqing Technology is owned
by Tsingshan Group as to 51% of its equity interests, and Tsingshan Group is ultimately
controlled by Mr. Xiang directly and indirectly through Shanghai Decent and Zhejiang
Tsingshan as to 57.5% of its equity interests. See “History and Development” for the corporate
structure of the Group.
Immediately following the completion of the Global Offering, Yongqing Technology will
hold approximately 59.4% of the total issued Shares, comprising approximately 47.8% direct
interest and approximately 11.6% indirect interest through Wenzhou Jingli. Mr. Xiang, through
Tsingshan Group, which is a 51% shareholder of Yongqing Technology, will control the
exercise of the approximately 59.4% voting rights in the Company. Accordingly, Mr. Xiang,
Zhejiang Tsingshan, Shanghai Decent, Tsingshan Group, Yongqing Technology, Ruitu Energy
and Wenzhou Jingli are a group of Controlling Shareholders.
For more details, please refer to “Relationship with the Controlling Shareholders” in this
prospectus.
CONTINUING CONNECTED TRANSACTIONS
Following the Global Offering, the transactions between our Company and our connected
persons will constitute continuing connected transactions of our Company under Chapter 14A
of the Listing Rules. We have applied to the Stock Exchange for, and the Stock Exchange has
granted us, waivers exempting us from strict compliance with the rules regarding the relevant
requirements under the Chapter 14A of the Listing Rules. Please see “Connected Transactions”
of this prospectus for details.
SUMMARY
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OUR PRE-IPO INVESTORS
In order to obtain the funds required for our Company’s development and continuously
optimize the corporate governance structure, our Company has carried out a series of equity
financing since its establishment to introduce new Shareholders and Pre-IPO Investors to our
Group. Please see “History and Development – Pre-IPO Investments” of this prospectus for
details. Our Pre-IPO Investors include state-owned enterprises, our upstream and downstream
industrial chain participants and professional investment companies or professional funds. For
further details of the background of our Pre-IPO Investors, please see “History and
Development – Pre-IPO Investments – Background of the Pre-IPO Investors.”
USE OF PROCEEDS
We estimate that we will receive net proceeds from the Global Offering of approximately
HK$2,118.8 million, after deducting underwriting commissions, fees and estimated expenses
payable by us in connection with the Global Offering, assuming an Offer Price of HK$19.40
per Share, being the mid-point of the indicative Offer Price range stated in this prospectus.
We currently intend to apply these net proceeds for the following intended purposes in the
amounts set forth below:
Amount
Approximate %
of total net
proceeds Intended use
(in HK$ millions)
1,695.0 80.0% Expansion of our production capacity. In particular,
the construction of production facilities in
Wenzhou, Foshan and Chongqing
211.9 10.0% R&D of core technologies for advanced lithium-ion
batteries, advanced materials and optimized
manufacturing processes
211.9 10.0% Working capital and general corporate purpose
100.0%
For a more detailed use of proceeds, please see “Future Plans and Use of Proceeds.”
SUMMARY
–2 7–


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LISTING EXPENSES
Listing expenses represent professional fees, underwriting commission and fees incurred
in connection with the Listing and the Global Offering. Our listing expenses are estimated to
be approximately RMB121.0 million (including underwriting commission) accounted for 5.9%
of the gross proceeds of the Global Offering, assuming that an Offer Price of HK$19.40 per
Share (being the mid-point of the Offer Price range stated in this prospectus) among which,
approximately RMB93.6 million is directly attributable to the issuance of Shares and will be
charged to equity upon completion of the Listing, and approximately RMB27.4 million has
been or will be charged to our consolidated statement of comprehensive income. The listing
expenses we incurred in the Track Record Period and expect to incur would consist of
approximately RMB51.4 million underwriting related expenses and fees (including
underwriting commissions, SFC transaction levy, Stock Exchange trading fee and AFRC
transaction levy), approximately RMB55.4 million non-underwriting-related expenses and fees
including fees for the Joint Sponsors, legal advisors and reporting accountant and
approximately RMB14.2 million for other non-underwriting-related fees and expenses. During
the Track Record Period, we incurred RMB42.2 million of listing expenses, among which,
RMB22.8 million was included in deposits and other receivables and will be subsequently
charged to our equity upon completion of the Listing and RMB19.4 million was charged to our
consolidated statement of comprehensive income.
The listing expenses above are the latest practicable estimate for reference only, and the
actual amount may differ from this estimate.
GLOBAL OFFERING STATISTICS
Based on the
Offer Price of
HK$18.20 per
Offer Share
Based on the
Offer Price of
HK$19.40 per
Offer Share
Based on the
Offer Price of
HK$20.60 per
Offer Share
Market capitalization of our
Shares (1)
HK$41,439.1
million
HK$44,171.4
million
HK$46,903.6
million
Unaudited pro forma adjusted
Consolidated net tangible assets
per Share
(2) HK$5.75 HK$5.81 HK$5.87
Notes:
(1) The calculation of market capitalization is based on 2,276,874,050 Shares expected to be in issue immediately
after completion of the Global Offering.
(2) The unaudited pro forma adjusted consolidated net tangible assets attributable to Shareholders of the Company
per Share is arrived at by dividing the unaudited pro forma adjusted net tangible assets by 2,276,874,050
Shares, being the number of Shares in issue assuming that the Global Offering had been completed on June 30,
2023.
(3) No other adjustment has been made to the unaudited pro forma adjusted consolidated net tangible asset of the
Group to reflect any trading result or other transactions entered into subsequent to June 30, 2023.
SUMMARY
–2 8–


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APPLICATION FOR LISTING ON THE STOCK EXCHANGE
We have applied to the Stock Exchange for the granting of the listing of, and permission
to deal in, our H Shares to be issued pursuant to the Global Offering, on the basis that, among
other things, we satisfy the market capitalization/revenue test under Rule 8.05(3) of the Listing
Rules with reference to (i) our revenue for the year ended December 31, 2022, being
RMB14,647.8 million (equivalent to approximately HK$15,964.6 million), which was over
HK$500 million, and (ii) the market capitalization of our Shares at the time of Listing, based
on the low end of the indicative Offer Price range, exceeding HK$4 billion as required by Rule
8.05(3) of the Listing Rules.
DIVIDEND
Since inception, we have not declared or paid any dividends on our shares. We do not
have any present plan to declare or pay any dividends on our Shares in the foreseeable future.
Any future plan to pay dividends will be made at the discretion of our Board of Directors
subject to approval of our Shareholders. Any declaration as well as the amount of such
declaration and payment will be subject to our Articles of Association and the relevant laws.
Even if we decide to pay dividends, the form, frequency and amount may be based on a number
of factors, including our future operations and earnings, capital requirements and surplus,
general financial condition, contractual restrictions and other factors that the Board of
Directors may deem relevant.
THE IMPACT OF COVID-19
The outbreak of COVID-19 pandemic has materially and adversely affected the global
economy since the first quarter of 2020. As a result of the restrictive and anti-pandemic
measures implemented in places where our operation, production and R&D activities are
located, the mobility of some of our employees was affected and some of our employees had
to work remotely. Such impact on our overall production and R&D processes was limited as
we implemented various precautionary measures and flexibly adjusted work arrangement of
our employees. During the Track Record Period and up to the Latest Practicable Date, we did
not experience temporary closure or shutdown of our offices or production facilities due to the
COVID-19 pandemic. Due to our active communication with our suppliers and strategic
procurement of key raw materials, during the Track Record Period and up to the Latest
Practicable Date, our production activities have not encountered any material disruption, nor
has our product delivery been materially affected, despite the impact of COVID-19 on the raw
material suppliers.
SUMMARY
–2 9–


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Accordingly, our Directors believe that the outbreak of COVID-19 has not had, and will
not have, any material adverse impact on the Group’s business, financial condition or results
of operations. However, there is no assurance that our operation or production activities will
not be affected in the future due to the COVID-19 pandemic and relevant restrictive measures.
See “Risk Factors – Risks Relating to Our Industry and Business – We face risks related to
health epidemics, including the COVID-19 pandemic, which could have a material adverse
effect on our business and results of operations.” See “Financial Information – Significant
Factors Affecting Our Results of Operations – The Impact of COVID-19.”
RECENT DEVELOPMENTS
Entering into the second half of 2023, the sales volume of our EV battery products has
gradually shown signs of recovery, but we still face increasingly intensified competitive
landscape in the lithium-ion battery industry.
Our newly launched 320Ah ESS battery products were also highly recognized in the
overseas market. We have received orders for our 320Ah ESS battery products of over 20GWh
in aggregate from overseas ESS battery customers, including a large-scale energy storage
solution provider in the United States, a leading photovoltaic power station system integrator
and solar station developer in the United States and a leading renewable energy company in the
Asia-Pacific region headquartered in Singapore. It reflected the increasing global recognition
of our ESS battery products and the success of our research and development in large capacity
ESS battery products.
On the supply side, the prices of key raw materials such as lithium carbonate continued
the downward trend after entering into the second half of 2023. According to the F&S Report,
the average prices of lithium carbonate decreased from RMB306,800 per ton by the end of June
2023 to RMB168,900 per ton by the end of September 2023, which further decreased to
RMB131,000 per ton by the end of November 2023. According to the same source, the average
prices of cathode material for LFP battery products decreased from RMB97,000 per ton by the
end of June 2023 to RMB65,000 per ton by the end of September 2023, which further
decreased to RMB53,000 per ton by the end of November 2023. As a result, the selling prices
of our battery products decreased accordingly in the third quarter of 2023 and continued to
decrease in the fourth quarter of 2023.
Based on our unaudited management accounts, we recorded net loss in the third quarter
of 2023, which was primarily due to the decrease in selling prices of our battery products as
a result of the continuous decrease in prices of key raw materials such as lithium carbonate as
mentioned-above, while our costs of raw materials did not decrease to the same extent as in the
third quarter of 2023, we mainly used the raw materials in stock procured when the prices of
raw materials were still at a relatively high level. As a result, we recorded impairment losses
of our inventories because the net realizable value of our inventories was lower than their costs.
The higher unit labor and manufacturing costs also contributed to our net loss in the third
quarter of 2023, which was primarily due to (i) the lower overall utilization rate as the
customers were more prudent and reluctant to place orders in consideration of the fluctuation
in raw material prices, while the fixed costs did not decrease to the same extent, and (ii) the
higher costs associated with the new production facility, Liuzhou facility, which was put into
trial production in July 2023.
SUMMARY
–3 0–


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We expect to record a substantial increase in net loss in 2023, primarily because (i)
China’s EV market is yet to fully recover from the slowdown in early 2023 despite the gradual
recovery in the second half of 2023, which adversely affect the sales volume of our EV battery
products, (ii) we recorded losses in the first half of 2023, primarily because (a) the temporary
slowdown in the EV industry in China in early 2023, directly affected the market demands for
EVs, and (b) certain EV manufacturers did not place their orders for EV batteries in early 2023
because they expected the price of EV batteries to further decrease as the price of lithium
carbonate decreased, and (iii) the intensified market competition in EV and ESS industries in
China in the second half of 2023 is expected to have a negative impact on our gross profit
margin. Going forward, we may also experience further delays in realizing our backlog if the
price of lithium carbonate further decreases or the market demand weakens. The delivery
schedule in our backlog orders may be subject to further confirmation from the customers and
we cannot assure you that will not experience delays in such confirmations in the future. If so,
the sales volume of our products and our revenue may be materially and adversely affected,
which could in turn materially and adversely affect our business operations, profitability and
prospects.
NO MATERIAL ADVERSE CHANGE
Our Directors confirmed that, up to the date of this prospectus, there has been no material
adverse change in our financial or trading position or prospects since June 30, 2023, and there
has been no event since June 30, 2023 that would materially affect the information as set out
in the Accountants’ Report in Appendix I to this prospectus.
SUMMARY OF MAJOR RISK FACTORS
Our major risk factors include:
 We have a limited operating history, making it difficult to evaluate our business
prospects, and we may not be successful in expanding our operations or managing
our growth.
 We recorded net losses in the past, and we have not been profitable yet.
 Our plans to achieve profitability may not develop as expected, which may affect
our business sustainability.
 We are exposed to risks relating to price fluctuations of raw materials.
 We may not be able to derive the desired benefits from our R&D efforts, which may
negatively affect our competitiveness and profitability.
 We may not be able to increase our production capacity as planned, and even if our
production expansion projects proceed as planned, we may not be able to increase
our production output in a timely manner or at all as envisaged.
SUMMARY
–3 1–


--- page 41 ---
 We purchase certain key raw materials and components from third parties, and we
may not be able to secure our supply of key raw materials in a stable and timely
manner.
 We may be required to purchase certain amounts of raw materials under the
long-term off-take agreements entered into with some of our raw material suppliers,
which may exceed our production needs.
 We face competition in our business.
 We may fail to recover our trade and bills receivables in a timely manner, which may
affect our financial condition and results of operations.
SUMMARY
–3 2–


--- page 42 ---
In this prospectus, unless the context otherwise requires, the following terms and
expressions have the meanings set forth below.
“2021 Share Incentive Scheme of
the Company”
The share incentive scheme adopted by the Company in
August 2021, a summary of which is set forth in
“Appendix VI – Statutory and General Information – The
Share Incentive Schemes” in this prospectus
“2022 Share Incentive Scheme of
the Company”
The share incentive scheme adopted by the Company in
March 2022, a summary of which is set forth in
“Appendix VI – Statutory and General Information – The
Share incentive Schemes” in this prospectus
“3W Global I” 3W Global I LTD, a limited liability company established
under the laws of the Cayman Islands on July 1, 2021,
which is a Pre-IPO Investor of the Company
“Accountants’ Report” the accountants’ report of the Company, the text of which
is set out in Appendix I to this prospectus
“AFRC” Accounting and Financial Reporting Council of Hong
Kong
“Articles of Association” or
“Articles”
the articles of association of the Company, as amended,
which shall become effective on the Listing Date and a
summary of which is set out in Appendix V to this
prospectus
“BatteroTech” one of the brands under which our products are sold
“BatteroTech Jiashan” BatteroTech Co., Ltd (ʮ̡), a
limited liability company established under the laws of
the PRC on December 9, 2020, which is a subsidiary of
BatteroTech Shanghai
“BatteroTech Jiaxing” Jiaxing BatteroTech Corporation Limited (Ҧ
ʮ̡), a limited liability company established under
the laws of the PRC on April 11, 2023, which is a
subsidiary of BatteroTech Jiashan
“BatteroTech Shanghai” BatteroTech Corporation Limited (Ҧ
ʮ̡), a limited liability company established under
the laws of the PRC on July 23, 2020, which is a
subsidiary of the Company
DEFINITIONS
–3 3–


--- page 43 ---
“BatteroTech Wuhan” Wuhan BatteroTech Corporation Limited (ဏᚆඓอঐ
ʮ̡), a limited liability company established
under the laws of the PRC on August 20, 2019, which is
a subsidiary of BatteroTech Shanghai
“Board” the board of Directors
“Business Day” or
“business day”
a day on which banks in Hong Kong are generally open
for normal banking business to the public and which is
not a Saturday, Sunday or public holiday in Hong Kong
“CAGR” compound annual growth rate
“Capital Market Intermediaries”
or “capital market
intermediary(ies)” or “CMI(s)”
the capital market intermediaries participating in the
Global Offering and has the meaning ascribed to it under
the Listing Rules
“CCASS” the Central Clearing and Settlement System established
and operated by HKSCC
“China” or “PRC” the People’s Republic of China, excluding, for the
purpose of this prospectus, Hong Kong, Macau and
Taiwan
“Chongqing REPT BATTERO” Chongqing REPT BATTERO Energy Co., Ltd. (ᅅ๿ऌ
ʮ̡), a limited liability company
established under the laws of the PRC on March 1, 2023,
which is a subsidiary of the Company
“Chuangyi Chengtun” Xiamen Chuangyi Chengtun New Energy Industry
Investment Partnership (Limited Partnership) (௴ू
ସˊอঐ๕ପุҳ༟ΥྫΆุ(Υྫ)), a limited
partnership established under the laws of the PRC on
April 30, 2021, which is a Pre-IPO Investor of the
Company
“CITICS Investment” CITIC Securities Investment Co., Ltd. (ᗇՎҳ༟Ϟ
ʮ̡) a limited liability company established under the
laws of the PRC on April 1, 2012, which is a Pre-IPO
Investor of the Company
“CLOU Intelligent Energy” Shenzhen CLOU Intelligent Energy Co., Ltd. (߅
ʮ̡), a limited liability company
established under the laws of the PRC on May 12, 2017,
which is one of the customers of the Company
DEFINITIONS
–3 4–


--- page 44 ---
“CNGR” CNGR Advanced Material Co., Ltd. (΅Ϟ
ʮ̡), a joint stock limited liability company
established under the laws of the PRC on September 15,
2014, which is a Pre-IPO Investor of the Company
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong), as amended, supplemented or otherwise
modified from time to time
“Companies (Winding Up and
Miscellaneous Provisions)
Ordinance”
the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (Chapter 32 of the Laws of Hong
Kong), as amended, supplemented or otherwise modified
from time to time
“Company” REPT BATTERO Energy Co., Ltd. (΅Ϟ
ʮ̡), which was incorporated in the PRC on October
25, 2017 and converted into a joint stock limited liability
company on April 7, 2022
“Company Law” or “PRC
Company Law”
Company Law of the People’s Republic of China ( ʕശɛ
جas amended, supplemented or
otherwise modified from time to time
“Controlling Shareholder(s)” has the meaning ascribed under the Listing Rules and in
this prospectus, refers to Mr. Xiang, Zhejiang Tsingshan,
Shanghai Decent, Tsingshan Group, Yongqing
Technology, Ruitu Energy and Wenzhou Jingli
“CRRC” CRRC Electric VEHICLE Co., Ltd. (˾ཥਗӛԓ
ʮ̡), a limited liability company established
under the laws of the PRC on July 23, 2007, which is one
of the customers of the Company
“CSRC” China Securities Regulatory Commission ( ʕ਷ᗇՎ္ຖ
ึ)
“DFPV (Aeolus)” Dongfeng Motor Corporation Passenger Vehicle
Company (͜ԓʮ̡), a
branch owned by the Dongfeng Motor Group Co., Ltd.
and incorporated in the PRC on June 15, 2009, which is
one of the customers of the Company
“Director(s)” director(s) of the Company
DEFINITIONS
–3 5–


--- page 45 ---
“DNPV (Venucia)” Dongfeng Nissan Passenger Vehicle Company (ӛԓ
͜ԓʮ̡), a branch owned by the
DONG FENG MOTOR Company Ltd. and incorporated
in the PRC on June 9, 2003, which is one of the
customers of the Company
“Domestic Unlisted Shares” ordinary Shares in the share capital of the Company with
a nominal value of RMB1.00 each, which are not listed
on any stock exchange
“EIT Law” Enterprise Income Tax Law of the People’s Republic of
China (جas amended,
supplemented or otherwise modified from time to time
“EP Equipment” Zhejiang E-P Equipment Co., Ltd. (΅Ϟ
ʮ̡), a limited liability company established under
the laws of the PRC on September 20, 2007, which is one
of the customers of the Company
“Exchange Participant(s)” a person: (a) who, in accordance with the Hong Kong
Listing Rules, may trade on or through the Hong Kong
Stock Exchange; and (b) whose name is entered in a list,
register or roll kept by the Hong Kong Stock Exchange as
a person who may trade on or through the Hong Kong
Stock Exchange
“Extreme Conditions” extreme conditions caused by a super typhoon as
announced by the Government of Hong Kong
“Farizon Auto” Zhejiang Geely Farizon New Energy Commercial Vehicle
Group Co., Ltd. (ʮ
̡), a limited liability company established under the
laws of the PRC on February 1, 2016, which is one of the
customers of the Company
“FAW” FAW Car Co., Ltd. (ʮ̡), a limited
liability company established under the laws of the PRC
on June 28, 2019, which is one of the customers of the
Company
“FINI” or “Fast Interface for
New Issuance”
an online platform operated by HKSCC that is mandatory
for admission to trading and, where applicable, the
collection and processing of specified information on
subscription in and settlement for all new listings
DEFINITIONS
–3 6–


--- page 46 ---
“Frost & Sullivan” Frost & Sullivan (Beijing) Inc.
“F&S Report” the industry report we commissioned Frost & Sullivan
(Beijing) Inc. to prepare on the lithium-ion battery
market
“Foshan Manufacturing
Transformation &
Development Fund”
Guangdong (Foshan) Manufacturing Transformation and
Development Fund (Limited Partnership) (؇(Нʆ)Ⴁ
ږ(Υྫ)), a limited partnership
established under the laws of the PRC on August 31,
2021, which is an investment entity of SCGC, and a
Pre-IPO Investor of the Company
“Foshan REPT BATTERO” Foshan REPT BATTERO Energy Co., Ltd. ( Нʆ๿ऌᚆ
ʮ̡), a limited liability company established
under the laws of the PRC on October 13, 2023, which is
a subsidiary of the Company
“GEM” GEM (Wuhan) New Energy Vehicle Service Co., Ltd. (ࣸ
ߕ؍(ဏ)ʮ̡), a limited liability
company established under the laws of the PRC on
November 11, 2014, with which the Company entered
into strategic cooperation agreements in November 2021
and July 2022 to promote the safe recycling for EV
batteries for the safe recycling, storage and green
disposal of lithium-ion batteries, and to provide quality
solutions in relation to resources
“General Rules of HKSCC” General Rules of HKSCC published by the Stock
Exchange and as amended from time to time
“Global Offering” the Hong Kong Public Offering and the International
Offering
“GoodWe” GoodWe Technologies Co., Ltd. (ʮ
̡), a limited liability company established under the
laws of the PRC on November 5, 2010, which is one of
the customers of the Company
DEFINITIONS
–3 7–


--- page 47 ---
“Group”, “our Group”, “the
Group”, “we” or “us”
the Company and its subsidiaries (or the Company and
any one or more of its subsidiaries, as the content may
require), or where the context so requires, in respect of
the periods before the Company became the holding
company of its present subsidiaries, such subsidiaries as
if they were subsidiaries of the Company at the relevant
time
“Growatt” Shenzhen GROWATT New ENERGY Co., Ltd. ( ଉέ̚
ʮ̡), a limited liability company
established under the laws of the PRC on March 3, 2011,
which is one of the customers of the Company
“Guangdong Guangxin Equity
Investment”
Guangdong Guangxin Equity Investment Fund
Partnership (Limited Partnership) (ᛆҳ༟ਿ
ΥྫΆุ(Υྫ)), a limited partnership established
under the laws of the PRC on December 10, 2021, which
is a Pre-IPO Investor of the Company
“Guangdong Guangxin Private
Equity”
Guangdong Guangxin Private Equity Investment
Partnership (Limited Partnership) (ᛆҳ
༟ΥྫΆุ(Υྫ)), a limited partnership established
under the laws of the PRC on April 14, 2022, which is a
Pre-IPO Investor of the Company
“Guangdong Jiarui” Guangdong Dezaihou Jiarui Equity Investment
Partnership (Limited Partnership) (ᛆ
ҳ༟ΥྫΆุ(Υྫ)), a limited partnership
established under the laws of the PRC on November 12,
2021, which is a Pre-IPO Investor of the Company
“Guangdong REPT BATTERO” Guangdong REPT BATTERO Energy Co., Ltd. (๿
ʮ̡), a limited liability company
established under the laws of the PRC on July 27, 2021,
which is a subsidiary of the Company
“H Share(s)” overseas listed foreign Shares in the share capital of the
Company with a nominal value of RMB1.00 each, which
are to be subscribed for and traded in HK dollars and are
to be listed on the Hong Kong Stock Exchange
“H Share Registrar” Computershare Hong Kong Investor Services Limited
DEFINITIONS
–3 8–


--- page 48 ---
“Hangzhou Longqi” Hangzhou Longqi Tianji Equity Investment Fund
Partnership (Limited Partnership) (ᛆҳ
ΥྫΆุ(Υྫ)), a limited partnership
established under the laws of the PRC on August 6, 2021,
which is a Pre-IPO Investor of the Company
“HK$” or “HK dollars” Hong Kong dollars, the lawful currency of Hong Kong
“HKSCC” Hong Kong Securities Clearing Company Limited, a
wholly-owned subsidiary of Hong Kong Exchanges and
Clearing Limited
“HKSCC EIPO” the application for the Hong Kong Offer Shares to be
issued in the name of HKSCC Nominees and deposited
directly into CCASS to be credited to your stock account
or a designated HKSCC Participant’s stock account
through causing HKSCC Nominees to apply on your
behalf, including by instructing your broker or custodian
who is a HKSCC Participant to give electronic
application instructions via HKSCC’s FINI system to
apply for the Hong Kong Offer Shares on your behalf
“HKSCC Operational
Procedures”
the operational procedures of HKSCC in relation to
CCASS, containing the practices, procedures and
administrative requirements relating to the operation and
functions of CCASS, in effect from time to time
“HKSCC Participant” a participant admitted to participate in CCASS as a direct
clearing participant, a general clearing participant or a
custodian participant
“HKSCC Nominees” HKSCC Nominees Limited, a wholly-owned subsidiary
of HKSCC
“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the
PRC
“Hong Kong Listing Rules” or
“Listing Rules”
the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited, as amended,
supplemented or otherwise modified from time to time
DEFINITIONS
–3 9–


--- page 49 ---
“Hong Kong Offer Shares” the 11,607,200 H Shares initially offered by the Company
for subscription at the Offer Price pursuant to the Hong
Kong Public Offering (subject to reallocation as
described in “Structure of the Global Offering” in this
prospectus)
“Hong Kong Public Offering” the offer of the Hong Kong Offer Shares for subscription
by the public in Hong Kong (subject to adjustment as
described in “Structure of the Global Offering”) at the
Offer Price (plus brokerage, SFC transaction levy, Hong
Kong Stock Exchange trading fees and AFRC transaction
levy), on and subject to the terms and conditions
described in this prospectus as further described in
“Structure of the Global Offering – Hong Kong Public
Offering” in this prospectus
“Hong Kong Stock Exchange” or
“Stock Exchange”
The Stock Exchange of Hong Kong Limited
“Hong Kong Underwriters” the underwriters of the Hong Kong Public Offering listed
in “Underwriting – Hong Kong Underwriters” in this
prospectus
“Hong Kong Underwriting
Agreement”
the underwriting agreement dated December 7, 2023
relating to the Hong Kong Public Offering entered into by
the Company, Yongqing Technology, the Joint Sponsors,
the Overall Coordinators, the Joint Global Coordinators
and the Hong Kong Underwriters, as further described in
“Underwriting – Underwriting Arrangements and
Expenses – Hong Kong Public Offering – Hong Kong
Underwriting Agreement” in this prospectus
“HOPU Orient” Tianjin HOPU Orient Equity Investment Partnership
(Limited Partnership) (ᛆҳ༟ΥྫΆุ
(Υྫ)) a limited partnership established under the
laws of the PRC on August 30, 2022, which is a Pre-IPO
Investor of the Company
“Hozon Auto” Hozon New Energy Automobile Co., Ltd. ( Υ଺อঐ๕ӛ
ʮ̡), a limited liability company established
under the laws of the PRC on October 16, 2014, which is
one of the customers of the Company
DEFINITIONS
–4 0–


--- page 50 ---
“Huzhou Lianjie” Huzhou Gaowu Jianling Lianjie Equity Investment Fund
Partnership (Limited Partnership) (ٰ
ΥྫΆุ(Υྫ)), a limited partnership
established under the laws of the PRC on November 18,
2020, which is a Pre-IPO Investor of the Company
“Hycan” Hycan Automobile Technology Co., Ltd. (Ҧ
ʮ̡), a limited liability company established under
the laws of the PRC on April 10, 2018, which is one of
the customers of the Company
“IFRS(s)” International Financial Reporting Standards, which
include standards, amendments and interpretations
promulgated by the International Accounting Standards
Board
“independent third party(ies)” party(ies) who are not connected persons of the Company
as far as our Directors are aware after having made all
reasonable enquiries
“Infinitude Holding” Infinitude Holding Limited, a limited liability company
established under the laws of the Cayman Islands on
November 15, 2023, which is a subsidiary of the
Company
“International Offer Shares” the 104,463,000 H Shares initially offered by the
Company pursuant to the International Offering (subject
to reallocation as described in “Structure of the Global
Offering” in this prospectus)
“International Offering” the offer of the International Offer Shares by the
International Underwriters at the Offer Price outside the
United States and in offshore transactions in accordance
with Regulation S under the U.S. Securities Act and in
the United States to QIBs only in reliance on Rule 144A
or any other available exemption from the registration
requirement under the U.S. Securities Act, in each case
on and subject to the terms and conditions of the
International Underwriting Agreement, as further
described in “Structure of the Global Offering” in this
prospectus
“International Underwriters” the underwriters of the International Offering listed in the
International Underwriting Agreement
DEFINITIONS
–4 1–


--- page 51 ---
“International Underwriting
Agreement”
the underwriting agreement expected to be entered into
on or around the Price Determination Date by, among
others, the Company and the International Underwriters
in respect of the International Offering, as further
described in “Underwriting – Underwriting
Arrangements and Expenses – International Offering” in
this prospectus
“Jiaxing Aohao” Jiaxing Aohao Equity Investment Partnership (Limited
Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ)), a
limited partnership established under the laws of the PRC
on April 9, 2021, which is a Pre-IPO Investor of the
Company
“Jiaxing Rongpu” Jiaxing Rongpu Investment Partnership (Limited
Partnership) (ऌҳ༟ΥྫΆุ(Υྫ)), a
limited partnership established under the laws of the PRC
on July 8, 2022, which is a Pre-IPO Investor of the
Company
“Jiaxing SAIC” Jiaxing SAIC Qirui Equity Investment Partnership
(Limited Partnership) (ᛆҳ༟ΥྫΆุ
(Υྫ)), a limited partnership established under the
laws of the PRC on January 17, 2022, which is a Pre-IPO
Investor of the Company
“Jiaxing Yuzhi” Jiaxing Yuzhi Investment Partnership (Limited
Partnership) (ҳ༟ΥྫΆุ(Υྫ)), a
limited partnership established under the laws of the PRC
on October 12, 2021, which is a Pre-IPO Investor of the
Company
“Jinli No. 1” Wenzhou Jinli No. 1 Enterprise Management Partnership
(Limited Partnership) ( ๝ψᎀ቞ఠ໮Άุ၍ଣΥྫΆุ
(Υྫ)), a limited partnership established under the
laws of the PRC on August 8, 2022, which is an employee
shareholding platform of the Company
“Jinli No. 2” Wenzhou Jinli No. 2 Information Technology Service
Partnership (Limited Partnership) (Ҧ
ਕΥྫΆุ(Υྫ)), a limited partnership
established under the laws of the PRC on August 8, 2022,
which is an employee shareholding platform of the
Company
DEFINITIONS
–4 2–


--- page 52 ---
“Jinli No. 3” Wenzhou Jinli No. 3 Market Management Partnership
(Limited Partnership) ( ๝ψᎀ቞䂋໮̹ఙ၍ଣΥྫΆุ
(Υྫ)), a limited partnership established under the
laws of the PRC on August 8, 2022, which is an employee
shareholding platform of the Company
“Jinli No. 4” Wenzhou Jinli No. 4 Drone Technology Partnership
(Limited Partnership) ( ๝ψᎀ቞ໍ໮ೌɛዚҦஔΥྫΆ
ุ(Υྫ)), a limited partnership established under
the laws of the PRC on August 9, 2022, which is an
employee shareholding platform of the Company
“Jinli No. 5” Wenzhou Jinli No. 5 Business Service Partnership
(Limited Partnership) (ਕΥྫΆุ
(Υྫ)), a limited partnership established under the
laws of the PRC on August 9, 2022, which is an employee
shareholding platform of the Company
“Jinli No. 6” Wenzhou Jinli No. 6 Project Management Consultation
Partnership (Limited Partnership) ( ๝ψᎀ቞௔໮ධͦ၍
ଣፔ༔ΥྫΆุ(Υྫ)), a limited partnership
established under the laws of the PRC on August 9, 2022,
which is an employee shareholding platform of the
Company
“Joint Bookrunners” the joint bookrunners as named in “Directors,
Supervisors and Parties Involved in the Global Offering”
in this prospectus
“Joint Global Coordinators” the joint global coordinators as named in “Directors,
Supervisors and Parties Involved in the Global Offering”
in this prospectus
“Joint Lead Managers” the joint lead managers as named in “Directors,
Supervisors and Parties Involved in the Global Offering”
in this prospectus
“Joint Sponsors” Morgan Stanley Asia Limited and CITIC Securities
(Hong Kong) Limited
“Latest Practicable Date” November 30, 2023, being the latest practicable date for
the purpose of ascertaining certain information contained
in this prospectus prior to its publication
DEFINITIONS
–4 3–


--- page 53 ---
“Leapmotor” Leapmotor (Jinhua) New Energy Vehicle Parts
Technology Co., Ltd. (ശཧൺอঐ๕ӛԓཧ௅΁Ҧஔ
ʮ̡), a limited liability company established under
the laws of the PRC on August 5, 2021, which is one of
the customers of the Company
“Lishui Xiangxi” Lishui Xiangxi Equity Investment Partnership (Limited
Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ)), a
limited partnership established under the laws of the PRC
on August 31, 2022, which is a Pre-IPO Investor of the
Company
“Listing” listing of the H Shares on the Main Board of the Hong
Kong Stock Exchange
“Listing Committee” the Listing Committee of the Hong Kong Stock Exchange
“Listing Date” the date expected to be on or about December 18, 2023,
on which dealings in our H Shares first commence on the
Hong Kong Stock Exchange
“Longwan Financial Holdings” Wenzhou Longwan Financial Holdings Co., Ltd. ( ๝ψ̹
ʮ̡), a limited liability company
established under the laws of the PRC on February 24,
2018, which is a Pre-IPO Investor of the Company
“Main Board” the stock market (excluding the option market) operated
by the Hong Kong Stock Exchange which is independent
from and operated in parallel with the Growth Enterprise
Market of the Hong Kong Stock Exchange
“Ministry of Finance” or “MOF” Ministry of Finance of the PRC (௅)
“Mr. Xiang” Mr. Xiang Guangda ( ධΈ༺), a Controlling Shareholder
of the Company controlling approximately 62.6% of the
total equity interests in the Company as of the Latest
Practicable Date
“NDRC” National Development and Reform Commission of the
PRC (ึ)
“NEA” National Energy Administration of the PRC ( ʕശɛ͏΍
ঐ๕҅)
DEFINITIONS
–4 4–


--- page 54 ---
“Offer Price” the final offer price per Offer Share in Hong Kong dollars
(exclusive of brokerage fee of 1%, SFC transaction levy
of 0.0027%, Stock Exchange trading fee of 0.00565%
and AFRC transaction levy of 0.00015%) at which the
Offer Shares are to be subscribed for and issued pursuant
to the Global Offering as described in “Structure of the
Global Offering” in this prospectus
“Offer Share(s)” Hong Kong Offer Shares and the International Offer
Shares
“overall coordinator(s)” has the meaning ascribed to it under the Listing Rules
“Overall Coordinators” the overall coordinators as named in “Directors,
Supervisors and Parties Involved in the Global Offering”
in this prospectus
“PBOC” People’s Bank of China ( ʕ਷ɛ͏ვБ), the central bank
of the PRC
“Pingan Investment” Guangzhou Ping An Consumer Equity Investment
Partnership (Limited Partnership) (ᛆ
ҳ༟ΥྫΆุ(Υྫ)), a limited partnership
established under the laws of the PRC on December 30,
2020, which is a Pre-IPO Investor of the Company
“PRC GAAP” accounting principles generally accepted in the PRC
issued by the MOF
“PRC Legal Advisor” Fangda Partners
“Price Determination Agreement” the agreement to be entered into by the Overall
Coordinators (for themselves and on behalf of the
Underwriters) and the Company on the Price
Determination Date to record and fix the Offer Price
“Price Determination Date” the date, expected to be on or around Thursday,
December 14, 2023 (Hong Kong time) on which the Offer
Price is determined by the Overall Coordinators (for
themselves and on behalf of the Underwriters) and us, but
in any event no later than 12:00 noon on Thursday,
December 14, 2023
DEFINITIONS
–4 5–


--- page 55 ---
“prospectus” this prospectus being issued in connection with the Hong
Kong Public Offering
“province” a province or, where the context requires, a provincial
level autonomous region or municipality, under the direct
supervision of the central government of the PRC
“QIB” or “Qualified Institutional
Buyer”
a qualified institutional buyer within the meaning of Rule
144A
“Qingdao Heaven-Sent” Qingdao Heaven-Sent Hengxin Equity Investment
Partnership (Limited Partnership) (ٰڦ
ᛆҳ༟ΥྫΆุ(Υྫ)), a limited partnership
established under the laws of the PRC on February 14,
2022, which is a Pre-IPO Investor of the Company
“Qingdao SAIC” Qingdao SAIC Innovation and Upgrade Industry Equity
Investment Fund Partnership (Limited Partnership) (ࢥڡ
ΥྫΆุ(Υྫ)), a
limited partnership established under the laws of the PRC
on January 12, 2021, which is a Pre-IPO Investor of the
Company
“Regulation S” Regulation S under the U.S. Securities Act
“Reporting Accountant” Ernst & Young
“REPT” one of the brands under which our products are sold
“REPT Battero Germany” REPT Battero Energy Germany GmbH, a limited liability
company established under the laws of Germany on
November 3, 2023, which is a subsidiary of the Company
“REPT Energy” REPT Energy Co., Ltd. (ʮ̡), a limited
liability company established under the laws of the PRC
on October 25, 2017, which is the predecessor of the
Company
“REPT Qingchuang” Shanghai REPT Qingchuang New Energy Co., Ltd. ( ɪऎ
ʮ̡), a limited liability company
established under the laws of the PRC on January 2,
2018, which is a subsidiary of the Company
DEFINITIONS
–4 6–


--- page 56 ---
“REPT SAIC” REPT SAIC EV Battery Co., Ltd. ( ๿ऌᒄдਗɢཥϫϞ
ʮ̡), a limited liability company established under
the laws of the PRC on April 15, 2022, which is a
subsidiary of the Company as of the Latest Practicable
Date
“RMB” or “Renminbi” Renminbi, the lawful currency of the PRC
“Ronghe BESS” Shanghai Ronghe BESS Energy Co., Ltd. ( ɪऎፄձʩᎷ
ʮ̡), a limited liability company established
under the laws of the PRC on June 4, 2019, which is one
of the customers of the Company
“Ruitu Energy” Ruitu Energy Co., Ltd. (ʮ̡), a limited
liability company established under the laws of the PRC
on August 27, 2019, which is a subsidiary of Yongqing
Technology as of the Latest Practicable Date and is a
Controlling Shareholder of the Company
“Ruizhou Energy” Ruizhou Energy Co., Ltd. (ʮ̡), a limited
liability company established under the laws of the PRC
on June 5, 2020, which is a subsidiary of Yongqing
Technology
“Rule 144A” Rule 144A under the U.S. Securities Act
“SAFE” State Administration of Foreign Exchange of the PRC ( ʕ
̮ි၍ଣ҅)
“SAIC-GM-Wuling” SAIC-GM-Wuling Automobile Co., Ltd. ( ɪӛஷ͜ʞഷ
ʮ̡), a limited liability company
established under the laws of the PRC on June 15, 1998,
which is one of the customers and strategic investors of
the Company
“SAIC MAXUS” SAIC MAXUS Automotive Co., Ltd. (ࠢ
ʮ̡), a limited liability company established under the
laws of the PRC on April 8, 2011, which is one of the
customers of the Company
“SAIC Motor” SAIC Motor Corp., Ltd. (ʮ̡), a
limited liability company established under the laws of
the PRC on April 16, 1984
DEFINITIONS
–4 7–


--- page 57 ---
“SAIC Passenger Automobile” SAIC Motor Co., Ltd. Passenger Automobile Branch ( ɪ
͜ԓʱʮ̡), a branch owned
by the SAIC Motor Corp., Ltd. and incorporated in the
PRC on January 26, 2007, which is one of the customers
of the Company
“Sany Group” SANY Group Co., Ltd. (ʮ̡), a limited
liability company established under the laws of the PRC
on October 18, 2000, which is one of the customers of the
Company
“SAT” State Administration of Taxation of the PRC ( ʕശɛ͏΍
೼ਕᐼ҅)
“SCGC” Shenzhen Capital Group Co., Ltd. ( ଉέ̹௴อҳ༟ණྠ
ʮ̡), a limited liability company established under
the laws of the PRC on August 25, 1999, which is a
Pre-IPO Investor of the Company
“Securities and Futures
Ordinance” or “SFO”
Securities and Futures Ordinance (Chapter 571 of the
Laws of Hong Kong), as amended, supplemented or
otherwise modified from time to time
“Securities Law” Securities Law of the People’s Republic of China ( ʕശɛ
جas amended, supplemented or
otherwise modified from time to time
“SFC” the Securities and Futures Commission of Hong Kong
“Shanghai Decent” Shanghai Decent Investment (Group) Co., Ltd. (ڦ
ҳ༟(ණྠ)ʮ̡), a limited liability company
established under the laws of the PRC on February 1,
2007, which is an associate of Mr. Xiang and is a
Controlling Shareholder of the Company
“Shanghai-Hong Kong Stock
Connect”
a securities trading and clearing links program developed
by the Hong Kong Stock Exchange, Shanghai Stock
Exchange, HKSCC and China Securities Depository and
Clearing Corporation Limited for mutual market access
between Hong Kong and Shanghai
“Share(s)” ordinary shares in the capital of the Company with a
nominal value of RMB1.00 each
DEFINITIONS
–4 8–


--- page 58 ---
“Shareholder(s)” holder(s) of the Shares
“Share Incentive Scheme of
BatteroTech Shanghai”
The share incentive scheme adopted by BatteroTech
Shanghai in November 2022, a summary of which is set
forth in “Appendix VI – Statutory and General
Information – The Share Incentive Schemes” in this
prospectus
“Share Incentive Schemes of the
Company”
2021 Share Incentive Scheme of the Company and 2022
Share Incentive Scheme of the Company
“Shenzhen-Hong Kong Stock
Connect”
a securities trading and clearing links program developed
by the Hong Kong Stock Exchange, Shenzhen Stock
Exchange, HKSCC and China Securities Depository and
Clearing Corporation Limited for mutual market access
between Hong Kong and Shenzhen
“Silver Saddle Fund” Nanjing Silver Saddle Lingxiu New Materials Industry
Fund Partnership (Limited Partnership) (ԯვቧᏊӸอ
ΥྫΆุ(Υྫ)), a limited partnership
established under the laws of the PRC on June 23, 2020,
which is a Pre-IPO Investor of the Company
“SolaX Power” SolaX Power Network Technology (Zhejiang) Co., Ltd.
(ʮ̡), a limited liability
company established under the laws of the PRC on March
2, 2012, which is one of the customers of the Company
“Sponsor-OCs” Morgan Stanley Asia Limited and CLSA Limited
“State Council” the State Council of the PRC ( ʕശɛ͏΍ձ਷਷ਕ৫)
“subsidiary(ies)” has the meaning ascribed to it in Schedule 1 of the
Companies Ordinance
“Sungrow Energy Storage” Sungrow ENERGY Storage Technology Co., Ltd. ( ජΈ
ʮ̡), a limited liability company
established under the laws of the PRC on June 15, 2015,
which is one of the customers of the Company
“Supervisor(s)” member(s) of Supervisory Committee
“Supervisory Committee” supervisory committee of the Company
DEFINITIONS
–4 9–


--- page 59 ---
“Suzhou NewMargin” Suzhou NewMargin Changfeng Venture Capital
Management Partnership (Limited Partnership) ( ᘽψᑌ
௴ุҳ༟၍ଣΥྫΆุ(Υྫ)), a limited
partnership established under the laws of the PRC on
August 18, 2022, which is a Pre-IPO Investor of the
Company
“Takeovers Code” the Codes on Takeovers and Mergers and Share Buy-
backs issued by the SFC, as amended, supplemented or
otherwise modified from time to time
“Tianjin Hexie Haihe” Tianjin Hexie Haihe Equity Investment Partnership
(Limited Partnership) (ᛆҳ༟ΥྫΆุ
(Υྫ)), a limited partnership established under the
laws of the PRC on April 18, 2019, which is a Pre-IPO
Investor of the Company
“Track Record Period” the three years ended December 31, 2020, 2021 and 2022
and the six months ended June 30, 2023
“Tsingshan Group” Tsingshan Holding Group Company Limited (ණ
ʮ̡), a limited liability company established
under the laws of the PRC on June 12, 2003, which is a
Controlling Shareholder of the Company holding
approximately 62.6% equity interests in the Company as
of the Latest Practicable Date through Yongqing
Technology, a subsidiary of Tsingshan Group
“UK” the United Kingdom
“Underwriters” the Hong Kong Underwriters and the International
Underwriters
“Underwriting Agreements” the Hong Kong Underwriting Agreement and the
International Underwriting Agreement
“US$” or “U.S. dollars” United States dollars, the lawful currency of the United
States
“U.S.” or “United States” the United States of America, its territories, its
possessions and all areas subject to its jurisdiction
“U.S. person” a U.S. person, as defined of Rule 902 of Regulation S
DEFINITIONS
–5 0–


--- page 60 ---
“U.S. Securities Act” the United States Securities Act of 1933, as amended,
supplemented or otherwise modified from time to time,
and the rules and regulations promulgated under it
“V AT” value added tax
“Vremt” Viridi E-Mobility Technology (Ningbo) Co., Ltd. (ြཥ
ਗӛԓҦஔ(ت)ʮ̡), a limited liability company
established under the laws of the PRC on June 23, 2017,
which is one of the customers of the Company
“Wenzhou Chengyuan” Wenzhou Xinyin Chengyuan Equity Investment
Partnership (Limited Partnership) (ᛆҳ
༟ΥྫΆุ(Υྫ)), a limited partnership established
under the laws of the PRC on July 11, 2022, which is a
Pre-IPO Investor of the Company
“Wenzhou Chenshan” Wenzhou Chenshan Enterprise Management Partnership
(Limited Partnership) ( ๝ψԕӄΆุ၍ଣΥྫΆุ(ࠢ
Υྫ)), a limited partnership established under the laws
of the PRC on July 7, 2020, which is an employee
shareholding platform of BatteroTech Shanghai
“Wenzhou Gongchuang” Wenzhou Gongchuang Investment Co., Ltd. ( ๝ψ̹ʈ௴
ʮ̡), a limited liability company established
under the laws of the PRC on December 19, 2011, which
is a Pre-IPO Investor of the Company
“Wenzhou Jingli” Wenzhou Jingli Business Service Partnership (Limited
Partnership) (ਕΥྫΆุ(Υྫ)), a
limited partnership established under the laws of the PRC
on July 21, 2021, which is an employee shareholding
platform of the Company and is a Controlling
Shareholder of the Company
“Wenzhou Lingteng” Lingteng (Wenzhou) Trading Agent Partnership (Limited
Partnership) 	ჯᙜ(䙺ψ)˾ଣΥྫΆุ(Υྫ)), a
general partnership established under the laws of the PRC
on November 7, 2022, which is an employee
shareholding platform of BatteroTech Shanghai
DEFINITIONS
–5 1–


--- page 61 ---
“Wenzhou Qianshi” Wenzhou Qianshi Mining Technology Partnership
(Limited Partnership) (ҦΥྫΆุ(ࠢ
Υྫ)), a limited partnership established under the laws
of the PRC on November 15, 2021, which is controlled by
Zhejiang Ruiyuan, its general partner
“Wenzhou Qingshan” Wenzhou Qingshan Metal Materials Partnership (Limited
Partnership) (ΥྫΆุ(Υྫ)), a
limited partnership established under the laws of the PRC
on July 5, 2021, which is an employee shareholding
platform of the Company
“Wenzhou Ruili” Wenzhou Ruili Enterprise Development Partnership
(Limited Partnership) (ΥྫΆุ(ࠢ
Υྫ)), a limited partnership established under the laws
of the PRC on August 5, 2021, which is an employee
shareholding platform of the Company
“Wenzhou Transportation Group” Wenzhou Transportation Group Co., Ltd. ( ๝ψ̹ʹஷ༶
ʮ̡), a limited liability company established
under the laws of the PRC on August 21, 1998, which is
a Pre-IPO Investor of the Company
“Wenzhou Zhenxu” Wenzhou Zhenxu Equity Investment Partnership
(Limited Partnership) (ᛆҳ༟ΥྫΆุ(ࠢ
Υྫ)), a limited partnership established under the laws
of the PRC on July 12, 2022, which is a Pre-IPO Investor
of the Company
“Wenzhou Zhongzhan” Wenzhou Zhongzhan Business Service Partnership
(Limited Partnership) (ਕΥྫΆุ(ࠢ
Υྫ)), a limited partnership established under the laws
of the PRC on November 7, 2022, which is an employee
shareholding platform of BatteroTech Shanghai
“Wenzhou Zhuorui” Wenzhou Zhuorui Energy Saving Technology Partnership
(Limited Partnership) ( ๝ψՙ๿ືঐҦஔΥྫΆุ(ࠢ
Υྫ), a limited partnership established under the laws of
the PRC on October 11, 2021, which is an employee
shareholding platform of Tsingshan Group and its
associates
DEFINITIONS
–5 2–


--- page 62 ---
“White Form eIPO ” the application process for Hong Kong Offer Shares with
applications issued in applicant’s own name and
submitted online through the designated website of the
White Form eIPO Service Provider at www.eipo.com.hk
“White Form eIPO Service
Provider”
Computershare Hong Kong Investor Services Limited
“Wuhan Yunshang” Wuhan Silicon Paradise Yunshang Venture Capital
Partnership (Limited Partnership) (௴
ุҳ༟ΥྫΆุ(Υྫ)), a limited partnership
established under the laws of the PRC on June 22, 2022,
which is a Pre-IPO Investor of the Company
“Wuhu Wenming” Wuhu Wenming Quanhong Investment Management
Partnership (Limited Partnership) (ҳ༟၍
ଣΥྫΆุ(Υྫ)), a limited partnership established
under the laws of the PRC on May 20, 2021, which is a
Pre-IPO Investor of the Company
“XCMG” Xuzhou XCMG Auto manufacturing Co., Ltd. (ʈ
ʮ̡), a limited liability company
established under the laws of the PRC on April 19, 2011,
which is one of the customers of the Company
“XCMG No. 1 Fund” XCMG No. 1 Industrial Investment Partnership (Limited
Partnership) (ʈఠ໮ପุҳ༟ΥྫΆุ (Υ
ྫ)) a limited partnership established under the laws of
the PRC on July 18, 2022, which is a Pre-IPO Investor of
the Company
“Xiamen Fuxinrui” Xiamen Fuxinrui Investment Partnership (Limited
Partnership) (၅อ๿ҳ༟ΥྫΆุ(Υྫ)), a
limited partnership established under the laws of the PRC
on August 23, 2022, which is a Pre-IPO Investor of the
Company
“Xiamen King Long” Xiamen KING LONG UNITED AUTOMOTIVE Industry
Co., Ltd. (ʮ̡), a limited
liability company established under the laws of the PRC
on December 3, 1988, which is one of the customers of
the Company
DEFINITIONS
–5 3–


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“Yongqing Technology” Yongqing Technology Group Co., Ltd. (ҦණྠϞ
ʮ̡), a limited liability company established under
the laws of the PRC on January 24, 2018, which is a
Controlling Shareholder of the Company directly and
indirectly holding approximately 62.6% equity interests
in the Company as of the Latest Practicable Date
“Yutong Bus” YUTONG Bus Co., Ltd. (ʮ̡), a
limited liability company established under the laws of
the PRC on January 8, 1997, which is one of the
customers of the Company
“Zhejiang Ruixu” Zhejiang Ruixu Technology Co., Ltd. (ࠢ
ʮ̡), a limited liability company established under the
laws of the PRC on December 6, 2019, which is a
subsidiary of the Company
“Zhejiang Ruiyuan” Zhejiang Ruiyuan Technology Co., Ltd. (ҦϞ
ʮ̡), a limited liability company established under
the laws of the PRC on June 6, 2022, which is a
subsidiary of the Company
“Zhejiang Tsingshan” Zhejiang Tsingshan Enterprise Management Co., Ltd. ( ए
ʮ̡), a limited liability company
established under the laws of the PRC on April 17, 2007,
which is controlled by Mr. Xiang as to 80% of its equity
interests as of the Latest Practicable Date and is a
Controlling Shareholder of the Company
“Zhejiang University Education
Foundation”
Zhejiang University Education Foundation ( एϪɽኪ઺
ึ), a social organization established under the
laws of the PRC on July 27, 2006, which is a Pre-IPO
Investor of the Company
“Zhongyuan Hejia” Zhongyuan Hejia (Zhuhai) Equity Investment Fund
(Limited Partnership) ( ʕ๕Υྗ(मऎ)ږ(Ϟ
Υྫ)), a limited partnership established under the laws
of the PRC on February 25, 2022, which is a Pre-IPO
Investor of the Company
DEFINITIONS
–5 4–


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“Zibo Junci” Zibo Junci Hongchuang No. 3 Equity Investment Fund
Partnership (Limited Partnership) (ٰ
ΥྫΆุ(Υྫ)), a limited partnership
established under the laws of the PRC on April 13, 2021,
which is a Pre-IPO Investor of the Company
“%” percent
In this prospectus, the terms “associate,” “close associate,” “connected person,”
“connected transaction,” “controlling shareholder,” and “substantial shareholder” have the
meanings given to such terms in the Hong Kong Listing Rules, unless the context otherwise
requires.
The English translation of PRC entities, enterprises, nationals, facilities and regulations
in Chinese or another language in this prospectus is for identification purposes only. In this
prospectus, should there be any discrepancy between the Chinese names of the entities or
enterprises established in China and its English translation, the Chinese names shall prevail.
DEFINITIONS
–5 5–


--- page 65 ---
In this prospectus, unless the context otherwise requires, explanations and
definitions of certain terms used in this prospectus in connection with our Group and our
business shall have the meanings set out below. The terms and their meanings may not
correspond to standard industry meaning or usage of these terms, and may not be
comparable to similarly terms adopted by other companies.
“Ah” Amp-hour, battery capacity unit
“ASES” Alliance Supplier Evaluation Standard used by Renault,
Nissan and Mitsubishi for supplier auditing
“BEV” Battery Electric Vehicle
“BIQS” Bureau of International Quality Standard
“BMS” Battery Management System
“bulk delivery” The stage where lithium-ion batteries have passed trial
production and certification process of customers, and
lithium-ion batteries are manufactured in large quantity
(i.e. mass production) to customers in accordance with
relevant contract
“CNAS” China National Accreditation Service for Conformity
Assessment
“CNT” Carbon nanotube
“CTP” Cell to pack, an approach used to integrate battery cells
directly into battery packs without the intermediate step
of modules
“cycle life” Or life cycle, refers to the number of times (or cycles)
that the EV or ESS battery can undergo the process of
complete charging and discharging until the end of its
life, and the end life of an EV or ESS battery generally
indicates that the available capacity of the battery has
decay to 80% of its designed capacity
GLOSSARY OF TECHNICAL TERMS
–5 6–


--- page 66 ---
“detachable CTP technology” A technology that can improve the space utilization of the
battery pack by optimizing the individual and module
structural design, realizing the de-structuring of the
battery pack and effectively improving the pack
integration rate
“die-cutting stage” A stage of manufacturing battery products, which
involves customizing a die by cutting, shaping, or
shearing it to create a certain shape, design, or structure
“dual carbon” goals dual goals of “carbon peak and carbon-neutrality”, which
refer to that China aims to peak carbon emission before
2030 and achieve carbon neutrality before 2060
“Easy-for-Tera cells (“ETڃCells that adopt the proprietary high-speed winding,
cutting or stacking integration technology in our flat
batteries, which improves the efficiency of the
production process and improves battery performance
“EMS” Energy management system
“energy density” The amount of energy that can be contained within a
given volume or given mass
“EPC” Engineering, procurement and construction
“EREV” Extended-range electric vehicle
“echelon use” The process of inspecting, detecting, classifying,
splitting, repairing or reconstructing the waste EV battery
products into echelon products so that those echelon
products could be applied in other fields
“ERP system” Enterprise Resource Planning System
“ESS” A device that can store and output power, consists of
multiple subsystems such as battery system and energy
management system
“EV” or “electric vehicle” New energy vehicles, mainly comprising of battery
electric vehicles and plug-in hybrid electric vehicles
GLOSSARY OF TECHNICAL TERMS
–5 7–


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“GB 38031-2020” PRC National Standard: <Electric vehicles traction
battery safety requirements>, which was issued on May
12, 2020
“GB 38032-2020” PRC National Standard: <Electric buses safety
requirements>, which was issued on May 12, 2020
“GB/T 31484-2015” PRC National Standard: <Cycle life requirements and
test methods for traction battery of electric vehicle>,
which was issued on May 15, 2015
“GB/T 31485-2015” PRC National Standard: <Safety requirements and test
methods for traction battery of electric vehicle>, which
was issued on May 15, 2015
“GB/T 31486-2015” PRC National Standard: <Electrical performance
requirements and test methods for traction battery of
electric vehicle>, which was issued on May 15, 2015
“GB/T 36276-2018” PRC National Standard: <Lithium ion battery for
electrical energy storage>, which was issued on June 7,
2018
“GD22-2019” <Guidelines for Inspections of Ships only powered by
Batteries>, which released by CCS (China Classification
Society)
“GWh” The unit of electricity, KWh is the degree,
1GWh=1,000,000KWh
“IATF16949” International technical specification of automotive
industry quality management system, which prepared by
IATF (International Automotive Task Force) and ISO
(International Organization for Standardization)
“IDC” Internet data center
“IEC62619” Secondary cells and batteries containing alkaline or
other non-acid electrolytes – Safety requirements for
secondary lithium cells and batteries for use in industrial
applications , which released by International
Electrotechnical Commission (IEC)
GLOSSARY OF TECHNICAL TERMS
–5 8–


--- page 68 ---
“IECQ QC 080000” IEC Quality Assessment System for Electronic
Components for Hazardous Substance Process
Management (HSPM) System Requirements, which
released by International Electrotechnical Commission
(IEC)
ICE vehicles internal combustion engine vehicles
“installed capacity” or
“installation”
The volume of battery products installed in EVs or ESSs,
usually expressed in electricity unit of GWh or KWh
“iron phosphate” Iron phosphate, also known as high iron phosphate and
iron orthophosphate, with molecular formula FePO4, is a
white, off-white monoclinic crystal powder, and is a
compound used to synthesize lithium iron phosphate
battery cathode materials
“IS16046:2018” Safety Requirements for Secondary Cells and Batteries
Containing Alkaline or Other Non-Acid Electrolytes to be
used in Portable applications, which issued by BIS
(Bureau of Indian Standards)
“ISO14001” Environmental Management System, which released by
ISO (International Organization for Standardization)
“ISO45001” Occupational Health and Safety Management System,
which released by ISO (International Organization for
Standardization)
“ISO50001” Energy Management System, which released by ISO
(International Organization for Standardization)
“ISO9001” International Quality Management System, which
released by ISO (International Organization for
Standardization)
“ISO/IEC17025” Laboratory Management System, which released by ISO
(International Organization for Standardization)
“JET” Japan Electrical Safety & Environment Technology
Laboratories
GLOSSARY OF TECHNICAL TERMS
–5 9–


--- page 69 ---
“JIS C 8715-2:2019” <Secondary lithium cells and batteries for use in
industrial applications – Part 2: Tests and requirements of
safety>, which released by Japanese Standards
Association
“large capacity battery” Battery with capacity of greater than or equal to 100Ah
“LCE” Lithium carbonate equivalent
“LCO” Lithium cobalt oxide (LiCoO
2)
“LMO” Lithium manganese oxide (LiMn 2O4)
“LMFP” Lithium manganese iron phosphate (LiMnxFe1−xPO4)
“LFP” Lithium iron phosphate (LiFePO
4)
“LFP battery” A lithium-ion battery that uses lithium iron phosphate
(LiFePO 4) as the cathode material
“lithium” A metal chemical element, of which the element symbol
is Li, and the atomic number is 3
“lithium carbonate” A common lithium compound with the chemical formula
Li2CO3. It is the most widely used lithium product with
broad application range. It is classified into industrial
grade lithium carbonate, battery grade lithium carbonate
and high-purity lithium carbonate due to its different
purity levels
“lithium-ion battery” Rechargeable battery that composes of cells in which
lithium ions move from the negative electrode through
electrolytes to the positive electrode during discharge and
back when charging
“mass energy density” The amount of energy that can be contained within a
given mass
“MES system” Manufacturing execution system
“MW” megawatt, unit of power, 1 MW=1,000,000 watts
“MWh” The unit of electricity, KWh is the degree,
1MWh=1,000KWh
GLOSSARY OF TECHNICAL TERMS
–6 0–


--- page 70 ---
“NCA” Lithium nickel cobalt aluminum oxide
(Li(Ni XCoYAlZ)O2), which can be used as cathode
materials for ternary batteries
“nail penetration test” A type of safety testing done to simulate internal short-
circuiting. Such test requires that the EV battery pack to
not explode or catch fire due to thermal runaway when it
is entirely penetrated by a steel nail under required
conditions
“NCM” Nickel-cobalt-manganese ternary materials, which can be
used as cathode materials for ternary batteries. Given
different ratios of nickel, cobalt, and manganese, it can be
classified into NCM523, NCM622, NCM811, etc.
“NMP” N-methylpyrrolidone, which is a chemical that is widely
used during the manufacture and production of
petrochemicals, electronics and plastic material and resin
manufacturing
“OA system” Office automation system
“OEM” Original equipment manufacturer
“PCS” Power conversion system
“PCT” Patent Cooperation Treaty
“PHEV” Plug-in Hybrid Electric Vehicle
“PLM system” Product lifecycle management
“PVDF” Polyvinylidene difluoride which is a highly non-reactive
thermoplastic fluoropolymer produced by the
polymerization of vinylidene difluoride
“pole piece(s)” A structure of lithium-ion battery products which
composed of material of high magnetic permeability that
serves to direct the magnetic field produced by a magnet
GLOSSARY OF TECHNICAL TERMS
–6 1–


--- page 71 ---
“REACH” Registration, Evaluation, Authorization and Restriction
of Chemicals, which is a regulation of the European
Union, adopted to improve the protection of human
health and the environment from the risks that can be
posed by chemicals
“ROHS” Restriction of Hazardous Substances, short for directive
on the restriction of the use of certain hazardous
substances in electrical and electronic equipment, which
adopted in February 2003 by the European Union
“R&D” Research and development
“SCL” Super cutting lithium-ion battery
“SCL technology” or “SCL die-
cutting technology”
One of the Company’s proprietary technology which can
effectively increase the volumetric energy density of the
battery cell by avoiding burrs on the top of pole pieces
caused by double cutter step at the die cutting stage, and
can improve the utilization of battery space
“small capacity battery” Battery with capacity of less than 100Ah
“SPC” Statistical Process Control
“ternary lithium battery” Lithium-ion battery whose cathode material composes of
three elements in two forms: nickel-cobalt-manganese, or
nickel-cobalt-aluminum
“TWh” The unit of electricity, KWh is the degree,
1TWh=1,000,000,000 KWh
“Twin Star (“݋battery” A type of battery that developed from new materials and
has high energy density, safety performance and low
production costs
“UL1642” Standard for Lithium Batteries, which released by
Underwriters Laboratories Inc.
“UL1973” Standard for Batteries for Use in Stationary and Motive
Auxiliary Power Applications, which released by
Underwriters Laboratories Inc.
GLOSSARY OF TECHNICAL TERMS
–6 2–


--- page 72 ---
“UL2580” Standard For Batteries for Use in Electric Vehicles, which
released by Underwriters Laboratories Inc.
“UL9540A” Standard for Test Method for Evaluating Thermal
Runaway Fire Propagation in Battery Energy Storage
Systems, which released by Underwriters Laboratories
Inc.
“UN38.3” The prevailing United Nations standard that lithium
batteries must meet to receive certification for safe
transport, which refers to Section 38.3 of Part 3 of the
“United Nations Manual of Tests and Standards for the
Transport of Dangerous Goods”
“UPS” Uninterruptible power supply
“V” Basic unit of voltage
“VDA” German Association of the Automotive Industry
“volumetric energy density” The amount of energy that can be contained within a
given volume
“WCS system” Warehouse control system
“WenDing (“ ਪ௟”) technology” A new generation technology with advanced techniques
for the welding of the battery tab and cap which can be
applied to LFP battery products as well as ternary lithium
battery products. Such technology improves the electrode
areal density and enhances the energy density of the
battery.
“Wh/kg” Watt hour/kilogram
“Wh/L” Watt hour/liter
“WMS system” Warehouse management system
GLOSSARY OF TECHNICAL TERMS
–6 3–


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This prospectus includes forward-looking statements. All statements other than
statements of historical facts contained in this prospectus, including, without limitation, those
regarding our future financial position, our strategy, plans, objectives, goals, targets and future
developments in the markets where we participate or are seeking to participate, and any
statements preceded by, followed by or that include the words “believe,” “expect,” “estimate,”
“predict,” “aim,” “intend,” “will,” “may,” “plan,” “consider,” “anticipate,” “seek,” “should,”
“could,” “would,” “continue,” or similar expressions or the negative thereof, are forward-
looking statements. These forward-looking statements involve known and unknown risks,
uncertainties and other factors, some of which are beyond our control, which may cause our
actual results, performance or achievements, or industry results, to be materially different from
any future results, performance or achievements expressed or implied by the forward-looking
statements. These forward-looking statements are based on numerous assumptions regarding
our present and future business strategies and the environment in which we will operate in the
future. Important factors that could cause our actual performance or achievements to differ
materially from those in the forward-looking statements include, among other things, the
following:
 general political and economic conditions, including those related to the PRC;
 our ability to successfully implement our business plans and strategies;
 future developments, trends and conditions in the industry and markets in which we
operate or into which we intend to expand;
 our business operations and prospects;
 our capital expenditure plans;
 the actions and developments of our competitors;
 our financial condition and performance;
 capital market developments;
 our dividend policy;
 any changes in the laws, rules and regulations of the central and local governments
in the PRC and other relevant jurisdictions and the rules, regulations and policies of
the relevant governmental authorities relating to all aspects of our business and our
business plans; and
 various business opportunities that we may pursue.
FORW ARD-LOOKING STATEMENTS
–6 4–


--- page 74 ---
Additional factors that could cause actual performance or achievements to differ
materially include, but are not limited to, those discussed in “Risk Factors” and elsewhere in
this prospectus. We caution you not to place undue reliance on these forward-looking
statements, which reflect our management’s view only as of the date of this prospectus. We
undertake no obligation to update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this prospectus might not occur. All
forward-looking statements contained in this prospectus are qualified by reference to the
cautionary statements set out in this section.
FORW ARD-LOOKING STATEMENTS
–6 5–


--- page 75 ---
An investment in the H Shares involves various risks. You should consider carefully
all the information set out in this prospectus and, in particular , the risks described below
before making an investment in the H Shares.
The occurrence of any of the following events could materially and adversely affect
our business, financial position, results of operations or prospects. If any of these events
occurs, the trading price of the H Shares could decline and you may lose all or part of
your investment. You should seek professional advice from your relevant advisors
regarding your prospective investment in the context of your particular circumstances.
RISKS RELATING TO OUR INDUSTRY AND BUSINESS
We have a limited operating history, making it difficult to evaluate our business prospects,
and we may not be successful in expanding our operations or managing our growth.
We were established in October 2017, and achieved bulk delivery for lithium-ion batteries
in April 2019. Our limited operating history makes it difficult to evaluate our business
prospects, and to plan for our future. We have relatively limited historical data for making
judgments on the demand for our products, our ability to develop, manufacture and deliver
products, or our profitability in the future. We may not always be accurate in predicting
industry trends that may emerge and affect our business. We experienced significant revenue
growth and the increase in our production capacity during the Track Record Period. See
“Financial Information – Principal Components of Statement of Profit or Loss and Other
Comprehensive Income – Revenue.” However, our historical revenue growth should not be
considered as an indicator of our future performance. Investors should comprehensively
consider our business and prospects in light of the risks and challenges we face in our industry
as a new entrant, including but not limited to our ability to:
 design and produce safe, reliable and quality products;
 continuously improve our R&D capabilities;
 improve operating efficiency and achieve economies of scale;
 build a well-recognized and respected brand;
 expand our customer base; and
 effectively manage our supply chain.
RISK FACTORS
–6 6–


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If we fail to address any of the aforesaid risks and challenges, our business, financial
condition and results of operations could be materially and adversely affected.
Our business growth depends, in large part, on our ability to efficiently execute our
production capacity expansion plan. We plan to achieve a designed production capacity of
62GWh by the end of 2023 and over 150GWh by the end of 2025. The success of our
production expansion plan may also be affected by a number of factors beyond our control,
including but not limited to the progress of the construction conducted by third-party
construction companies, development of local laws and regulations and government support.
Even if we succeed in expanding our production capacity, there may not be enough demand for
our products to justify the increased capacity. If there is persistent mismatch in the demand for
our products and our production capacity, we may experience problems associated with
overcapacity and under-utilization of our resources, which may result in adverse impact to our
business, financial condition and results of operations. Furthermore, as we expand our
production capacity in the future, we expect to incur additional depreciation and operational
expenses, which may also adversely affect our results of operations.
Our growth may also be affected by factors such as our ability to manage a continuously
growing organization as we expand, control expenses and investments in anticipation of
expanded operations, implement and enhance administrative infrastructure, system and
processes, comply with environmental, workplace safety, and relevant regulations, execute our
strategies successfully, and address new markets and potentially unforeseen challenges as they
arise.
If we are unable to manage our growth effectively, we may be unable to take advantage
of market opportunities, execute our business strategies or respond to competitive pressures
which could have a material adverse effect on our business, results of operations and prospects.
We recorded net losses in the past, and we have not been profitable yet.
We have been incurring net losses from operations during the Track Record Period. We
incurred net losses of RMB53.3 million, RMB804.2 million, RMB450.8 million, RMB705.5
million and RMB919.7 million in 2020, 2021 and 2022 and the six months ended June 30, 2022
and 2023, respectively. See “Financial Information – Results of Operations.” We are not yet
profitable for a number of reasons, including but not limited to the fluctuation in prices of key
raw materials, the time needed for the release of our production capacity and the formation of
economies of scale, the need for improvement in our production efficiency, and the
increasingly intense competition, as well as other risks discussed herein. There is no assurance
as to whether and when we will become profitable. Our ability to become profitable in the
future will not only depend on our efforts to sell our products but also to control our costs. If
we are unable to adequately control the costs associated with our operations, we may continue
to experience losses in the future.
RISK FACTORS
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Our plans to achieve profitability may not develop as expected, which may affect our
business sustainability.
We have plans and have adopted various measures to sustain our business and achieve
profitability. See “Business – Business Sustainability – Path to Profitability.” We intend to
continue to invest substantially in the foreseeable future in expanding our production facilities
to achieve economies of scale. See “Future Plans and Use of Proceeds.” We also plan to
continue to optimize product design and improve product performance, and to continue to
conduct strategy cooperation and joint development with suppliers to leverage the suppliers’
resource pool. See “Business – Business Sustainability.” However, such plans may not
materialize or develop as timely and to the extend as expected, in which case may not achieve
profitability as planned or at all. In addition, if we fail to achieve economies of scale through
our efforts or fail to adopt adequate cost control and price adjustment measures, our plan to
achieve profitability may be adversely affected. These plans may be more costly than we
expect, which may result in significantly increased expenses and failure to achieve our
intended profitability. In the worst case of the abovementioned events, our business
sustainability may be affected.
We are exposed to risks relating to price fluctuations of raw materials.
Prices of raw materials have a significant impact on our cost of sales. In 2020, 2021, 2022
and the six months ended June 30, 2022 and 2023, costs of raw materials accounted for 67.5%,
68.3%, 79.9%, 74.3% and 69.1% of our cost of sales for the respective periods. See “Financial
Information – Significant Factors Affecting Our Results of Operations – Fluctuation in Prices
of Raw Materials” for a sensitivity analysis of raw material price fluctuations on our gross
profit/(loss) before income tax. The current or expected supply of our key raw materials may
fluctuate depending on a number of factors beyond our control, including but not limited to the
availability of resources in the raw materials market, market demand, potential speculation,
market disruptions, natural disasters and other factors. We may not be able to obtain stable,
high-quality raw materials at reasonable prices at all times. Raw materials for our products
primarily include cathode materials, anode materials, separators and electrolyte solutions.
From 2020 to 2022, we experienced significant price increase in key raw materials needed
for our products. Particularly, the average price of lithium carbonate, a kind of key raw material
for cathode materials for LFP products, has experienced significant increase during such
period. According to the F&S Report, in 2020, 2021 and 2022, the average price for lithium
carbonate was RMB47,100 per ton, RMB131,100 per ton, and RMB496,100 per ton,
respectively. As a result, the average price for cathode material for LFP battery products
increased significantly from RMB37,300 per ton in 2020 to RMB157,800 per ton in 2022. The
unit cost of raw materials for our battery products increased from RMB0.35 per Wh in 2020
to RMB0.50 per Wh in 2021 and further increased to RMB0.65 per Wh in 2022.
RISK FACTORS
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As a result of the above, we recorded gross loss in 2021 and the first half of 2022. We
managed to record gross profit for our battery products in the second half of 2022 as we
introduced the price adjustment mechanism in the second quarter of 2022 in response to the
rapid increase in raw material prices. See “Financial Information – Significant Factors
Affecting Our Results of Operations – Fluctuation in Prices of Raw Materials.” We cannot
assure you that we will not experience significant increases in the prices of raw materials in
the future. Under such circumstances, we may need to further adjust the prices of our products
accordingly to pass down the increased costs onto our customers, or secure other sources of
supply of raw materials. However, we cannot assure you that we will be able to pass all or a
portion of the increased costs to our customers due to factors such as competition, or we will
be able to find alternative sources in a timely and cost-effective manner, or at all. As of the
Latest Practicable Date, there was no framework sales agreement of our battery products
subject to fixed pricing arrangement without flexibility to reflect raw material price
fluctuation. If we fail to respond appropriately to the increases in the prices of raw materials
needed for our products, our business, financial condition and results of operations may be
materially and adversely affected.
Entering into 2023, there was a temporary slowdown in the EV industry in China, and the
average price for lithium carbonate decreased rapidly as compared to that in 2022. According
to the F&S Report, the average price for lithium carbonate decreased from RMB461,200 per
ton in the six months ended June 30, 2022 to RMB333,100 per ton in the six months ended June
30, 2023, which further decreased to RMB239,900 per ton in the three months ended
September 30, 2023. As a result, the average price for cathode material for LFP battery
products decreased from RMB152,200 per ton in the six months ended June 30, 2022 to
RMB112,900 per ton in the six months ended June 30, 2023, and further decreased to
RMB82,500 per ton in the three months ended September 30, 2023. The unit cost of raw
materials for our battery products decreased from RMB0.66 per Wh in the six months ended
June 30, 2022 to RMB0.56 per Wh in the six months ended June 30, 2023.
Against this backdrop, the selling prices of our battery products decreased rapidly in the
first half of 2023. Meanwhile, the relevant costs of raw materials did not decrease to the same
extent as there was a lag of time before the decrease in market prices of raw materials leads
to a decrease in our own cost of sales. In the six months ended June 30, 2023, we recorded net
provision for impairment losses of inventories of RMB264.7 million, as the net realizable value
of our inventories lower than their costs due to the decrease in selling prices of our battery
products. See “Financial Information – Selected Balance Sheet – Inventories.” We recorded a
gross loss for our EV battery products in the first half of 2023. Even though we took a more
prudent procurement strategy of raw materials and implemented a refined inventory
management including reducing the stock-up amount and maintaining a lower level of raw
material inventories in consideration of the expected continuous decrease in raw material
prices in the second half of 2023, as well as closely monitoring the market trend of raw material
prices, there is no guarantee that we will not experience such rapid decrease in raw material
prices in the future, and that we could mitigate the above-mentioned risks associated with raw
material prices decreases in a timely manner. When raw material prices decrease, there is no
assurance that we can always maintain the selling prices of our products at a level that is
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favorable to us. We may not have strong bargaining power with customers and suppliers, and
may not be able to effectively mitigate the impact of raw material price fluctuations despite all
the measures being put in place. Our business and our results of operations may be materially
and adversely affected if there happens the rapid decrease in raw material prices and we fail
to mitigate the risks associated with it.
We face uncertainties in relation to our backlog orders.
In the six months ended June 30, 2023, we received less orders from our customers than
expected, primarily due to the decrease in the prices of raw materials and the customers’
expectation that such decrease would continue. According to the F&S Report, the average price
for lithium carbonate decreased from an average of RMB496,100 per ton in 2022 to
RMB333,100 per ton in the six months ended June 30, 2023, which further decreased to
RMB239,900 per ton in the three months ended September 30, 2023. According to the same
source, the average price for the cathode material for LFP battery products decreased from
RMB157,800 per ton in 2022 to RMB112,900 per ton in the six months ended June 30, 2023,
which further decreased to RMB82,500 per ton in the three months ended September 30, 2023.
Going forward, we may experience further delay in realizing our backlog orders if the prices
of lithium carbonate further decreases or the market demand weakens. The delivery schedule
in our backlog orders may be subject to further confirmation from the customers and we cannot
assure you that will not experience delays in such confirmations in the future. If so, the sales
volume of our products and our revenue may be materially and adversely affected, which could
in turn materially and adversely affect our business operations, profitability and prospects.
We may not be able to derive the desired benefits from our research and development
efforts, which may negatively affect our competitiveness and profitability.
Technological innovation is critical to our success, and we make significant investments
in product R&D. In 2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023,
our R&D expenses were RMB72.7 million, RMB245.6 million, RMB767.7 million, RMB257.1
million and RMB505.2 million, respectively. See “Financial Information – Principal
Components of Statement of Profit or Loss and Other Comprehensive Income – Research and
Development Expenses.” In order to maintain and expand our competitive advantage, we may
devote more resources in the future. In addition to our in-house R&D capabilities, we also
engage in joint R&D collaboration with third parties to jointly develop new technologies and
products. See “Business – Research and Development – Our Research and Development.”
However, as R&D activities are inherently uncertain, we cannot assure you that our R&D
projects will be successful or be completed within the anticipated time frame and budget, or
that our newly developed products will achieve wide market acceptance or enjoy the
advantages as we expected. If we fail to keep up with the latest technological development and
industry trends, we may suffer a decline in our competitive position. Even if such products can
be successfully launched, we cannot assure you that they will be accepted by our customers and
achieve anticipated sales target or profit. For example, to reduce the cost of ESS batteries and
lower the dependence on lithium, we have conducted research on anode and cathode material
system, electrolyte system and the process of the sodium-ion battery production. However, as
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a result of the continuous decrease in prices of raw materials for lithium-ion batteries since
early 2023, the advantage of sodium-ion batteries in cost reduction has declined and may be
lost at all if the prices of raw materials for lithium-ion batteries continue to decrease in future.
In the foreseeable future, we plan to continue the research and development of sodium-ion
battery not only for its potential of cost reduction, but also for its other features, such as
outstanding performance in low-temperature environment. However, there is no assurance that
we may be able to roll out the sodium-ion battery products in the end or that the sodium-ion
battery products will still be welcomed in the market in the future. Under such circumstances,
our previous investment in it may be wasted, and our prospects, competitive advantages and
business may be adversely affected.
In addition, we cannot assure you that our existing or potential competitors will not
develop products which are similar or superior to our products or more competitively priced.
Due to uncertainties in the time frame for developing new products and the duration of market
window for these products, there is a substantial risk that we may have to abandon a product
or a potential product that is no longer commercially viable, even after we have invested
significant resources in the development of such product.
If we fail to respond appropriately in the afore-mentioned situations, our significant
expenditures on R&D may not generate corresponding benefits, which may materially and
adversely affect our business, prospects, financial condition and results of operations.
We may not be able to increase our production capacity as planned, and even if our
production expansion projects proceed as planned, we may not be able to increase our
production output in a timely manner or at all as envisaged.
We expect to expand our battery production capacity to meet customers’ expected
demands for our products. We plan to achieve a designed production capacity of 62GWh by the
end of 2023 and over 150GWh by the end of 2025. See “Business – Production – Planned
Production Facilities.” Such expansion will impose significant responsibilities on our senior
management and require significant commitment of our resources, including financial
resources and the time needed to identify, recruit, maintain, and integrate additional
employees. Our proposed expansion will also expose us to greater overhead and support costs
and other risks associated with the manufacture and commercialization of new products as
disclosed in this prospectus. Based on our total budgeted investment for our planned
production facilities in Foshan, Liuzhou, Jiashan and Wenzhou and our accounting policies on
depreciation, we expect to incur additional depreciation expenses of approximately RMB402.1
million, RMB1,007.0 million and RMB1,519.0 million arising from such production expansion
plans in 2023, 2024 and 2025 respectively. We expect operational expenses arising from such
production expansion plans in 2023, 2024 and 2025 will be approximately RMB1,280.3
million, RMB2,626.9 million and RMB3,297.1 million, respectively. Difficulties in effectively
managing the budgeting, financing, forecasting and other process control issues presented by
such expansion could negatively affect our business, prospects, results of operations and
financial condition. Such expansion is also required to obtain various approvals, permits,
licenses and certificates and complete relevant inspections by competent government
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authorities. There is no assurance that we will be able to execute our expansion plan as
contemplated or at all. Any delay or failure to obtain relevant approvals, permits, licenses and
certificates or complete the inspections for our production expansion projects may materially
delay our production expansion or even result in the cancellation of such plans, which may
adversely affect our business, financial conditions and results of operations. See “– We may
experience delays and/or failures in obtaining and renewing, such as, relevant PRC
governmental approvals, licenses or permits for our new construction/expansion projects.”
However, even if we manage to expand our production capacity as planned, there is no
assurance that we may increase our production output in a timely manner or at all as envisaged.
Our ability to increase our production output is subject to significant constraints and
uncertainties, including but not limited to:
 delays by our suppliers and equipment vendors and cost overruns as a result of a
number of factors, many of which may be beyond our control or cannot be foreseen,
such as increases in raw material prices and problems with equipment vendors;
 delays in government approval process or denial of required approvals for
production by relevant government authorities;
 our ability to configure the production lines for specific products in a timely
manner;
 the performance of the manufacturing equipment we procured and the production
expertise we retained; and
 diversion of significant management attention and other resources.
Moreover, our product development, manufacturing and testing protocols are complex
and require significant technological and production process expertise. Any change in our
processes could cause one or more production errors, requiring a temporary suspension or
delay in our production line until the errors can be researched, identified, and properly
addressed and rectified, and thus limit our production output. This may occur particularly as
we introduce new products, modify our engineering and production techniques, and/or expand
our production capacity. In addition, our failure to maintain appropriate quality assurance
processes could result in increased product failures, loss of customers, increased warranty
reserve, or increased production and logistics costs, and delays.
If we are unable to increase our production output in a timely manner or at all in the end
because of any of the risks described above, we may be unable to fulfill customer orders or
achieve the growth we expect. In addition, if we are unable to fulfill customer orders, our
reputation could be affected, and our customers could source products from other companies.
The combination of the foregoing could materially and adversely affect our business, financial
condition and results of operations.
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We purchase certain key raw materials and components from third parties, and we may
not be able to secure our supply of key raw materials in a stable and timely manner.
We currently purchase certain key raw materials needed for our products from third
parties. Despite that we make strategic arrangements with major suppliers of raw materials to
primarily lock the quantity of our key raw materials in advance to ensure the stable supplies
of key raw materials, our current suppliers may be unable to satisfy our future requirements of
quality and quantity of raw materials on a timely basis. See “Business – Raw Materials,
Components and Suppliers – Raw Materials, Components and Supply Agreement.” Moreover,
the prices of raw materials and components could fluctuate significantly due to circumstances
beyond our control. See “– We are Exposed to Risks Relating to Price Fluctuations of Raw
Materials.” If our current suppliers are unable to satisfy our long-term requirements on a timely
basis, we may be required to seek alternative sources for necessary materials and components,
produce the raw materials or components in-house or redesign our proposed products to
manufacture available substitutes at reasonable cost. If we fail to do so, it will result in a
significant delay in our manufacturing and delivery of our products, which may result in
liabilities of damages and damage to our reputation, and will adversely and materially affect
our business, results of operations and financial condition.
We may be required to purchase certain amounts of raw materials under the long-term
off-take agreements entered into with some of our raw material suppliers, which may
exceed our production needs.
To ensure the stable supplies of key raw materials, we have made and may continue to
make strategic arrangements in the future with major suppliers of raw materials to primarily
lock the quantity of our key raw materials in advance. For example, we purchased LFP, one of
our key raw materials, from some of our suppliers pursuant to long-term off-take agreements
at a benchmark price by referring to the then prevailing market prices. See “Business – Raw
Materials, Components and Suppliers – Raw Materials, Components and Supply Agreement.”
Under such agreements, we may be required to purchase certain amounts of raw materials from
the suppliers which may exceed our production needs, and may restrain our liquidity. It may
also result in overstock of raw materials for certain periods and cause more impairment losses
of our inventories due to inventory obsolescence, or due to the rapid increase in raw material
prices for certain periods combined with our failure to adjust the selling prices of our battery
products accordingly in a timely manner, and thus adversely affect our business, financial
condition and results of operations. As such, this measure may not be able to help us effectively
mitigate the raw material price fluctuations or help us maintain an optimal inventory level.
Moreover, in the event that the selling prices of relevant raw materials do not increase as
expected, we may be subject to the adverse impact of purchasing raw materials at prices that
are higher than the market price, which in return may adversely affect our results of operations.
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We face competition in our business.
The global lithium-ion battery market is highly competitive and concentrated, and we
expect that the competition will be even more intense in the future. According to the F&S
Report, top five EV battery manufacturers in China accounted for approximately 85.3% and
90.0% of China’s total EV battery installation volume in 2022 and the six months ended June
30, 2023, respectively, which increased from 81.9% in 2020. According to the same source, top
five ESS battery manufacturers accounted for approximately 63.4% and 64.6% of the global
total ESS battery installation volume in 2022 and the six months ended June 30, 2023,
respectively, which increased from 40.3% in 2020. Our existing competitors may seek to
increase their market shares through various measures, such as continued R&D efforts,
increased production capacity, optimized production process and active marketing campaigns.
Our competitors may also seek to increase their market shares through the reduction of price.
We expect to face competition from both existing and new competitors as we expand our
business into new business lines, geographic regions and product categories. Competitive
pressure could also have an adverse impact on the demand for and pricing of our products,
which in turn affects our growth and market share. Even if there is sufficient downstream
demand for EV and ESS battery products, there is no guarantee that we will always succeed
in competing with other market players for orders from downstream customers. If we fail to
compete effectively, we may not be able to retain or expand our market share, which would
have a material adverse effect on our business, results of operations and financial condition.
We may fail to recover our trade and bills receivables in a timely manner, which may
affect our financial condition and results of operations.
As of December 31 2020, 2021 and 2022 and June 30, 2023, our trade and bills
receivables amounted to approximately RMB611.8 million, RMB1,053.5 million, RMB4,194.1
million and RMB3,553.1 million, respectively. We recorded impairment of trade receivables of
RMB2.1 million, RMB3.6 million, RMB84.7 million and RMB331.8 million as of December
31, 2020, 2021 and 2022 and June 30, 2023, respectively. See “Financial Information –
Liquidity and Capital Resources – Trade and Bills Receivables.” There can be no assurance that
we will be able to maintain our trade receivables turnover days at a reasonable level. Should
the credit worthiness of our customers deteriorate, or should a significant number of our
customers fail to settle their trade and bills receivables in full for any reason, we may continue
to incur impairment losses in the future and our results of operations and financial position
could be materially and adversely affected. In addition, there may be a risk of delay in payment
by our customers within their respective credit period, which in turn may also result in an
impairment loss provision. There is no assurance that we will be able to fully recover our trade
and bills receivables from the customers or that they will settle our trade and bills receivables
in a timely manner. In the event that settlements from customers are not made on a timely
manner, or at all, our financial condition and results of operations may be materially and
adversely affected.
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Our business depends on our ability to protect our intellectual property rights, and we
may be exposed to intellectual property infringement and other claims by third parties,
which, if successful, could cause us to pay significant damages and incur other costs.
We rely primarily on a combination of our patents, trade secrets, trademarks, the
confidentiality agreements signed by the employees, and confidentiality agreements signed
with the third parties to protect our intellectual property rights. Although we have applied and
obtained a number of trade marks and patents for the operations of our business, there is no
assurance that we are able to successfully apply and be granted new intellectual property rights
in a timely and cost-effective manner in the future, for such applications are expensive and time
consuming. See “Business – Intellectual Property.” Despite our efforts to protect our
proprietary rights, unauthorized parties may be able to obtain and use information that we
regard as proprietary. Under such circumstances, to protect our intellectual property rights and
maintain our competitive advantages, we may initiate legal proceedings against parties who we
believe are infringing our intellectual property rights. Legal proceedings are often costly and
may divert management attention and resources away from our business. In certain situations,
we may have to initiate such legal proceedings in foreign jurisdictions, in which case we are
subject to additional risks as to the result of the proceedings, the amount of damages that we
can recover, and the enforcement process. As of the Latest Practicable Date, we were not
involved in any legal proceeding against parties who we believe are infringing upon our
intellectual properties.
Our success is also subject to our ability to use, develop and protect our technology and
trade secrets without infringing the intellectual property rights of third parties. Others may hold
or obtain patents, copyrights, trademarks, or other proprietary rights used in our products and
service. This might prevent, limit, or interfere with our production, use, development, sales, or
marketing, and could therefore disturb our daily operations and distract our management. From
time to time, we may receive communications from intellectual property right holders
regarding their proprietary rights. Companies holding patents or other intellectual property
rights may bring suits alleging infringement of such rights or otherwise assert their rights and
urge us to obtain licenses. Our uses of trademarks relating to our design, software, technology
could be found to infringe upon existing intellectual property rights owned by others. In
addition, if we are found to have infringed upon a third party’s intellectual property rights, we
may be required to do one or more of the following:
 cease to sell products that are involved in the challenged intellectual property rights
owned by others;
 pay damages;
 redesign our products; or
 establish and maintain alternative branding for our products.
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The validity and scope of any potential claims/requests can be complicated and involve
complex scientific, legal and factual questions and analysis and, therefore, may be highly
uncertain. The defense and prosecution of intellectual property suits, patent opposition
proceedings and related legal and administrative proceedings or requests can be both costly and
time consuming and may significantly divert the efforts and resources of our management. A
determination in any such litigation or proceedings or requests to which we are a party may
invalidate our patents, subject us to pay damages to third parties, require us to seek licenses
from third parties, pay ongoing royalties, redesign our products, subject us to injunctions
prohibiting the manufacture and sale of our products or the use of our technologies. Any of the
afore-mentioned will materially and adversely affect our business, financial condition and
results of operations.
We may be subject to financial and reputational risks due to product recalls and product
liability claims.
Lithium-ion battery used in EVs and ESSs are inherently complex and may be subject to
failure, accidents or other malfunctions. Although we have not been involved in any material
product quality accident, product recalls or other similar events during the Track Record Period
and up to the Latest Practicable Date, there is no assurance that we will not be involved in those
events in the future. The risk of product recalls and product liability claims, and associated
adverse publicity, is inherent in the development, manufacturing and sales of our products. Our
products and the products of third parties in which our products are a component are becoming
increasingly sophisticated and complicated as technologies continue to advance, and as demand
increases for lighter and more powerful rechargeable battery.
Product quality and liability issues may affect not only our own products but also the
third-party products in which our battery products are a component. Our efforts to maintain
product quality may not be successful, which may result in us incurring expenses in connection
with, for example, product recalls and product liability claims, and adversely impact our brand
image and reputation as a producer of high-quality products. Any product recalls or product
liability claims seeking significant monetary damages could have a material adverse effect on
our business and financial condition. A product recall or product liability claim could generate
substantial negative publicity about our products and business, interfere with our
manufacturing plans and product delivery obligations as we seek to replace, or repair affected
products, and inhibit or prevent commercialization of other future product candidates.
We may be subject to liabilities and disruption in operations in connection with accidents
that occur during the manufacturing process at our production facilities due to, among
others, failure to comply with safety measures and procedures.
In the course of operations and production, we implement and require our employees to
comply with safety measures and procedures as stipulated in our internal policies.
Nevertheless, there is no assurance that our safety measures and procedures are strictly
followed by our employees. As our manufacturing process is complicated and inevitably
involves operation of tools, equipment and machinery and use of chemical materials, accidents
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resulting in employee injuries or even deaths may occur. Such accidents may result in
disruption of our operation and subject us to liabilities, and we may not have adequate or
sufficient insurance to cover such liabilities, which could then adversely affect our business,
results of operation and financial condition. See “– We may not have adequate insurance to
cover losses and liabilities arising from various operational risks and hazards.” Our Directors
and management confirmed that, there were no safety-related or occupational accidents during
the Track Record Period.
If we are unable to retain existing customers and attract new customers, our business,
financial conditions and results of operations will be adversely affected.
During the Track Record Period, we achieved significant growth of our business. Our
total revenue increased from RMB907.0 million in 2020 to RMB2,109.1 million in 2021, and
further to RMB14,647.8 million in 2022. Our total revenue increased from RMB4,016.6
million in the six months ended June 30, 2022 to RMB6,594.8 million in the six months ended
June 30, 2023. However, there is no assurance that we could retain our existing customers or
attract new customers as we did during the Track Record Period, or at all. If we fail to retain
our existing customers or attract new customers in the future due to that our products could not
meet the requirements of the market, or that our selling prices are not competitive, or due to
other factors disclosed in this herein, our business, financial conditions and results of
operations will be adversely affected.
Our business is exposed to the supply-demand dynamics in the lithium-ion battery
industry, and thus is affected by market demand for the end products where our batteries
are used.
We provide battery products that are used for EVs and ESSs. Accordingly, our results of
operations have been and are expected to continue to be affected by downstream demand for
EVs and ESSs. Strong growths in China’s EV market and EV battery annual installations, as
well as the global ESS market, were major drivers for our growth during the Track Record
Period. See “Financial Information – Significant Factors Affecting Our Results of Operations
– End Market that We Serve and Fluctuation in Customer Demand.” The downstream demands
for EVs and ESSs are affected by many factors, such as:
 the specifications of EVs, such as purchase price, charging time, driving range,
reliability and battery life; and of ESSs, such as the cost of renewable energy and
the cost of corresponding energy storage systems;
 the government policies which promote the development of EVs and ESSs;
 the seasonality of China’s EV market, where historically the sales volume of EV in
the fist half year was generally lower than that of the second half year, which was
affected by factors such as consumption habits, launch time of new EVs and
holidays; and
 the macro-economies which affected the consumption habits of the society.
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There is no assurance that the downstream demand for EVs and ESSs will maintain at the
same level as we experienced during the Track Record Period which drove our revenue
increase rapidly, or continue to increase in the future. We experienced the temporary slowdown
in the EV industry in early 2023, which adversely affected our sales volume of EV battery
products, and directly affected our results of operations for the periods concerned. There is no
assurance that we will not experience the slowdown in growth in the EV and ESS industry in
the future. If the downstream demand for EVs and ESSs do not increase as we expect, the
market demand for our products will decrease correspondingly, which may result in under
utilization of our production capacity, and in turn materially and adversely affect our business,
financial condition and results of operations.
In addition, the U.S. Inflation Reduction Act (the “ IRA”), passed into law by President
Biden on August 16, 2022, sets aside $369 billion for climate and clean energy projects and
policies. One of the key provisions for speeding the transition to EVs is a tax credit up to
$7,500 for consumers in the U.S. purchasing EVs. However, in order to stimulate domestic
production of not only EVs but also their batteries, the IRA requires EV manufacturers to
provide verifiable evidence that large percentages of material sourcing and manufacturing take
place within the US or in a partner country with a free trade agreement. EV manufacturers must
prove that battery components have not been “extracted, processed or recycled by a foreign
entity of concern.” As such, to the extent an EV manufacturer is selling the EVs with our
battery products in the U.S., the buyers will not be able to enjoy the tax credit. Without the tax
credit, the demand and pricing of these EVs can be negatively affected, which in turn may have
a negative impact on the pricing of our products to these EV manufacturers. Similarly, under
the IRA there are certain tax credits available for the owners of ESS projects. However, if an
ESS project fail to satisfy the relevant “domestic content” requirement, the tax credits that the
project owner is eligible may be reduced. This may discourage U.S. ESS project owners from
purchasing products from us or our customers. The European Union is also in the process of
passing legislations with similar effects. Any of such legislations may affect our ability in
developing overseas markets who focus on the sales to the U.S. and potentially Europe.
We may face overcapacity of production in China’s lithium-ion battery industry.
Our designed annual production capacity of lithium-ion batteries has increased by more
than ten folds from 2.3GWh in January 2020 to 35.2GWh in June 2023, and is expected to
increase from 62GWh by the end of 2023 to over 150GWh by the end of 2025. See “Business
– Production – Planned Production Facilities.” According to the F&S Report, other market
players in China have also been expanding their production capacity quite aggressively since
a few years ago. Looking ahead, China’s lithium-ion battery industry may face overcapacity of
production if future demand from downstream customers, such as EV and ESS manufacturers,
is unable to keep pace with the rapid capacity expansions, which is affected by many factors
out of our control, including the macro-economy which affected the consumption habits of the
society. There is no assurance that we will not face overcapacity of production in China’s
lithium-ion battery industry. According to the F&S Report, early signs of potential
overcapacity of production in China’s lithium-ion battery industry have started to emerge. For
example, the capacity utilization rates of certain top players in China’s lithium-ion battery
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industry have declined in the first half of 2023. We also experienced decline in our overall
utilization rate of existing production capacity in the first half of 2023. See “Business –
Production – Existing Production Facilities.” If there is overcapacity of production in China’s
lithium-ion battery industry in the future, we may face more fierce competition and there is no
assurance that we could out-compete other market players in such situation. As a result, our
capacity utilization rate may further decline and our manufacturing costs may increase
significantly, and thus our business and results of operations will be materially and adversely
affected.
New legislations or changes in the PRC regulatory requirements regarding the end
markets of our products may affect our business operations and prospects.
Our products are used in our customer’s end products, including EVs and ESSs. New
legislations or changes in the PRC regulatory requirements regarding these end markets may
affect our business, financial condition, results of operations and prospects. For example, the
PRC government has promulgated, amended and updated a number of legislations in relation
to the new energy vehicle market. On June 28, 2012, the State Council of PRC approved the
Energy-saving and New Energy Automobile Industry Development Plan (2012-2020) ( ືঐ
஝ྌ(2012-2020 ϋ))( ਷೯[2012]22 ໮), granting supports and
subsidies to EVs. On July 14, 2014, the General Office of the State Council issued the Guiding
Opinion of the General Office of the State Council on Accelerating the Popularization and
Application of New Energy Vehicle (ኬจ
Ԉ)( ਷፬೯[2014]35 ໮) to grant further tax incentives and exemptions for new energy
vehicles. On March 13, 2015, the Ministry of Communications issued the Opinions on
Accelerating the Promotion and Application of New Energy Vehicles in the Transportation
Industry (จԈ)( ʹ༶೯[2015]34
໮). A preferential vehicle licensing system has also been introduced in several cities in the
PRC to further encourage the purchases of new energy vehicles. On October 20, 2020, the State
Council issued the “Development Plan for New Energy Automobile Industry (2021-2035)”
(Guobanfa [2020] No. 39) (஝ྌ(2021–2035 ϋ)(਷፬೯[2020]39 ໮)),
proposing to achieve the large-scale application of vehicles with high driving automation
through a 15-year effort. However, these policies are subject to certain limits as well as
changes that are beyond our control, and we cannot assure you that future changes, if any,
would be favorable to our business or financial condition. For instance, according to the Notice
on Improving the Financial Subsidy Policies for the Promotion and Application of New Energy
Vehicles (Caijian [2020] No. 86) ((ৌ
ܔ[2020]86 ໮)) (collectively, the “ 2020 Subsidy Circular ”), released by the Ministry of
Finance, the Ministry of Industry and Information Technology, the Ministry of Science and
Technology and the Development and Reform Commission on April 23, 2020, which was
further confirmed on December 31, 2020 and December 31, 2021, save in areas such as public
transportation, the subsidies for EV purchases from 2020 to 2022 will generally be reduced by
10%, 20% and 30%, respectively, based on the level of the previous year, and the total number
of EVs sold in China that will be entitled to such subsidies should be no more than two million
each year. In addition, the national EV subsidy policy under the 2020 Subsidy Circular was
terminated on December 31, 2022. Such policies are expected to have a negative impact on the
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demand for EVs and hence for EV batteries. The termination of the subsidy policy could
directly affect the profitability of the EV manufacturers in the short term and some of them may
choose to pass down such increased costs to end customers, which may disencourage end
customers from choosing EV , and then affect the overall market demand of EV batteries. In
2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023, our revenue generated
from sales of EV battery products amounted to RMB673.2 million, RMB981.5 million,
RMB4,642.8 million, RMB1,662.5 million and RMB1,247.8 million, representing 74.2%,
46.5%, 31.7%, 41.4% and 18.9% of our total revenue in the same periods, respectively. Any
uncertainty or delay in collection of the government subsidies may have an adverse impact on
our product’s end markets, which in turn might adversely affect the demand of our products.
In addition, in the context of the national goal of carbon neutrality, China energy storage
market welcomes a series of favorable policies. For instance, Action Plan for Carbon Dioxide
Peaking Before 2030 issued by the State Council in 2021 unveiled a series of action plan to
accelerate the energy storage development. As for ESS industry, on July 23, 2021, the National
Development and Reform Commission (the “ NDRC”) and the National Energy Administration
(the “ NEA”) issued the Guiding Opinions on Accelerating the Development of New Energy
Storage (ኬจԈ)( ೯ҷঐ๕஝[2021]1051 ໮), which set
the goal of achieving a cumulative installation volume of 30GWh of ESS by 2025, and
achieving the complete market development of new energy storage by 2030. On July 26, 2021,
the NDRC issued the Notice on Further Improvement of the Time-of-use Pricing Mechanism
()(ࣸ[2021]1093 ໮), which encouraged the
use of ESS to reduce the power load in peak hours. On December 21, 2021, the NEA issued
the Regulations on Power Grid Connection and Operations ()( ਷
ঐ೯္၍஝[2021]60 ໮), which included electrochemical energy storage and other new energy
storage into the management of grid-connected subjects. On March 21, 2022, the NDRC and
NEA issued The “14th Five-Year Plan” New Energy Storage Development Implementation
Plan ( “ɤ̬ʞ”)( ೯ҷঐ๕[2022]209 ໮), which set the goal of
enhancing the technological performance of electrochemical ESS and reduces the systematic
cost by over 30% by 2025, and encouraged to innovate new energy storage business models and
explore the application of business models such as shared energy storage, cloud energy storage
and energy storage aggregation. In 2020, 2021 and 2022 and the six months ended June 30,
2022 and 2023, our revenue generated from sales of ESS battery products amounted to
RMB182.1 million, RMB859.5 million, RMB8,400.6 million, RMB1,881.5 million and
RMB4,320.5 million, representing 20.1%, 40.8%, 57.4%, 46.8% and 65.5% of our total
revenue in the same periods, respectively. There is no guarantee that such rules and regulations
may not change in the future. Unfavorable policies against the development of new energy
storage industry may adversely affect the development of our end customers of ESS battery
products and may in return result in adverse impact to our business and results of operations.
We may need to change or adapt our business focuses from time to time in response to
the new rules and regulations regarding the end markets of our products, but we may also not
be able to do so timely and efficiently. Any new legislations or changes in the PRC regulatory
requirements could materially and adversely affect our business, financial condition and results
of operations.
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We may fail to keep up with rapid technological changes and evolving industry standards,
and the demand for our products may decrease as a result.
We mainly manufacture and market lithium-ion batteries. As we believe that the market
for lithium-ion batteries has good growth potential, we have focused our R&D activities on
exploring new materials and structure to enhance our product quality and features while
reducing cost. Some of our competitors are conducting R&D on alternative battery
technologies, such as fuel cells and super capacitors, and academic studies are ongoing as to
the viability of sulfur and aluminum-based battery technologies. If any viable substitute
products emerge and gain market acceptance because they have more enhanced features, more
practical applications, more power, more attractive pricing, or better reliability, the market
demand for our products may decrease, and accordingly our business, financial condition and
results of operations would be materially and adversely affected.
Furthermore, the lithium-ion battery market is characterized by rapid technological
changes and evolving industry standards, which are difficult to predict. This, together with the
frequent introduction of new products and models, has shortened product life cycles and may
render our products obsolete or less marketable. For example, research on the electrochemical
applications of carbon nanotechnology and other storage technologies is developing at a rapid
pace, and many private and public companies and research institutions are actively engaged in
the development of new battery technologies that may bring competitive advantages over the
mainstream battery products in the market. If our competitors develop new technologies that
we are not able to keep up with, such technologies may provide them with significant
performance or price advantages over us and our technology leadership and competitive
strengths may be adversely affected.
To reduce the cost of ESS batteries and lower the dependence on lithium, we also
conducted research on anode and cathode material system, electrolyte system and process of
the sodium-ion battery production. As of the Latest Practicable Date, we have invested
approximately RMB3 million in research and development of sodium-ion batteries. However,
as a result of the continuous decrease in prices of raw materials for lithium-ion batteries since
early 2023, the advantage of sodium-ion batteries in cost reduction has declined and may be
lost at all if the prices of raw materials for lithium-ion batteries continue to decrease in future.
In the foreseeable future, we plan to continue the research and development of sodium-ion
battery not only for its potential of cost reduction, but also for its other features, such as
outstanding performance in low-temperature environment. We may not be able to adjust our
research and envelopment direction in a timely manner in face of the rapid technological
changes in the industry. There is no assurance that we will successfully roll out and
commercialize sodium-ion battery products in the end and generate return from such research
and development. If we fail to do so, our prospect, business and results of operations may be
adversely affected.
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Our ability to adapt to evolving industry standards and anticipate future standards will be
a significant factor in our ability to maintain and improve our competitive position and our
prospects for growth. To achieve this goal, we have invested and plan to continue investing
significant financial resources in our R&D infrastructure. R&D activities, however, are
inherently uncertain, and we may encounter practical difficulties in commercializing our
research results. See “– Failure to derive the desired benefits from our product R&D efforts
may hurt our competitiveness and profitability.” On the other hand, our competitors may
improve their technologies or even achieve technological breakthroughs either as alternatives
to lithium-ion battery systems or improvements on existing lithium-ion battery systems that
would render our products obsolete or less marketable. Therefore, our failure to effectively
keep up with rapid technological changes and evolving industry standards by introducing new
and enhanced products may cause us to lose our market share and to suffer a decrease in our
revenue.
We may face failure or delays in the design and launch of our new products.
The development and launch of new products involve complex efforts and there may be
uncertainties at various stages before a product is launched. Any delay in the financing, design,
production and eventually the launch of our new products could materially damage our brand,
business, prospects, financial condition and results of operations. To the extent that we delay
the launch of our new products, our growth prospects could be adversely affected as we may
fail to grow our market share, keep up with competing products or satisfy customers’ demands
or needs. Due to the uncertainty in the market window for the new products, any delay in
launch of new products may result in the obsolescence of such products and our investments
in developing such products may become sunk costs, which will materially and adversely affect
our business, financial position and results of operations.
Our business, financial condition and results of operations may be subject to adverse
effect from the risk of customer concentration.
In each of 2020, 2021 and 2022 and the six months ended June 30, 2023, our revenue from
the top five customers for the respective periods was approximately RMB631.8 million,
RMB1,075.9 million, RMB5,592.6 million and RMB2,483.7 million, accounting for 69.7%,
51.0%, 38.2% and 37.6% of our total revenue during the respective period. During the same
periods, our revenue from the largest customer for the respective periods was RMB350.4
million, RMB516.4 million, RMB1,708.3 million and RMB835.3 million, accounting for
38.6%, 24.5%, 11.7% and 12.7% of our total revenue during the respective period. See
“Business – Marketing, Sales and Customers – Our Customers.”
Despite the fact that we have mitigated the concentration of customers throughout the
Track Record Period, as we are in an industry that generally have a high concentration of
customers, we may still be affected by risks arising from the customer concentration, especially
given that we had a high concentration of customers in 2020. We cannot assure you that our
major customers will not diversify their suppliers, change their business scope or business
model nor suspend their operation, or they will not encounter any operating or financial
difficulties. Any material adverse changes in the business, operation and financial conditions
of our major customers may in turn have a material adverse effect on us. There is no assurance
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that we are able to maintain good relationship with our major customers, or our major
customers will continue to have high demands for our products in the future. Under the
aforementioned circumstances, if we are unable to identify and acquire suitable new customers
within a reasonable period of time, our business, financial condition and results of operation
may be materially and adversely affected.
We may experience difficulties in establishing large-scale production capacity and
estimating potential cost savings and efficiencies from anticipated improvements to our
production capacity.
While our production capacity achieved to date is already at commercial scale, it has not
achieved what we expect will be necessary to fully meet the demand we see in the market for
our products. The manufacturing process for our expected full commercial scale is still being
refined and improved. There are risks associated with scaling up manufacturing to larger
commercial volumes, including but not limited to, technical or other problems with process
scale-up, process reproducibility, stability issues, quality consistency, timely availability of
raw materials, cost overruns, and adequate definitions or qualifications for safety, reliability,
and quality. There is no assurance that our production facilities will be successful in
establishing a larger-scale commercial manufacturing process that achieves our objectives for
production capacity. Moreover, we had experienced low manufacturing efficiency historically.
Although our manufacturing efficiency improved from 2020 onward, there is no assurance that
we could continue to improve our production efficiency that achieves our targets for optimal
unit cost of battery products, in a timely manner or at all. If we are unable to produce sufficient
quantities of product on a timely basis and in a cost-effective manner, our commercialization
efforts would be impaired which could materially affect our business, financial condition,
results of operations, and growth prospects.
Our business is capital intensive. The sources of our future financing can be uncertain,
and our working capital can be unstable during certain quarters.
We operate in a capital-intensive industry that requires substantial capital and other
long-term expenditures, including expenditures for the purchase of equipment and construction
of production facilities. To the extent that we expand or add new production facilities, we
expect to fund the related financial commitments and other capital and operating expenses from
the proceeds from the Pre-IPO Investments, banking facilities, and the net proceeds from the
Global Offering. However, we cannot assure you that we will be able to generate sufficient
cash from our operations or obtain the necessary financing or that such financing will be at
interest rates and on other terms that are commercially reasonable and affordable to us or
consistent with our expectations. To the extent we cannot obtain financing for our expansion
or acquisitions at reasonable costs or at all in the future, our business may be adversely
affected. In addition, our expansions require us to make pre-construction preparation and trial
production input, as a result, during certain quarters we may incur higher working capital needs
that may affect our working capital sufficiency. We cannot assure you that we will not
experience any unforeseen circumstances that may adversely affect our working capital in the
future. If that happens, our business, financial position, results of operations, prospects may be
affected.
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Failure to maintain optimal inventory levels could increase our inventory holding costs
and cause us to lose sales.
In order to operate our business effectively and meet our consumers’ demands and
expectations, we must maintain a certain level of inventory to meet the needs of production and
ensure timely delivery of our products. As of December 31, 2020, 2021 and 2022 and June 30,
2023, we had inventories of RMB244.6 million, RMB720.7 million, RMB3,245.6 million and
RMB3,028.5 million, respectively. We determine our level of inventory based on our
experience, number of orders from customers, assessment of customer demand and fluctuation
in prices of raw materials. However, such assessment is inherently uncertain, and the demand
for our products could change significantly between the order date and the projected delivery
date. We cannot assure you that we are able to always maintain optimal inventory levels in the
future. If we fail to accurately assess the demand, we may experience inventory obsolescence
and inventory shortage risk. Inventory levels in excess of demand, or substantial decrease in
the expected market price of our products, may result in inventory write-downs or write-offs
and we may sell the excess inventory at discounted prices, which would have an adverse effect
on our profitability. We recorded the reversal of impairment losses of inventories of RMB16.4
million in 2020. We recorded the provision for impairment losses of inventories of RMB82.6
million in 2021, primarily due to the rapid increase in purchase prices of raw materials in 2021
and the fact that we did not manage to adjust the selling prices of our battery products
accordingly in a timely manner, which together resulted in the net realizable value of our
inventories lower than their costs. We recorded the reversal of impairment losses of inventories
of RMB24.8 million in 2022. We recorded the net provision for impairment losses of
inventories of RMB264.7 million in the six months ended June 30, 2023, primarily due to the
decrease in average selling prices of our EV and ESS battery products as a result of decrease
in raw material prices in the first half of 2023, which resulted in the net realizable value of
inventories lower than their costs. See “Financial Information – Selected Balance Sheet Items
– Inventories.” Furthermore, if we underestimate the demand for our products, we may not be
able to produce a sufficient number of products to meet such unanticipated demand, which
could result in delays in the delivery of our products and negatively affect our reputation.
Any of the above may materially and adversely affect our business, results of operations
and financial condition. As we plan to continue to expand our production capacities, we may
continue to face challenges in effectively managing our inventory.
Our reputation is key to our business success. Negative news or publicity may adversely
affect our reputation, business and growth prospects.
Any negative news or publicity in relation to us, or any of our Directors, management,
Controlling Shareholders and joint ventures or business partners or counter-parties, or any of
their respective affiliates (including, where applicable, any joint venture or business partner or
counter-party thereof), among others, whether or not they act on our behalf or otherwise utilize
or share our brand name, and even if proven untrue, could adversely affect our reputation,
business and growth prospects.
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We cannot assure you that such negative news or publicity would not damage our
reputation or brand image. Given our specialized industry and market, negative news, publicity
and word of mouth could spread quickly and negatively impact our reputation, brand image or
relationship with third parties, which could have a material adverse effect on our business,
financial condition and results of operations. Even if we are not a party to, not involved in, and
not liable to these litigations, disputes and allegations, we cannot assure you that any of such
negative news or publicity will not affect our reputation, brand image or relationship with third
parties, which could in turn have a material adverse effect on our business, financial condition
and results of operations.
Work stoppage, increases in labor cost and other labor related matters may have an
adverse effect on our businesses.
Good working relationship with our employees across our business lines is crucial to our
operations and success. We have not experienced any material work stoppages, strikes or other
major labor problems during the Track Record Period. However, there is no assurance that any
of such events will not arise in the future. If our employees were to engage in a strike or other
work stoppage, we could experience significant disruption of our operations and/or higher
on-going labor costs, which may have an adverse effect on our businesses, financial condition
and results of operations. As of June 30, 2023, we had 12,096 full-time employees. Some of
our employees are currently represented by labor unions. In addition, employees of some of our
suppliers or customers may become unionized in the future or experience labor instability and
we may not be able to predict the outcome of any future labor negotiations. Any conflicts
between us and our employees’ labor union or between our suppliers and customers and their
respective unions (if any) could have an adverse effect on our financial condition and results
of operations.
In 2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023, our direct
labor costs amounted to RMB71.2 million, RMB174.6 million, RMB499.9 million, RMB254.6
million and RMB286.3 million, representing 8.9%, 7.2%, 3.7%, 6.1% and 4.5% of our total
cost of sales, respectively. In addition, labor costs in regions where we operate have generally
been increasing in recent years and could potentially continue to increase. If labor costs in
these regions continue to increase, our production costs will increase. We may not be able to
pass on these increased costs to customers by increasing the selling prices of our products in
light of competitive pressure in the markets where we operate. In such circumstances, our
profit margin may decrease, which could have an adverse effect on our financial condition and
results of operations.
We face risks related to health epidemics, including the COVID-19 pandemic, which could
have a material adverse effect on our business and results of operations.
We face various risks related to public health issues, including epidemics, pandemics, and
other outbreaks, including COVID-19. The impact of COVID-19, including changes in
consumer and business behavior, pandemic fears and market downturns, and restrictions on
business and individual activities, has created significant volatility in the global economy and
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led to reduced economic activity. Specifically, difficult macroeconomic conditions, such as
decreases in per capita income and level of disposable income, increased and prolonged
unemployment or a decline in consumer confidence as a result of the COVID-19 pandemic, as
well as reduced spending by businesses, could have a material adverse effect on the demand
for our products.
In response to the COVID-19 pandemic, the PRC government enacted a number of
measures, including implementing mandatory quarantine, requiring residents to remain at
home and to avoid gathering in public. The COVID-19 pandemic has also resulted in the
temporary closure of many corporate offices, retail stores and manufacturing facilities across
the country. Particularly, the resurgence of COVID-19 in the PRC in 2022 resulted in extended
duration of afore-mentioned measures. While we did not experience material disruptions to our
operations during the Track Record Period and up to the Latest Practicable date, there is no
assurance that such material disruptions will not materialize in the future. Towards the end of
2022, with the outbreak of Omicron variant in China, the logistics in some regions have been
affected to various degrees due to the government control measures in response to the
pandemic. As we actively contacted with our suppliers and strategically procured key raw
materials in advance according to our production plan, our production activities did not
encountered any material disruption, nor was our product delivery. However, we may incur
additional costs for dealing with the COVID-19 pandemic, such as the costs of sanitation and
purchase of supervisory devices. Government restrictions on movement within the PRC had
been relaxed as of the Latest Practicable Date, but there may be uncertainty as to the future
progress and impact of the pandemic and thus, we may still be subject to operational
restrictions. See “Financial Information – Significant Factors Affecting Our Results of
Operations – The Impact of COVID-19.”
Moreover, the COVID-19 pandemic could limit the ability of our customers, suppliers,
vendors and business partners to operate in the ordinary course, including third party suppliers’
ability to provide raw materials and components used in our products. We may also experience
an increase in the cost of raw materials used in our commercial production. Even after the
COVID- 19 pandemic has subsided, we may continue to experience an adverse impact to our
business as a result of its global economic impact, including any recession that has occurred
or may occur in the future.
Our operations depend on a stable, timely and adequate supply of energy at commercially
reasonable prices.
We depend on the supply of energy to maintain our production processes. Our production
volume and production costs are affected by price and supply of energy. The prices of energy
are subject to a number of factors which may be beyond our control, including inflation,
supplier capacity constraints, general economic conditions, commodity price fluctuations,
demand from other industries for energy, power consumption policies and local and national
regulatory requirements. Significant increase in energy prices may have a material effect on
our profitability and result in decrease of our profit margin, if we are unable to adjust the price
of our products and pass such increased costs to our customers accordingly. Moreover, if the
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supply of energy is affected by natural disasters, adverse weather conditions, suppliers’
equipment failures, disruptions in transport or other inclement factors, we may not be able to
identify and secure alternative sources of supply and/(or) at acceptable prices. We cannot
assure you that unexpected and serious shortages of energy will not occur in the future. Any
disruption in the supply of energy or fluctuation in energy prices may have a material adverse
effect on our business, financial condition and results of operations.
Our facilities or operations could be damaged or adversely affected as a result of natural
disasters and other catastrophic events.
Our facilities or operations could be adversely affected by events outside of our control,
such as natural disasters, wars, health epidemics such as the ongoing COVID-19 pandemic, and
other calamities. We cannot assure you that any backup systems will be adequate to protect us
from the effects of fire, floods, typhoons, earthquakes, power loss, telecommunications
failures, break-ins, war, riots, terrorist attacks or similar events. Any of the foregoing events
may give rise to interruptions, breakdowns, system failures, technology platform failures or
internet failures, which could cause the loss or corruption of data or malfunctions of software
or hardware as well as adversely affect our ability to produce our products and provide
services.
Any failure to maintain an effective quality management system may have a material
adverse effect on our business, reputation, financial condition and results of operations.
Our product quality is critical to our success. Therefore, we have a quality management
system in place. The effectiveness of our quality management system depends on a number of
factors, including the design of the system, the equipment used, the quality of our staff and
related training programs and our ability to ensure that our employees adhere to our quality
management policies and guidelines. We are required to comply with specific guidelines based
on product safety and restricted and hazardous materials laws and regulations that are
applicable in the jurisdictions into which our customers sell their products. Our safety
standards for the inspection of our products are also based on relevant national and industry
standards. We cannot assure you that our quality management system will continue to be
effective or in compliance with relevant laws and regulations and standards. See “Business –
Quality Control.” Any significant failure in or deterioration of the efficacy of our quality
management system could result in us losing accreditations and requisite certifications or
qualifications, which could in turn have a material adverse effect on our business, financial
condition and results of operations.
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We may experience delays and/or failures in obtaining and renewing relevant PRC
governmental approvals, licenses, permits or others required for our new
construction/expansion projects.
We are required to obtain various approvals, permits, licenses and certificates throughout
multiple stages of our new construction/expansion projects. Various completion inspections are
also required before we commence production at our new facilities. Generally, such approvals,
licenses, permits, certificates or inspections are only issued, renewed or completed after certain
conditions have been satisfied. We cannot assure you that we will not encounter obstacles that
delay us in obtaining or completing, or result in our failure to obtain or complete, the required
approvals or inspections. In the event that we encounter significant delays in obtaining or
renewing the necessary government approvals for any of our new construction/expansion
projects, or fail to timely complete the inspections for our new production facilities, we will
not be able to continue with our development plans or production activities, and our business,
financial condition and results of operations may be adversely affected. Furthermore, under the
relevant PRC land and property laws and regulations, we were required to obtain the real estate
ownership certificates for our owned land and property, and to file the lease agreements for our
leased properties. Failure to comply with the relevant laws and regulations may subject us to
certain fines and penalties. See “Business – Properties.”
We are dependent upon third parties for various services and components in connection
with our business.
We rely on third-party service providers for some services in connection with our
business, such as logistics and customs clearance. We obtain services from third-party service
providers who we believe are able to meet our specifications and requirements. However, the
services provided by any of the third-party service providers may not be provided in a timely
manner and as we may have limited control on customers who may resell our products, the
services provided by them may not be of satisfactory quality. If the third-party service
providers do not perform satisfactorily, substantially reduce the amount and scope of their
services, substantially increase the prices of their services or terminate their business
relationship with us, we may need to replace the third-party service providers or take other
remedial actions which could increase our costs of operations. As we do not have direct control
over the third-party service providers, if they become involved in the unauthorized provision
of services not complying with our requirements or that of our customers, our reputation in the
industry will be affected. Our reputation in the industry will also be adversely affected if the
third-party service providers do not comply with applicable laws and regulations. This, in turn,
may materially and adversely affect our business, financial condition and results of operations.
In addition, we incorporate components manufactured by third parties into our products.
If there are quality issues with respect to these third-party components included in our battery
products, we may not discover the issue until after our products have been shipped and
installed. In addition, we may have little or no recourse against these third-party suppliers
arising out of warranty claims made by our customers. If the components manufactured by
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third parties could not satisfy our specification and quality standards, or if there is any delay
in delivering such components to us on time which may in turn delay our shipments of
products, our business, reputation and results of operations may be materially and adversely
affected.
Our battery packs (including battery boxes, battery racks and energy storage containers
for ESS packs) rely on software and hardware that are highly technical. If these systems
contain errors, bugs or vulnerabilities, or if we are unsuccessful in addressing or
mitigating technical limitations in our systems, our business could be adversely affected.
Besides battery cells, we also produce battery packs (including battery boxes, battery
racks and energy storage containers for ESS packs). Such products rely on software and
hardware battery management systems that are highly technical and complex and will require
modification and upgrades over their service life. In addition, certain of our products depend
on the ability of such software and hardware to store, retrieve, process and manage immense
amounts of data. Such software and hardware may contain errors, bugs, design defects or
vulnerabilities, and the systems are subject to certain technical limitations that may
compromise our ability to meet the designed objectives. Some errors, bugs or vulnerabilities
inherently may be difficult to detect and may only be discovered after the code has been
released for external or internal use. Although we attempt to remedy any issues that we are able
to identify in our products as effectively and promptly as possible, such efforts may not be
timely, may hamper production, or may not be to the satisfaction of our customers. If we are
unable to prevent or effectively remedy errors, bugs, vulnerabilities or defects in our software
and hardware, we may suffer damage in relation to our brand and reputation, loss of customers,
loss of revenue or liability for damages, any of which could adversely affect our business and
results of operations.
We may face challenge from new power systems that could be applied to the end products
where our batteries are used.
EV batteries are a core component of EVs, and is one of our major source of revenue and
focuses in future business development. Benefiting from the growth of global EV market, the
global EV battery market gained a steady growth with the annual installation growing from
63.8GWh in 2017 to 504.5GWh in 2022, representing a CAGR of 51.2%, which is further
expected to grow to 2,597.1GWh in 2027, representing a CAGR of 38.8% from 2022 to 2027,
according to the F&S Report. However, there is no assurance that there would not be a
development of power system for EVs that could replace lithium-ion batteries and thus make
obsolete all of our EV battery products. In addition, new types of vehicles may emerge and
ultimately replace EVs. In the event that new power system is to replace lithium-ion batteries,
or new types of vehicles emerge to replace EVs, our business, financial condition and results
of operations would be adversely affected.
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We face risks associated with the international operations and sales of our products, and
if we are unable to effectively manage these risks, our business and financial condition
and results of operations may be materially and adversely affected.
While we generated a substantial majority of our total revenue during the Track Record
Period from sales to customers located in the PRC we also made sales to overseas customers
in countries such as Indonesia, Australia, Turkey and France, as well as system integrators who
may incorporate our battery products and sell their end-products overseas. See “Financial
Information – Revenue – Revenue by Region.” While we expect the PRC will continue to be
our primary market, we may expand the sales of our products overseas, which will expose us
to a number of risks, including, but not limited to:
 fluctuations in foreign currency exchange rates;
 increased costs associated with maintaining the ability to understand the local
markets and develop and maintain effective marketing and distributing presence in
various countries;
 providing customer service and support in these markets;
 difficulty with staffing and managing overseas operations;
 failure to develop and implement appropriate risk management and internal control
structures tailored to overseas operations;
 difficulty and cost relating to compliance with different commercial and legal
requirements of the overseas markets in which we offer or plan to offer our products;
 failure to obtain or maintain permits for our products or services in these markets;
 different safety concerns and measures needed to address accident related risks in
different countries and regions;
 inability to obtain, maintain or enforce intellectual property rights;
 unanticipated changes in prevailing economic conditions and regulatory
requirements; and
 trade barriers such as export requirements, tariffs, taxes and other restrictions and
expenses.
Moreover, we intend to establish overseas production facilities in the future. The success
of our overseas expansion plans depends on whether we could adequately, timely and
effectively address the risks associated with overseas operations, such as failure to adopting
different legal framework and government policies, restrictions or requirements relating to
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foreign investments, non-compliance with the requirements of applicable sanctions, anti-
bribery and related laws and regulations, failure to protect our reputation from negative
publicity against us, and limitations on ability of non-nationals to reside and work in such
countries. We may not be able to develop and implement policies and strategies that will be
effective in each location where we do business. A change in one or more of the factors
described above may have a material adverse effect on our business, financial condition and
results of operations.
The current tensions in international trade and rising political tensions may adversely
impact our business, financial condition, and results of operations.
Some jurisdictions or organizations have through executive order, legislation or other
governmental means, implemented measures that impose economic sanctions, export or import
controls against certain countries or regions or against targeted industry sectors, groups of
companies or persons, and or organizations. Such sanctions law and regulations are likely
subject to frequent changes, and their interpretation and enforcement involves substantial
uncertainties, which may be heightened by national security concerns or driven by political
and/or other factors that are beyond our control. Therefore, such restrictions, and similar or
more expansive restrictions that may be imposed by sanctions authorities in the future, may
adversely affect our ability to work with certain existing and future customers and suppliers,
which in turn could negatively affect our business. Furthermore, our association with
customers, suppliers or other relevant parties that are or become subject to such restrictions
could subject us to actual or perceived reputational harm, which could materially and adversely
affect our business relationships business, financial condition, results of operations or
prospects. During the Track Record Period and up to the Latest Practicable Date, to our best
knowledge, we did not make any direct sales or indirect sales that would violate laws and
regulations relating to economic sanctions.
We are subject to anti-corruption, anti-bribery, anti-money laundering, financial and
economic sanctions, and similar laws, and non-compliance with such laws can subject us
to administrative, civil, and criminal penalties, collateral consequences, remedial
measures, and legal expenses, any of which could adversely affect our business, results of
operations, financial condition, and reputation.
We are subject to anti-corruption, anti-bribery, anti-money laundering, financial and
economic sanctions, and similar laws and regulations in various jurisdictions in which we
conduct activities. We have adopted policies and procedures designed to ensure compliance
with applicable anti-corruption, anti-bribery, anti-money laundering, financial and economic
sanctions, and similar laws and regulations by our employees, suppliers, representatives,
consultants, agents and business partners. We have specifically stipulated the compliance with
above-mentioned policies and procedures in our contracts with our employees, while we were
not able to do so in every contract or agreement we entered into with other parties as some of
those other parties were required by their own internal policies to use their own contract
templates, which was in line with the industry practice according to the F&S Report. We have
established relevant mechanisms to ensure the implementation of such policies and procedures,
such as periodic review and reporting the issues identified including those related to our
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employees and other parties, collecting evidence and reporting to relevant authorities if there
involves violation of applicable laws and regulations of our employees and other parties.
However, our policies and procedures may not be sufficient, and our directors, officers,
employees, suppliers, representatives, consultants, agents, and business partners could engage
in improper conduct for which we may be held responsible.
Non-compliance with anti-corruption, anti-bribery, anti-money laundering, or financial
and economic sanctions laws could subject us to whistleblower complaints, adverse media
coverage, investigations, and severe administrative, civil and criminal sanctions, collateral
consequences, remedial measures, and legal expenses, any of which could materially and
adversely affect our business, reputation, financial condition and results of operations.
The success of our business depends on our ability to attract, train and retain highly
skilled employees and key personnel.
As a result of the highly specialized, technical nature of our business, we must attract,
train and retain a sizable workforce comprising highly-skilled employees and other key
personnel. If one or more of our highly skilled employees or key personnel were unable or
unwilling to continue their services with us, we might not be able to replace them easily, in a
timely manner, or at all. Moreover, our industry is characterized by high demand and intense
competition for talent, we may have to pay higher salaries and wages and provide greater
benefits in order to attract and retain highly-skilled employees or other key personnel that we
will need to achieve our strategic objectives. As we are still a relatively young company, our
ability to recruit, train and integrate new employees into our operations may not meet the
growing demands of our business. Our failure to attract, train or retain highly-skilled
employees and other key personnel in numbers that are sufficient to satisfy our needs would
materially and adversely affect our business and the results of operations. Staff that we are
unable to retain also pose a risk, since they can inform competitors of our commercially
sensitive information such as know-how and may lessen the technological advantages over our
competitors that we have developed.
We may face risks in relation to the joint ventures. Our results of operations may be
affected by the share of results of our joint ventures and we may be subject to related
liquidity risk if no dividend is declared to us.
We have, and may have more, interests in many joint ventures engaging in battery
products and related raw materials manufacturing business. As of the December 31, 2020, 2021
and 2022 and June 30, 2023, we had investments in joint ventures of nil, nil, RMB132.4 million
and RMB168.9 million, respectively. Although the Company has majority shareholdings in,
and control over, the board of some of our existing joint ventures, certain important resolutions
of these joint ventures, including (i) the amendments to articles of association; (ii) the
termination and dissolution of the joint ventures; (iii) the transfer of any interests in the joint
ventures; or (iv) the merger of the joint ventures with other economic entities, must be passed
by unanimous approval of the joint venture partners. Such joint ventures may involve special
risks, including but not limited to the possibility that the joint venture partner may (i) have
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economic or business objectives that are inconsistent with ours; (ii) experience financial
difficulties; or (iii) be unable or unwilling to fulfill their obligations under the joint venture
contracts. If any of the above risks materialized in the future, our relationship with those joint
venture partners and the related joint venture business may be adversely affected, which in turn
would affect our business, financial condition and results of operation.
In addition, our results of operations may be affected by the fluctuation in the share of
results of our joint ventures. In 2022 and the six months ended June 30, 2023, we recorded
share of losses of joint ventures of RMB1.6 million and RMB0.7 million, respectively. Any
losses our joint ventures record would negatively impact the results of our operations. Our
investment in joint ventures creates exposure to liquidity risk. Our investments in joint
ventures are not as liquid as other investment products as there is no cash return in our
investment until dividends are received, even if our joint ventures reported profits under equity
accounting. If there is no or negative share of profit from our joint ventures, or if we do not
receive any dividends, our financial condition or result of operations could be adversely
affected. Moreover, as we plan to continue to invest in our existing and future joint ventures
for the expansion of our business, our liquidity may be further restricted if we need to make
additional investments into the joint ventures or if we are not able to receive dividends from
our existing or future joint ventures, which could adversely affect our ability to conduct or
expand our business.
We may be involved in legal or other proceedings arising out of our operations from time
to time and may face reputational risks and significant liabilities as a result.
We may be involved from time to time in disputes with various parties involved in our
business operations, including but not limited to our customers, suppliers, employees, logistics
service providers, insurers and banks. These disputes may lead to legal or other proceedings,
including threatened proceedings, which may result in damages to our reputation, substantial
costs and diversion of our resources and management’s attention. In addition, we may
encounter additional compliance issues in the course of our operations, which may subject us
to administrative proceedings and unfavorable results, and result in liabilities and delays
relating to our production or product launch schedules. We cannot assure you as to the outcome
of such legal proceedings, and any negative outcome may materially and adversely affect our
business, financial condition and results of operations.
We may be involved in product liability claims, and our product liability insurance may
not be sufficient to cover potential liability from product liability claims.
Designing, manufacturing and sales of quality products that are safe and reliable is of
vital importance to our business. However, the lithium-ion battery can rapidly release the
energy they contain by venting smoke and flames in a manner that can ignite nearby materials
as well as other lithium-ion batteries. This faulty result could subject us to lawsuits of product
liability claims, product recalls, or redesign efforts, all of which would be time consuming and
expensive. A successful product liability claim against us could require us to pay for substantial
damages. Product liability claims against us, whether or not successful, are costly and
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time-consuming to defend. In the event that our products prove to be defective, we may be
required to redesign or recall such products. We cannot assure you that a product liability claim
will not be brought against us in the future. A product liability claim, with or without merit,
could result in significant adverse publicity against us, and could have a material adverse effect
on the marketability of our products and our reputation, which in turn, could have a material
adverse effect on our business, financial condition and results of operations. Moreover, we may
not be fully indemnified or indemnified at all if liabilities arise from faulty components
manufactured by our suppliers that are used in our products, or results from the faulty assembly
by our EV manufacturer customers, EV battery pack manufacturers designated by EV
manufacturers or ESS integrators.
Our product liability insurance to cover liabilities arising from product liability claims
and product recalls in the PRC may not be sufficient to cover potential liability claims.
Inability to obtain sufficient insurance coverage at an acceptable cost or otherwise to protect
against potential product recalls and product liability claims could prevent or inhibit the
commercialization of our products or could result in a loss of customers and decrease in
revenue, unexpected expenses and a loss of market share. If any of our products are found to
have reliability, quality or compatibility problems, we will be required to accept returns,
provide replacements, provide refunds, or pay damages. We cannot assure you that as we
continue distribution of our products, we will be able to obtain or maintain adequate insurance
coverage on acceptable terms, or that such insurance will provide adequate coverage against
all potential claims. In the event that our exposure to liabilities exceeds the coverage of our
insurance, we may still be required to incur substantial amounts, which would materially and
adversely affect our business, financial condition and results of operations. As of the Latest
Practicable Date, our Directors and management were not aware of any case that would cause
product liabilities in the future.
We may face sales return from time to time which may adversely affect our business,
results of operations and financial position.
Generally, we would accept sales return if there exist product defects for which we are
responsible and the relevant products in question are still within the warranty duration
prescribed in sales contracts or production specification. We may also accept sales return
negotiated with our customers on a case by case basis under specific situations for commercial
consideration despite the fact that there is no product defect. For example, we had negotiated
and accepted an one-off sales return of our EV battery products of RMB157 million from an
EV battery pack manufacturer in consideration of the long-term strategic cooperation with it
and the relevant EV manufacturer, although there was no product defect. Such sales return
partially resulted in the decrease in revenue from sales of EV battery products in the six months
ended June 30, 2023 as compared to that in the six months ended June 30, 2022. See “Financial
Information – Period-to-period Comparison of Results of Operations.” There is no assurance
that we will not encounter material sales return or cancellation of orders due to product defects,
or other sales return negotiated with our customers on a case by case basis under specific
situations for commercial consideration despite that there is no product defect. If that happens,
our business, results of operations and financial position will be adversely affected.
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We may not have adequate insurance to cover losses and liabilities arising from various
operational risks and hazards.
Our business is subject to a variety of operational risks, including but not limited to
production disruptions due to operational errors, power outages, equipment failures and
suspension due to other risks; operational restrictions imposed by environmental or other
regulatory requirements; social, political and labor unrest, environmental or industrial
accidents, and catastrophic incidents such as fires, earthquakes, explosions, floods or other
natural disasters. In addition, as we may further expand our operations in overseas markets in
the future, we may be exposed to risks related to geopolitical tensions, policy changes and
intellectual property and technology protection. These afore-mentioned risks may result in,
including but not limited to, damage to or destruction of production facilities, personal injury
or casualties, environmental damage, monetary loss, and legal liability. The occurrence of any
of these events may result in disruption of our operations and cause us to suffer substantial
losses or incur significant liabilities. We may not have adequate or any insurance to cover these
operational risks. In addition to product liability insurance, we maintain property insurance and
employee insurance for our business operations. There is no assurance that our insurance will
be adequate to cover our exposure to the foregoing risks. If we incur material losses or
liabilities, and insurance is not adequate to cover such losses or liabilities, our business,
financial condition and results of operations may be materially and adversely affected.
We may incur significant costs because of the warranties we provide with our products,
and our provisions to cover future potential claims under our product warranties may be
insufficient.
For EV battery products, we usually provide our customers with a warranty of 8 years or
120,000 kilometres for private passenger vehicles, and 5 years or 200,000 kilometres for
commercial passenger vehicles; for ESS battery products, the warranty period varies on clients’
needs. We usually provide our customers with a warranty period of 1-5 years for ESS battery
cells, and the warranty period for ESS battery module and systems is generally longer. See
“Business – Marketing, Sales and Customers – Sales Agreements.” We provide a provision for
these potential warranty expenses, which is based on an analysis of the Group’s recent claims,
past warranty data and the weight of all possible results and their related probabilities. In 2020,
2021 and 2022 and the six months ended June 30, 2022 and 2023, our provisions for product
warranty were RMB20.1 million, RMB36.7 million, RMB239.1 million, RMB68.4 million and
RMB88.9 million, respectively, the increase of which was in line with the increase of our
battery sales volume during the Track Record Period. As we continue to upgrade our products
design and introduce new models, there is no assurance that future warranty claims will be
consistent with past history, and in the event that we experience a significant increase in
warranty claims, there is no assurance that our provision will be sufficient. This could have a
material adverse effect on our business, financial condition and results of operations.
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We recorded net current liabilities as of December 31, 2020 and 2021, which might expose
us to certain liquidity risks and could constrain our operational flexibility.
We recorded net current liabilities of RMB967.2 million and RMB2,556.4 million as of
December 31, 2020 and 2021, respectively, primarily for our due to our related parties. See
“Financial Information – Liquidity and Capital Resources.” We cannot assure you that we will
not have net current liabilities in the future. A net current liabilities position exposes us to
liquidity risks. Our future liquidity, capital expenditures, the payment of trade and other
payables and the repayment of debt financing will primarily depend on our ability to generate
an adequate cash flow from our operating activities. If we have a shortage in the cash flow
generated from operations, our liquidity position may be materially and adversely affected,
which in turn may impact our ability to execute our business strategies and constrain our
business operation. See “– We recorded net operation cash outflow in the past, and our
liquidity, financial condition and prospects may be adversely affected if we continue to record
net operating outflow in the future.” In such event, our business, financial condition and results
of operations could be materially and adversely affected.
We recorded net operation cash outflow in the past, and our liquidity, financial condition
and prospects may be adversely affected if we continue to record net operating outflow in
the future.
In 2021 and 2022, we recorded net cash outflow from operating activities of RMB1,957.3
million and RMB2,230.5 million, respectively. See “Financial Information – Liquidity and
Capital Resources – Cash Flow.” There is no assurance that we will generate net cash inflows
from our operating activities in the future. In the event that we are unable to generate sufficient
cash flow for our operations or otherwise unable to obtain sufficient funds to finance our
business, our liquidity, financial condition and prospects may be adversely affected. We cannot
assure you that we will continue to have sufficient cash from other sources to fund our
operations. If we resort to other financing activities to obtain additional cash, we will incur
additional financing costs, and we cannot assure you that we will be able to obtain financing
to satisfy our needs of cash flow on terms acceptable to us, or at all.
We may not be able to timely fulfill our obligations in respect of contract liabilities to our
customers or at all.
Our contract liabilities comprise advances received from our customers. We typically
require some of our customers to pay part of the consideration for their purchases from us upon
or prior to the delivery of the products. As of December 31, 2020, 2021 and 2022 and June 30,
2023, we had contract liabilities of RMB8.9 million, RMB158.5 million, RMB184.4 million
and RMB303.4 million, respectively. See “Financial Information – Liquidity and Capital
Resources – Contract Liabilities.” Our recognition of contract liabilities as revenue is subject
to future performance of contract obligations and may not be representative of revenue for
future periods. The continued operation of our production facilities may be substantially
interrupted and materially and adversely affected due to a number of factors, many of which
may be beyond our control. As a result of disruption to any of our production facility or any
problems in manufacturing our products, we may fail to fulfill our contract obligations or meet
market demand for our products, and our results of operations, liquidity and financial position
could be adversely affected.
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Share-based payments may lead to shareholding dilution for our existing Shareholders
and adversely affect our financial performance.
We adopted share incentive schemes for the benefit of our Directors, senior management,
key technicians and key employees who, in the opinion of the Board, contribute directly to the
overall business performance and sustainable development of the Group. See note 32 to
“Appendix I – Accountants’ Report” and “The Share Incentive Scheme” in “Appendix VI –
Statutory and General Information.” In 2020, 2021 and 2022 and the six months ended June 30,
2022 and 2023, we incurred share incentive expense of nil, RMB42.6 million, RMB133.6
million, RMB63.9 million and RMB77.1 million, respectively. To further incentivize our
Directors, senior management, key technicians and key employees, we may pay additional
share-based payment in the future. Issuance of Shares with respect to such share-based
payment may dilute the shareholding percentage of our existing Shareholders. Such share-
based payments may also increase our expenses and therefore have a material and adverse
effect on our financial performance.
Our financial result may be affected by government grants.
We received government grants of RMB21.9 million, RMB42.6 million, RMB153.8
million, RMB61.3 million and RMB133.3 million in 2020, 2021 and 2022 and the six months
ended June 30, 2022 and 2023, respectively. Not all of the government grants are recurring in
nature. See “Financial Information – Principal Components of Statement of Profit or Loss and
Other Comprehensive Income – Other Income and Gains.” Government grants we received are
uncertain and are subject to certain criteria and procedures stipulated by the local government.
In addition, the development focus of local government may shift to other industries over time.
We cannot assure you that we will be able to receive any such government grants in the future.
If we are unable to receive the government grants in the future at the same level as we had
during the Track Record Period, our financial condition and results of operations for the period
may be adversely affected.
If we are unable to fully recover our contract assets, our liquidity and financial position
may be adversely affected.
During the Track Record Period, we recorded contract assets from the sales of products,
the receipt of the consideration of which is conditional. Contract assets will be transferred to
receivables upon the expiration of warranty period when we have unconditional right to receive
consideration from the customers. As of December 31, 2020, 2021 and 2022 and June 30, 2023,
we had contract assets of RMB6.7 million, RMB20.9 million, RMB113.4 million and
RMB167.0 million. See note 21 to the “Appendix I – Accountants’ Report.” We cannot assure
you that the financial position of our customers will remain solvent or that we will be able to
recover our contract assets in full or at all in the future. If we are unable to recover our contract
assets, our liquidity and financial position may be materially and adversely affected, in
particular as we have already incurred costs and expenses when conducting preliminary
research and development for products and producing such products.
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We may need to provide impairment losses for intangible assets, which could negatively
affect our results of operations and financial condition.
We had intangible assets of RMB6.7 million, RMB10.3 million, RMB28.8 million and
RMB34.8 million as of December 31, 2020, 2021 and 2022 and June 30, 2023, respectively.
Our intangible assets mainly consist of software, emission rights and research and development
costs. See note 2.3 and 15 to “Appendix I – Accountants’ Report.”
However, the intangible assets are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. If the carrying value
of our intangible assets is considered to exceed its recoverable amount and is therefore
determined to be impaired in the future, we would be required to write down the carrying value
or record a provision of impairment loss for these intangible assets in our financial statements
during the period in which our intangible assets are determined to be impaired, and this
impairment would adversely affect our results of operations and our financial condition. While
we did not recognize impairment loss for intangible assets during the Track Record Period, we
cannot assure you that there will be no such losses in the future, which could adversely affect
our results of operations and financial conditions.
We may recognize impairment loss on our prepayments, other receivables and other
assets.
We recorded prepayments, other receivables and other assets of approximately RMB131.2
million, RMB1,245.8 million, RMB1,325.1 million and RMB1,985.0 million as of December
31, 2020, 2021 and 2022 and June 30, 2023, respectively. During the Track Record Period, our
prepayments, other receivables and other assets primarily consisted of (i) prepayment for raw
materials, (ii) value-added-tax recoverable, and (iii) deposits and other receivables which
includes capitalized listing expenses. See “Financial Information – Selected Balance Sheet
Items – Prepayment, Other Receivables and Other Assets” and note 17 to “Appendix I –
Accountants’ Report.” Although these financial assets included in the above balances related
to receivables had no recent history of material defaults, and as of December 31, 2020, 2021
and 2022 and June 30, 2023, the loss allowance for such balances was all nil, we cannot assure
you that there would not be any impairment charges on our prepayments, deposits or other
receivables in the future. If we record impairment losses on such balances in the future, our
business, financial condition and results of operations may be materially and adversely
affected.
Fair value change of financial assets at fair value through profit or loss may affect our
results of operations.
Fluctuation in fair value change of our financial assets at fair value through profit or loss,
which primarily consist of wealth management products issued by commercial banks in
Mainland China. As of December 31, 2020, 2021 and 2022 and June 30, 2023, we had financial
assets at fair value through profit or loss of RMB50.5 million, nil, RMB17.2 million and
RMB117.0 million, respectively. Changes in the fair value of the wealth management products
are reflected in our consolidated statement of profit or loss. See note 22 to “Appendix I –
Accountants’ Report.” The methodology that we use to assess the fair value of our investments
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in wealth management products involve a significant degree of management judgment and are
inherently uncertain. We cannot assure you that market conditions and regulatory environment
will create fair value gains on the wealth management products we invest in or that we will not
incur any fair value losses on our investments in wealth management products in the future. If
we incur such fair value losses, our results of operations, financial condition and prospects may
be adversely affected.
Fair value change of financial assets designated at fair value through other comprehensive
income may affect our financial position.
Upon initial recognition, we could elect to classify irrevocably the equity investment
designated at fair value through other comprehensive income when they meet the definition of
equity under IAS 32 – Financial Instruments: Presentation. In January 2023, the Company
invested in Liuzhou Fansaike New Energy Technology Co., Ltd. (the “ Liuzhou Fansaike ”)
with RMB10 million in return for the 5% shareholdings. The major business of Liuzhou
Fansaike was the production and sales of electrolytes. We made such investment as part of our
strategy of ensuring stable and cost-effective supply of raw materials by investing in upstream
raw material suppliers. We recognized the equity investment in Liuzhou Fansaike irrevocably
designated at fair value through other comprehensive income as we consider this investment
to be strategic in nature. As of December 31, 2020, 2021 and 2022 and June 30, 2023, our
equity investment designated at fair value through comprehensive income was nil, nil, nil and
RMB10.0 million.
Such equity investment were categorized as level three under the fair value measurement
hierarchy. However, Liuzhou Fansaike was still in the construction stage as of June 30, 2023,
as newly established in January 2023. The management estimate that the fair value of such
equity investment approximates its investment cost given consideration to the recent
transaction and investee in the pre-operating state. See note 41 to the “Appendix I –
Accountants’ Report.” Going forward, significant unobservable inputs will be used to measure
the fair value of such equity investment, and then be subject to uncertainties of accounting
estimates.
The uncertainty in global economic conditions could negatively affect our operating
results.
Our operating results are directly affected by the general global economic conditions of
the industries in which our major customer groups operate. Some of our business segments are
highly dependent on the economic and market conditions in each of the geographic areas in
which we operate. The uncertainty in global economic conditions varies by geographic segment
and can result in substantial volatility in global credit markets. Credit volatility could impact
our working capital for manufacturing, or result in cost changes or interruptions to suppliers
whose components we rely upon if we are unable to access the needed credit for our operations.
These conditions affect our business by reducing prices that our customers may be able or
willing to pay for our products or by reducing the demand for our products, which could in turn
negatively impact our sales and result in a material adverse effect on our business, cash flow,
results of operations and financial condition.
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The supply restrictions, trade controls or sanctions on semiconductor chips or other
major components of EVs may disrupt the operations of our end customers and in turn
adversely affect our business, results of operations, and financial condition.
The installation/application of semiconductor chips on EVs are common in the EVs
industry, as such component is often applied to facilitate vehicle electrification and safety and
driver assistance. Since late 2020, there has been a global shortage in the supply of
semiconductor chips for automotive production resulting from the COVID-19 pandemic,
increased demand for consumer electronics and disruption in semiconductor chip production
due to labor shortage and severe weather. Moreover, there are various sanctions and export
controls related to the trade of advanced semiconductor being announced or implemented,
which have also affected the supply of semiconductor chips globally. There is no assurance that
our downstream customers (i.e. EV manufacturers or EV battery pack manufacturers
designated by EV manufacturers) will be able to obtain sufficient quantities of semiconductor
chips and other major components for their operations at a reasonable cost, or at all. Also,
while to the best of our knowledge, our downstream customers did not experience any supply
restrictions or trade controls, or are subject to sanctions related to semiconductor chips or other
major components which materially affected their business during the Track Record Period and
up to the Latest Practicable Date, there is no assurance that they will not be materially affected
by supply restrictions, trade controls or sanctions on semiconductor chips or other major
components in the future. If suppliers of semiconductor chips and other major components are
unable to meet the needs of our downstream customers on acceptable terms, or at all, our
downstream customer’s production and delivery could be disrupted, which in turn, could have
an adverse effect on our business, results of operations and financial condition.
We depend on information technology and other infrastructure that are exposed to
certain risks, including cyber security risks.
We rely on our computer systems and network infrastructure to conduct and monitor the
daily operations of our manufacturing facilities, and to collect accurate up-to-date financial and
operating and other transaction data for business analysis. We also rely on such systems and
infrastructure to collect, process and store data concerning our customers, business partners
and employees, including personal and transaction data. Therefore, our business is dependent
upon the continued maintenance and enhancement of our computer systems and network
infrastructure. Such systems and infrastructure are subject to certain risks, such as malfunction,
nature disasters, and also the cyber security risks. Although we have devoted significant
resources to develop our security measures against cyber security issues, our cybersecurity
measures may not detect or prevent all attempts to compromise our systems, including
distributed denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks,
social engineering, security breaches or other attacks and similar disruptions that may
jeopardize the security of information stored in and transmitted by our systems or that we
otherwise maintain. Breaches of our cybersecurity measures could result in unauthorized
access to our systems, misappropriation of information or data, deletion or modification of
customer information, or a denial-of-service or other interruption to our business operations.
In cases of ransomware attacks, we may be asked to make a large lump-sum payment in order
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to resume the operation of our system, which may materially and adversely impact our business
and financial condition. As techniques used to obtain unauthorized access to or sabotage
systems change frequently and may not be known until launched against us or our third-party
service providers, we may be unable to anticipate, or implement adequate measures to protect
against these attacks. There is no assurance that we will not be subject to any of those cyber
security issues in the future. Any failure to adequately deal with such issues would result in a
material and adverse effect on our business and results of operations.
Our risk management and internal control systems, as well as the risk management tools
available to us, may not fully protect us against various risks inherent in our business.
We have implemented risk management and internal control systems, and adopted risk
management tools available to us with respect to our business operations. However, there is no
assurance that our risk management, internal control systems and risk management tools are
adequate or effective to fully protect us against the potential risks inherent in our business. In
the event that we fail to identify and deal with any potential risks or internal control
deficiencies, our business, results of operations and prospects may be materially and adversely
affected.
Further, the successful implementation of our risk management and internal control
systems depends on our management, employees and subcontractors. There is no assurance that
our management, employees and subcontractors will strictly observe and adhere to relevant
measures and policies. There is also no assurance that our management, employees and
subcontractors will be able to carry out relevant measures and policies without human errors
or mistakes. In addition, as our business expands, we may have to adopt and modify our risk
management and internal control measures and policies in a timely manner in response to our
business growth. Failure to do so may result in material and adverse effect on our business and
results of operations.
RISKS RELATING TO DOING BUSINESS IN THE PRC
Changes in economic, political or social conditions or government policies in the PRC
could have a material adverse effect on our business and results of operations.
Most all of our operations are located in the PRC. As a result, our results of operations,
financial condition and prospects are substantially affected by economic, political, social and
legal developments in the PRC. In general, the Chinese government regulates its economy and
related industries through implementation of industrial policies, and regulates the macro-
economy of the PRC through fiscal and monetary policies. Over the last few decades, the
Chinese government adopted a number of measures to promote its market economy and
encourage the corporate entities to establish sound corporate governance. The Chinese
government also exercised a significant impact on China’s economic growth through strategic
resource allocation, control of foreign currency denominated debt payments, monetary policy
and preferential treatment for specific industries or companies. Any significant changes in
Chinese government’s policies or China’s laws could have a material impact on China’s overall
RISK FACTORS
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economic growth. Although China’s economy has been growing significantly over the last few
decades, the growth rate has slowed down as China suffered from the impact of the COVID-19
pandemic on its economy in 2020 and 2021, and such trend is likely to continue in a period of
time in the future. Due to the current economic, political, social and regulatory developments,
it may be difficult for us to predict all the risks and uncertainties we may face, and a slow-down
of China’s economy may have a material adverse effect on our business and results of
operations, in particular:
 during a period of economic slowdown, there is a greater likelihood that more of our
customers or contractual parties could become delinquent in respect of their
obligations to us;
 we may not be able to raise additional capital on favorable terms, or at all; or
 trade and capital flows may further contract as a result of protectionist measures
introduced in certain markets, which could cause a further slowdown in economies
and materially and adversely affect our business and prospects.
In addition, factors such as consumer, corporate and government spending, business
investment, volatility of the capital markets and inflation all affect the business and economic
environment, the growth of the PRC’s new energy industry and ultimately, the profitability of
our business. Our labor and other costs may also increase due to pressure from inflation. Any
future calamities, such as natural disasters, outbreak of contagious diseases or social unrest,
may cause a decrease in the level of economic activities and adversely affect the economic
growth in the PRC, Asia and elsewhere in the world.
As such, if the PRC’s economy experiences significant adverse developments or a
significant downturn, our business, financial condition and results of operations would be
materially and adversely affected.
Uncertainties with respect to the PRC’s legal system could limit the legal protections
available to you and us. Holders of our Shares may not be able to enforce their rights
successfully as shareholders in the PRC according to the PRC Company law or Hong
Kong regulatory provisions.
Substantially all of our operating subsidiaries are incorporated under and governed by the
laws of the PRC. The PRC’s legal system is based on written statutes. Prior court decisions may
be cited for reference, but have limited precedential value. In 1979, the Chinese government
began to promulgate a comprehensive system of laws and regulations governing economic
matters in general, such as foreign investment, corporate organization and governance,
commerce, taxation and trade. As substantially all of our business is conducted in the PRC, our
operations are principally governed by the PRC laws and regulations. However, since the
PRC’s legal system continues to evolve rapidly, the interpretations of many laws, regulations
and rules are not always uniform and enforcement of these laws, regulations and rules involves
uncertainties, which may limit legal protections available to us. Furthermore, certain important
RISK FACTORS
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aspects of PRC Company Law are different from the corporate laws of common law
jurisdictions such as Hong Kong and the United States, particularly with respect to investor
protection, such as shareholder class action suits and measures protecting non-controlling
shareholders; restrictions on directors; disclosure requirements; different rights of classes of
shareholders; general meeting procedures and disbursement of dividends. Our Articles of
Association include provisions in accordance with the Listing Rules. Although such provisions
have been included, we cannot assure you that no discrepancy exists between the protections
given to our investors and those given to investors in companies formed in common law
jurisdictions. Intellectual property rights and confidentiality protections in the PRC may not be
as effective as in the United States or other countries. In addition, we cannot predict the effect
of future developments in the PRC’s legal system, including the promulgation of new laws,
changes to existing laws or the interpretation or enforcement thereof, or the preemption of local
regulations by national laws. These uncertainties could limit the legal protections available to
us and other foreign investors, including you. In addition, any litigation in the PRC may be
protracted and result in substantial costs and diversion of our resources and management
attention.
Payment of dividends or gains from the sale or other disposition of our Shares is subject
to taxation under PRC law.
Non-PRC resident individual holders of H Shares whose names appear on the register of
members of H Shares (“ Non-PRC Resident Individual Holders ”) are subject to the PRC
individual income tax on dividends received from us. Pursuant to the Circular on Questions
Concerning the Collection of Individual Income Tax Following the Repeal of Guo Shui Fa
[1993] No. 045 (Guo Shui Han [2011] No. 348) (਷೼೯[1993]045ࡈ
)( ਷೼Ռ[2011]348 ໮) dated June 28, 2011 and issued by the SAT
of the PRC, the tax rate applicable to dividends paid to Non-PRC Resident Individual Holders
of H Shares varies from 5.0% to 20.0%, depending on whether there is any applicable tax treaty
between the PRC and the jurisdiction in which the Non-PRC Resident Individual Holder of H
Shares resides, as well as the tax arrangement between the PRC and Hong Kong. Non-PRC
Resident Individual Holders who reside in jurisdictions that have not entered into tax treaties
with the PRC are subject to a 20.0% withholding tax on dividends received from us. In
addition, under the Individual Income Tax Law of the PRC (੻೼
) and its implementation regulations, Non-PRC Resident Individual Holders of H Shares
are subject to individual income tax at a rate of 20.0% on gains realized upon the sale or other
disposition of H Shares. However, pursuant to the Circular Declaring that Individual Income
Tax Continues to be Exempted over Income of Individuals from Transfer of Shares (ࡈ׵
) issued by the MOF of the PRC and the
SAT on March 30, 1998, gains of individuals derived from the transfer of listed shares of
enterprises may be exempt from individual income tax. Based on our knowledge, as of the
Latest Practicable Date, the PRC tax authorities have not in practice sought to collect
individual income tax on such gains. If such tax is collected in the future, the value of such
individual holders’ investments in H Shares may be materially and adversely affected.
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Under the Enterprise Income Tax Law of the PRC ()
(“EIT Law ”) and its implementation regulations, a non-PRC resident enterprise is generally
subject to enterprise income tax at a rate of 10.0% with respect to its PRC-sourced income,
including dividends received from a PRC company and gains derived from the disposition of
equity interests in a PRC company. This rate may be reduced under any special arrangement
or applicable treaty between the PRC and the jurisdiction in which the non-PRC resident
enterprise resides. Pursuant to the Circular on Questions Concerning Withholding of
Enterprise Income Tax for Dividends Distributed by Resident Enterprises in China to
Non-resident Enterprises Holding H-shares of the Enterprises (Guo Shui Han [2008] No. 897)
(͏ΆุΣྤ̮ Hஷ
(਷೼Ռ[2008]897 ໮)) promulgated by the SAT on November 6, 2008, we intend to
withhold tax at 10.0% from dividends payable to non-PRC resident enterprise holders of H
Shares (including HKSCC Nominees). Non-PRC resident enterprises that are entitled to be
taxed at a reduced rate under an applicable income tax treaty or arrangement will be required
to apply to the PRC tax authorities for a refund of any amount withheld in excess of the
applicable treaty rate, and payment of such refund will be subject to the PRC tax authorities’
approval. There are uncertainties as to the interpretation and implementation of the EIT Law
and its implementation rules by the PRC tax authorities, including whether and how enterprise
income tax on gains derived upon the sale or other disposition of H Shares will be collected
from non-PRC resident enterprise holders of H Shares. If such tax is collected in the future, the
value of such non-PRC resident enterprise holders’ investments in H Shares may be materially
and adversely affected.
Under the EIT Law, we may not be classified as a “high and new-technology enterprise”
of the PRC. Such classification could result in unfavorable tax consequences.
Pursuant to the EIT Law, a high and new-technology enterprise may enjoy a preferential
enterprise income tax rate of 15%. The Company and a subsidiary of the Company, namely
REPT Qingchuang, received approvals by competent government authorities, and were
recognized as high and new-technology enterprises with a validity period of three years, which
entitled the Company and REPT Qingchuang a preferential tax rate of 15% from 2020 to 2022
and 2021 to 2023, respectively.
Despite being eligible for preferential tax rate as high and new-technology enterprises
during the Track Record Period, there is no assurance that the Company or the subsidiary
would successfully reapplied for the certificates of high and new-technology enterprises so as
to enjoy the preferential tax rate after the expiry of the certificates, in which case our Group
and our subsidiaries will be subject to the normal enterprise income tax rate of 25% as for all
PRC enterprises. The effective tax rate will therefore significantly increase and may materially
and adversely affect our profitability, which may have a material adverse effect on our
business, results of operations and financial condition. Also, there can be no assurance that the
EIT Law, its application or its interpretation will not change, in which case our effective
income tax rate may increase significantly.
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It may be difficult to effect service of process upon us or our Directors or executive
officers who reside in the PRC or to enforce against them in the PRC any judgments
obtained from non-Chinese courts.
Most of our Directors and executive officers reside within the PRC, and most of our assets
and substantially all of the assets of those persons are located within the PRC. It may not be
possible for investors to effect service of process upon us or those persons inside the PRC or
to enforce against us or them in the PRC any judgments obtained from non-Chinese courts. The
PRC does not have treaties providing for the reciprocal recognition and enforcement of
judgments of courts in the United States, the United Kingdom, Japan or most other western
countries. However, judgments rendered by Hong Kong courts may be recognized and enforced
in the PRC if the requirements set forth by the Arrangement on Mutual Recognition and
Enforcement of Judgments in Civil and Commercial Matters by Courts of Mainland and of the
Hong Kong Special Administrative Region Pursuant to Agreed Jurisdiction by Parties
Concerned (΁
τર) are met.
Therefore, recognition and enforcement in the PRC of judgments of a court in any of
these jurisdictions other than Hong Kong in relation to any matter not subject to binding
arbitration provisions may be difficult or impossible.
Provided in our Articles of Association, whenever any disputes or claims arise between
holders of the overseas listed shares and the Company, holders of the overseas listed shares and
the Company’s Directors, Supervisors, general manager or other Senior Management, or
holders of the overseas listed shares and holders of domestic shares, based on the Articles of
Association or any rights or obligations conferred or imposed by the Company Law or any
other relevant laws and administrative regulations concerning the affairs of the Company, such
disputes or claims shall be referred by the relevant parties to arbitration. A claimant may elect
arbitration at either the China International Economic and Trade Arbitration Commission in
accordance with its arbitration rules or the Hong Kong International Arbitration Center in
accordance with its securities arbitration rules. See “Appendix V – Summary of the Articles of
Association.” Awards made by the PRC arbitral authorities recognized under the Hong Kong
Arbitration Ordinance can be enforced in Hong Kong. Hong Kong arbitral awards are also
enforceable in the PRC, subject to the satisfaction of certain PRC legal requirements. However,
we are uncertain whether any action brought in the PRC to enforce an arbitral award made in
favor of holders of H Shares would succeed.
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The Chinese government’s control over foreign currency conversion may adversely affect
our business and results of operations and our ability to remit dividends.
Conversion and remittance of foreign currencies are subject to the Chinese foreign
exchange regulations. It cannot be guaranteed that under a certain exchange rate, we shall have
sufficient foreign exchange to meet our foreign exchange needs. Under the Chinese current
foreign exchange control system, foreign exchange transactions under the current account
conducted by us, including the payment of dividends, do not require advance approval from the
SAFE, but we are required to present relevant documentary evidence of such transactions and
conduct such transactions at designated foreign exchange banks within the PRC that have the
licenses to carry out foreign exchange business. Foreign exchange transactions under the
capital account, however, normally need to be approved by or registered with the SAFE or its
local branch unless otherwise permitted by law. The Chinese government may also at its
discretion restrict access in the future to foreign currencies for current account transactions.
Any insufficiency of foreign exchange may restrict our ability to obtain sufficient foreign
exchange for dividend payments to shareholders or satisfy any other foreign exchange
obligation. If we fail to obtain approvals from the SAFE to convert RMB into any foreign
exchange for any of the above purposes, our potential offshore capital expenditure plans and
even our business may be materially and adversely affected.
Failure to comply with the PRC Social Insurance Law and the Regulation on the
Administration of Housing Provident Funds may subject us to fines and other legal or
administrative sanctions.
Pursuant to the PRC laws and regulations, we are required to participate in the employee
social welfare plan administered by local governments. Such plan consists of pension
insurance, medical insurance, work-related injury insurance, maternity insurance,
unemployment insurance and housing provident fund. The amount we are required to
contribute for each of our employees under such plan should be calculated based on the
employee’s actual salary level of previous year, and be subject to a minimum and maximum
level as from time to time prescribed by local authorities. During the Track Record Period, we
did not pay social insurance and housing provident fund in full for some of our employees
based on their actual salary level. See “Business – Compliance and Legal Proceedings.” As a
result, we may be required by competent authorities to pay the outstanding amount, and could
be subject to late payment penalties or enforcement application made to the court. We have
made provisions in the amount of RMB0.9 million, RMB22.1 million, RMB78.1 million,
RMB46.3 million and RMB45.8 million in 2020, 2021 and 2022 and the six months ended June
30, 2022 and 2023, respectively, for the shortfall of contribution to social insurance fund. As
of the Latest Practicable Date, no competent government authorities had imposed
administrative action, fine or penalty to us with respect to this non-compliance incident nor had
any competent government authorities required us to settle the outstanding amount of social
insurance payments and housing provident fund contributions. As advised by our PRC Legal
Advisor, the non-compliance during the Track Record Period in relation to the payment of
social insurance and housing provident fund will not have material adverse effects on our
production and business operations.
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The enforcement of PRC Labor Contract Law and other labor related regulations may
materially affect our business, financial condition and results of operations.
Pursuant to the Labor Contract law of the PRC and its implementation rules, employers
are subject to strict requirements in terms of signing labor contracts, minimum wages, paying
remuneration, overtime working hours limitations, determining the term of employees’
probation and unilaterally terminating labor contracts. In the event that we decide to terminate
the employment of some of our employees or otherwise change our employment or labor
practices, the Labor Contract Law and its implementation rules may limit our ability to effect
those changes in a desirable or cost-effective manner, which could adversely affect our
business and results of operations. As confirmed by our PRC Legal Advisor, based on the
confirmation letters issued by the competent government authorities, we were not subject to
any significant administrative penalties for violating labor laws and regulations during the
Track Record Period. However, if we were found to be in violation with the overtime working
hours limitations as stipulated in the Labor Law of the PRC, it may subject us to a fine that
ranges from RMB100 to RMB500 per person from local government authorities and we may
be requested to take rectification measures to reduce the overtime working hours of our
production employees.
During the Track Record Period, we engaged third-party employment agencies to dispatch
contract workers. On December 28, 2012, the Labor Contract Law of the PRC ( ʕശɛ͏΍ձ
جwas amended to impose more stringent requirements on labor dispatch and such
amendments became effective on July 1, 2013. For example, the number of dispatched contract
workers that an employer hires may not exceed a certain percentage of its total number of
employees, to be decided by the Ministry of Human Resources and Social Security and the
dispatched contract workers may only engage in temporary, auxiliary or substitute work.
According to the Interim Provisions on Labor Dispatch promulgated by the Ministry of Human
Resources and Social Security on January 24, 2014, which became effective on March 1, 2014
(the “ Interim Provisions ”), the number of dispatched contract workers hired by an employer
shall not exceed 10% of the total number of its employees (including both directly hired
employees and dispatched contract workers). The Interim Provisions further requires the
employer that is not in compliance with the above provisions to formulate a plan to reduce the
number of its dispatched contract workers to below 10% of the total number of its employees.
In addition, an employer is not permitted to hire any new dispatched contract worker until the
number of its dispatched contract workers has been reduced to below 10% of the total number
of its employees. The employers who fail to comply with the relevant requirements on labor
dispatch shall be ordered by the labor administrative authorities to make correction within a
stipulated period. Where correction is not made within the stipulated period, the employers
may be subject to a penalty ranging from RMB5,000 to RMB10,000 per dispatched worker
exceeding the 10% threshold. During the Track Record Period, the total dispatched contract
workers hired by the Company have exceeded 10% of its total number of employees. As of the
Latest Practicable Date, we had proactively rectified such non-compliance incidents during the
Track Record Period by reducing the number of dispatched contract workers to below 10%. See
“Business – Compliance and Legal Proceedings – Labor Dispatch.” Even though we had not
received any notice of warning or been subject to any administrative penalties or other
RISK FACTORS
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disciplinary actions from relevant PRC authorities, we cannot assure you that the relevant PRC
authorities will not take actions retrospectively against us for our past practice. If we decide
to increase our number of dispatched workers in the future and are found to be in violation of
the rules regulating dispatched contract workers, we may be subject to fines and penalties.
Such penalties may adversely affect our business, results of operations and reputation.
As the interpretation and implementation of the Labor Contract Law, the Social Insurance
Law and other labor related regulations (the “ labor-related laws and regulations ”) are still
evolving, we cannot assure you that our employment practice do not and will not violate
labor-related laws and regulations in the PRC, which may subject us to labor disputes or
government investigations. If we are deemed to have violated relevant labor-related laws and
regulations, we could be required to provide additional compensation to our employees and our
business, financial condition and results of operations could be materially and adversely
affected.
Present or future environmental, safety and occupational health laws and regulations in
the PRC may have a material adverse effect on our business, financial condition and
results of operations.
Our business is subject to certain PRC laws and regulations relating to environmental,
safety and occupational health matters. Under these laws and regulations, we are required to
maintain safe production conditions and protect the occupational health of our employees.
While we have conducted periodic inspections of our operating facilities and carry out
equipment maintenance on a regular basis to ensure that our operations are in compliance with
applicable laws and regulations, we cannot assure you that we will not experience any material
accidents or worker injuries in the course of our manufacturing process in the future.
In addition, our manufacturing process produces pollutants such as wastewater, waste gas.
The discharge of wastewater and other pollutants from our manufacturing operations into the
environment may give rise to liabilities that may require us to incur costs to remedy such
discharge. We cannot assure you that all situations that will give rise to material environmental
liabilities will be discovered or any environmental laws adopted in the future will not
materially increase our operating costs and other expense. Should the PRC impose stricter
environmental protection standards and regulations in the future, we cannot assure you that we
will be able to comply with such new regulations at reasonable costs, or at all. Any increase
in production costs resulting from the implementation of additional environmental protection
measures and/or failure to comply with new environmental laws or regulations may have a
material adverse effect on our business, financial condition or results of operations. In 2020,
2021, 2022 and the six months ended June 30, 2022 and 2023, the costs we incurred for
complying with the requirements of the relevant environmental laws and regulations and our
expenditures related to environmental protection amounted to approximately RMB19.2
million, RMB10.3 million, RMB27.1 million, RMB14.4 million and RMB33.5 million,
respectively.
RISK FACTORS
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Inflation in the PRC could negatively affect our profitability and growth.
Economic growth in the PRC has, during certain periods, been accompanied by periods
of high inflation, and the Chinese government has implemented various policies from time to
time to control inflation. For example, the Chinese government introduced measures in certain
sectors to avoid overheating of the Chinese economy, including increasing interest rates and
capital reserve thresholds at Chinese commercial banks. The effects of the stimulus measures
implemented by the Chinese government since the global economic crisis that commenced in
2008 and the continued growth in the overall economy since then have resulted in sustained
inflationary pressures. If these inflationary pressures continue and are not mitigated by Chinese
government measures, our cost of sales will likely increase and our profitability could be
materially reduced, as there is no assurance that we would be able to pass any cost increases
onto our customers.
Our legal right to some leased properties may be challenged.
As of the Latest Practicable Date, we had signed 15 property lease agreements in the PRC
in respect of 15 leased units/buildings relating to our production and operations with a total
area of 39,636.02 sq.m, among which one of the above-mentioned leased agreements in respect
of one unit of lease property has not provided the property ownership certificate, and 14 of the
above-mentioned lease agreements have not been registered and filed with the relevant PRC
authorities in accordance with PRC laws and regulations. See “Business – Properties – Leased
Properties.” We cannot guarantee that the landlords from whom we leased such properties have
the right to lease such properties to us. The relevant rightful title holders or other third parties
may challenge our use of such leased properties and we may be required to seek alternative
properties for lease on short notice. However, we may not be able to find alternative properties
that are suitable for our use in a timely manner and at reasonable costs, or at all. Furthermore,
as advised by our PRC Legal Advisor, we may be subject to penalties of RMB1,000 to
RMB10,000 for each of the above-mentioned non-registered lease should we and our landlords
fail to register the lease agreements upon request by the relevant authority.
RISKS RELATING TO THE GLOBAL OFFERING
There has been no prior public market for our H Shares, and their liquidity and market
price maybe volatile.
Prior to the Global Offering, there has been no public market for our H Shares. The initial
Offer Price for our H Shares to the public will be the result of negotiations between us and the
Overall Coordinators (for themselves and on behalf of the Underwriters), and the Offer Price
may differ significantly from the market price of our H Shares following the Global Offering.
We have applied to the Stock Exchange for the listing of, and permission to deal in, the H
Shares. A listing on the Stock Exchange, however, does not guarantee that an active and liquid
trading market for our H Shares will develop, or if it does develop, that it will be sustained
following the Global Offering, or that the market price of our H Shares will not decline
following the Global Offering.
RISK FACTORS
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Furthermore, the price and trading volume of our H Shares may be volatile. The following
factors, among others, may cause the market price of our H Shares after the Global Offering
to vary significantly from the Offer Price:
 variations in our revenue, earnings and cash flow;
 unexpected business interruptions resulting from natural disasters or power
shortages;
 major changes in our key personnel or senior management;
 our inability to obtain or maintain regulatory approval for our operations;
 our inability to compete effectively in the market;
 political, economic, financial and social developments in China and Hong Kong and
in the global economy;
 fluctuations in stock market prices and volume;
 changes in analysts’ estimates of our financial performance; and
 involvement in material litigation.
Moreover, shares of other companies listed on the Stock Exchange with operations and
assets in China have experienced significant price volatility in the past. It is possible that our
H Shares may be subject to changes in price not directly related to our performance and as a
result, investors in our H Shares may suffer substantial losses.
Normally, a stabilizing manager acting on behalf of the underwriters may over-allocate or
effect short sales or any other stabilizing transactions with a view to stabilizing or maintaining
the market price of the offer shares at a level higher than that which might otherwise prevail
in the open market. However, given that we will not grant any over-allotment option to the
underwriters, no stabilizing manager has been appointed by us in connection to the Global
Offering and it is anticipated that no price stabilization activities will be conducted by any
underwriters, which may result in substantial losses for investors during the period when price
stabilization activities would normally have been conducted.
Holders of our H Shares are subject to the risk that the price of our H Shares could fall
during the period before trading of our H Shares begins.
The Offer Price of our H Shares is expected to be determined on the Price Determination
Date. However, our H Shares will not commence trading on the Stock Exchange until they are
delivered, which is expected to be two business days after the pricing date. As a result,
investors may not be able to sell or deal in our H Shares during that period. The price and
trading volume of the H Shares may be highly volatile. Factors such as variations in our
RISK FACTORS
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revenue, net profit and cash flows and announcements of new investments, strategic alliances
and acquisitions, fluctuations in market prices for our products or fluctuations in market prices
for product of other companies could cause the market price of our H Shares to change
substantially. Any such developments may result in significant and sudden changes in the
volume and price at which our H Shares will trade. We cannot assure you that these
developments will not occur in the future. Accordingly, holders of our H Shares are subject to
the risk that the price of our H Shares could fall before trading begins as a result of adverse
market conditions or other adverse developments, which could occur between the time of sale
and the time trading begins.
Substantial future sales or the expectation of substantial sales of our H Shares in the
public market and conversion of our Domestic Unlisted Shares into H Shares could cause
the price of our H Shares to decline and could materially impair our future to raise capital
through offerings of our H Shares.
Although our Controlling Shareholders are subject to restrictions on their sales of Shares
within 12 months from the Listing Date as described in “Underwriting” in this prospectus,
future sales of a significant number of our H Shares by our Controlling Shareholders in the
public market after the Global Offering, or the perception that these sales could occur, could
cause the market price of our H Shares to decline and could materially impair our future ability
to raise capital through offerings of our H Shares. We cannot assure you that our Controlling
Shareholders will not dispose of Shares held by them or that we will not issue Shares pursuant
to the general mandate to issue shares granted to our Directors or otherwise, upon the
expiration of restrictions set out above. We cannot predict the effect, if any, that any future
sales of Shares by our Controlling Shareholders, or the availability of Shares for sale by our
Controlling Shareholders, or the issuance of Shares by the Company may have on the market
price of the Shares. Sale or issuance of a substantial amount of Shares by our Controlling
Shareholders or us, or the market perception that such sale or issuance may occur, could
materially and adversely affect the prevailing market price of the Shares.
We are currently applying for part of the Company’s Domestic Unlisted Shares to be
converted into H Shares after the completion of the Global Offering. According to the
Company Law, the Domestic Unlisted Shares issued by the Company prior to the Global
Offering are restricted from trading within one year from the Listing Date. Such restriction
from trading will limit the number of H Shares to be circulated on the market, which will in
turn adversely affect the liquidity of the H Shares during such restriction period. If our
application for the circulation of our relevant Domestic Unlisted Shares on the Hong Kong
Stock Exchange after the completion of the Global Offering is successful, any future sales
(after the expiration of the restrictions set out above) of Domestic Unlisted Shares by relevant
Shareholders in the public market may affect the market price of our H Shares. Moreover, if
we convert a substantial amount of Domestic Unlisted Shares into H shares to be listed and
traded in the future at the Hong Kong Stock Exchange, it may further increase the supply of
the H shares in the market, which may adversely affect the market price of the H shares.
RISK FACTORS
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We may need additional capital, and the sale or issue of additional Shares or other equity
securities could result in additional dilution to our Shareholders.
Notwithstanding our current cash and cash equivalents and the net proceeds from the
Global Offering, we may require additional cash resources to finance our continued growth or
other future developments, including any investments or acquisitions we may decide to pursue.
The amount and timing of such additional financing needs will vary depending on the timing
of investments in and/or acquisitions of new businesses from third parties, and the amount of
cash flow from our operations. If our resources are insufficient to satisfy our cash
requirements, we may seek additional financing through selling additional equity or debt
securities or obtaining a credit facility. The sale of additional equity securities could result in
additional dilution to our Shareholders. The incurrence of indebtedness would result in
increased debt service obligations and could result in operating and financing covenants that
may, among other things, restrict our operations or our ability to pay dividends. Servicing such
debt obligations could also be burdensome to our operations. If we fail to service the debt
obligations or are unable to comply with such debt covenants, we could be in default under the
relevant debt obligations and our liquidity and financial conditions may be materially and
adversely affected.
Our ability to obtain additional capital on acceptable terms is subject to a variety of
uncertainties, including:
 investors’ perception of, and demand for, securities of battery producers;
 conditions in Hong Kong and other capital markets in which we may seek to raise
funds;
 our future results of operations, financial condition and cash flows;
 the PRC governmental regulation of foreign investment in new energy sectors in
China;
 economic, political and other conditions in China; and
 the PRC governmental policies relating to foreign currency borrowings.
We cannot assure you that financing will be available in the amounts or on terms
acceptable to us, if at all. If we fail to raise additional funds, we may need to sell debt or
additional equity securities or reduce our growth to a level that can be supported by our cash
flow, or defer planned expenditures.
RISK FACTORS
–1 1 2–


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As the Offer Price of our H Shares is higher than our consolidated net tangible asset book
value per Share, purchasers of our H Shares in the Global Offering may experience
immediate dilution upon such purchases.
As the Offer Price of our H Shares is higher than the consolidated net tangible assets per
Share immediately prior to the Global Offering, purchasers of our H Shares in the Global
Offering may experience an immediate dilution. Our existing Shareholders will receive an
increase in the pro forma adjusted consolidated net tangible asset value per Share of their
Shares. In addition, holders of our H Shares may experience further dilution of their interest
if any Shares are issued upon exercise of any options granted under the Pre-IPO Share Option
Scheme, or if we issue additional Shares in the future to raise additional capital.
Future sale or major divestment of Shares by our Controlling Shareholders may
materially and adversely affect the prevailing market price of our H Shares.
Our Shares held by our Controlling Shareholders are subject to certain lock-up periods,
the details of which are set out in the section headed “Underwriting” in this prospectus.
However, there is no assurance that after the restrictions of the lock-up periods expire, our
Controlling Shareholders will not dispose of any Shares. Sale of substantial amounts of our
Shares in the public market, or the perception that these sales may occur, may materially and
adversely affect the prevailing market price of our H Shares.
Our Controlling Shareholders may have substantial influence over the Company and
their interests may not be aligned with the interests of other Shareholders.
Our Controlling Shareholders have substantial influence over our business, including
matters relating to our management, policies and decisions regarding mergers, expansion plans,
consolidations and sales of all or substantially all of our assets, election of Directors and other
significant corporate actions. Immediately following the completion of the Global Offering,
our Controlling Shareholders will be entitled to exercise approximately 59.4% of the voting
rights of the Company. This concentration of ownership may discourage, delay or prevent a
change in control of the Company, which could deprive other Shareholders of an opportunity
to receive a premium for their Shares as part of a sale of the Company and might reduce the
price of our H Shares. These events may occur even if they are opposed by our other
Shareholders. In addition, the interests of our Controlling Shareholders may differ from the
interests of our other Shareholders. It is possible that our Controlling Shareholder may exercise
its substantial influence over us and cause us to enter into transactions or take, or fail to take,
actions or make decisions that conflict with the best interests of our other Shareholders.
We cannot assure you whether and when we will declare and pay dividends in the future.
While dividends may be paid out of distributable profits under our Articles of
Association, no dividends were distributed during the Track Record Period. Distributable
profits mean our net profits for a period, plus the distributable profits or net of the accumulated
losses, if any, at the beginning of such period, less statutory reserve fund appropriations to
RISK FACTORS
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general risk reserve, transaction risk reserve, and discretionary surplus reserve (as approved by
our shareholders’ meeting). As a result, we may not have sufficient profit to enable us to make
future dividend distributions to our shareholders, even if our financial statements prepared in
accordance with IFRSs indicate that our operations have been profitable.
Furthermore, future determination of dividends will also depend on various factors,
including but not limited to our results of operations, cash flows and financial conditions,
capital adequacy ratio, operation and capital expenditure requirement and other factors that our
Board consider relevant. We cannot assure you that the factors we take into consideration will
not change in the future.
Certain facts, forecast and statistics contained in this prospectus are derived from
publicly available official government sources and they may not be reliable.
Certain facts, forecast and statistics contained in this prospectus relating to China, the
PRC economy and the industry in which we operate have been derived from various official
government publications. We have taken reasonable care in the reproduction or extraction of
the official government publications for the purpose of disclosure in this prospectus. However,
the information from the official government sources have not been prepared or independently
verified by us, the Joint Sponsors, the Overall Coordinators, the Joint Global Coordinators, the
Joint Bookrunners, the Joint Lead Managers, the Underwriters, the Capital Market
Intermediaries or any of their respective affiliates or advisors and, therefore, we make no
representation as to the accuracy of such facts, forecast and statistics, which may not be
consistent with other information compiled within or outside the PRC. Due to possibly flawed
or ineffective collection methods or discrepancies between published information and market
practice, such statistics in this prospectus may be inaccurate or may not be comparable to
statistics produced with respect to other economies. Further, there is no assurance that they are
stated or compiled on the same basis or with the same degree of accuracy as the case may be
in other jurisdictions. In all cases, investors should give consideration as to how much weight
or importance they should attach to or place on such facts, forecast and statistics.
Forward-looking statements contained in this prospectus are subject to risks and
uncertainties.
This prospectus contains certain statements and information that are forward-looking and
uses forward-looking terminology such as “anticipate,” “believe,” “could,” “going forward,”
“intend,” “plan,” “project,” “seek,” “expect,” “may,” “ought to,” “should,” “would” or “will”
and similar expressions. You are cautioned that reliance on any forward-looking statement
involves risks and uncertainties and that any or all of those assumptions could prove to be
inaccurate and as a result, the forward-looking statements based on those assumptions could
also be incorrect. In light of these and other risks and uncertainties, the inclusion of
forward-looking statements in this prospectus should not be regarded as representations or
warranties by us that our plans and objectives will be achieved and these forward-looking
statements should be considered in light of various important factors, including those set forth
in this section. Subject to the requirements of the Listing Rules, we do not intend publicly to
RISK FACTORS
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update or otherwise revise the forward-looking statements in this prospectus, whether as a
result of new information, future events or otherwise. Accordingly, you should not place undue
reliance on any forward-looking information. All forward-looking statements in this prospectus
are qualified by reference to this cautionary statement.
Investors should read the entire prospectus carefully and should not consider any
particular statements in this prospectus or in published media reports without carefully
considering the risks and other information contained in this prospectus.
Prior to the publication of this prospectus, there has been coverage in the media regarding
us, the Global Offering or our Controlling Shareholders, which contained among other things,
certain financial information, projections, valuations and other forward-looking information
about us and the Global Offering. We have not authorized the disclosure of any such
information in the press or media and do not accept any responsibility for the accuracy or
completeness of such media coverage or forward-looking statements. We make no
representation as to the appropriateness, accuracy, completeness or reliability of any
information disseminated in the media. We disclaim any information in the media to the extent
that such information is inconsistent or conflicts with the information contained in this
prospectus. Accordingly, prospective investors are cautioned to make their investment
decisions on the basis of the information contained in this prospectus only and should not rely
on any other information.
RISK FACTORS
–1 1 5–


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DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS
This prospectus, for which our Directors (including any proposed Director who is named
as such in this prospectus) collectively and individually accept full responsibility, includes
particulars given in compliance with the Listing Rules, the Companies (Winding Up and
Miscellaneous Provisions) Ordinance and the Securities and Futures (Stock Market Listing)
Rules (Chapter 571V of the Laws of Hong Kong) for the purpose of giving information to the
public with regard to the Group. Our Directors, having made all reasonable enquiries, confirm
that to the best of their knowledge and belief the information contained in this prospectus is
accurate and complete in all material respects and not misleading or deceptive, and there are
no other matters the omission of which would make any statement herein or this prospectus
misleading.
CSRC FILING
On October 19, 2023, the CSRC issued a notification on the Company’s completion of the
PRC filing procedures for the conversion of 191,307,938 Domestic Unlisted Shares into H
Shares, the listing of our H Shares on the Stock Exchange and the Global Offering. As advised
by our PRC Legal Advisor, the Company has completed all necessary filings with the CSRC
in the PRC in relation to the conversion of Domestic Unlisted Shares into H Shares, the Listing
and the Global Offering. The CSRC accepts no responsibility for the financial soundness of us
or for the accuracy of any of the statements made or opinions expressed in this prospectus.
INFORMATION ON THE GLOBAL OFFERING
This prospectus is published solely in connection with the Hong Kong Public Offering.
For applications under the Hong Kong Public Offering, this prospectus contain the terms and
conditions of the Hong Kong Public Offering. The Global Offering comprises the Hong Kong
Public Offering of initially 11,607,200 Offer Shares and the International Offering of initially
104,463,000 Offer Shares (subject, in each, to reallocation on the basis as set out in “Structure
of the Global Offering.”)
The Hong Kong Offer Shares are offered solely on the basis of the information contained
and representations made in this prospectus and on the terms and subject to the conditions set
out herein and therein. No person is authorized to give any information in connection with the
Global Offering or to make any representation not contained in this prospectus, and any
information or representation not contained herein must not be relied upon as having been
authorized by the Company, the Joint Sponsors, the Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters, the Capital
Market Intermediaries, any of our or their affiliates or any of their respective directors,
officers, employees, advisors, agents or representatives, or any other persons or parties
involved in the Global Offering. Neither the delivery of this prospectus nor any subscription
or acquisition made under it shall, under any circumstances, create any implication that there
has been no change in our affairs since the date of this prospectus or that the information in
this prospectus is correct as of any subsequent time.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–1 1 6–


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INFORMATION ON THE CONVERSION OF DOMESTIC UNLISTED SHARES INTO
H SHARES
The Company has applied for conversion of 191,307,938 Domestic Unlisted Shares into
H Shares held by certain existing Shareholders into H Shares on a one-for-one basis
immediately before the Global Offering. See “History and Development” and “Share Capital”
for details of our existing Shareholders and their respective interests in the Company and
relevant procedures for the conversion of Domestic Unlisted Shares into H Shares. Such H
Shares to be converted from Domestic Unlisted Shares are restricted from trading for a period
of one year after the Listing.
PROCEDURE FOR APPLICATION FOR HONG KONG OFFER SHARES
The procedure for applying for the Hong Kong Offer Shares is set forth in “How to Apply
for the Hong Kong Offer Shares” in this prospectus.
STRUCTURE OF THE GLOBAL OFFERING
Details of the structure of the Global Offering, including its conditions, are set out in the
section headed “Structure of the Global Offering” in this prospectus.
RESTRICTIONS ON OFFER AND SALE OF THE OFFER SHARES
Each person acquiring the Hong Kong Offer Shares under the Hong Kong Public Offering
will be required to, or be deemed by his acquisition of Hong Kong Offer Shares to, confirm that
he is aware of the restrictions on the offer and sale of the Hong Kong Offer Shares described
in this prospectus.
No action has been taken to permit a public offering of the Offer Shares outside Hong
Kong or the distribution of this prospectus in any jurisdiction other than Hong Kong.
Accordingly, and without limitation to the following, this prospectus may not be used for the
purpose of, and does not constitute, an offer or invitation in any jurisdiction or in any
circumstances in which such an offer or invitation is not authorized or to any person to whom
it is unlawful to make such an offer or invitation for subscription. The distribution of this
prospectus and the offering and sale of the Offer Shares in other jurisdictions are subject to
restrictions and may not be made except as permitted under the applicable securities laws of
such jurisdictions pursuant to registration with or authorization by the relevant securities
regulatory authorities or an exemption therefrom. In particular, the Offer Shares have not been
offered and sold, and will not be offered and sold, directly or indirectly, in the PRC.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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UNDERWRITING
The Listing is sponsored by the Joint Sponsors and the Global Offering is managed by the
Overall Coordinators and the Joint Global Coordinators. The Hong Kong Public Offering is
fully underwritten by the Hong Kong Underwriters subject to the terms and conditions of the
Hong Kong Underwriting Agreement. The International Offering is expected to be fully
underwritten by the International Underwriters, subject to the agreement on the Offer Price
between the Overall Coordinators (for themselves and on behalf of the Underwriters) and us.
For further details on the Underwriters and the underwriting arrangements, see “Underwriting.”
APPLICATION FOR LISTING OF THE H SHARES ON THE STOCK EXCHANGE
We have applied to the Listing Committee for the granting of listing of, and permission
to deal in, our H Shares to be issued pursuant to the Global Offering and the H Shares to be
converted from Domestic Unlisted Shares. Dealings in the H Shares on the Stock Exchange are
expected to commence on Monday, December 18, 2023. Except as otherwise disclosed in this
prospectus, no part of our H Shares is listed on or dealt in on any other stock exchange, and
no such listing or permission to list is being or proposed to be sought in the near future.
Under section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, any allotment made in respect of any application will be invalid if the listing of,
and permission to deal in, the H Shares on the Stock Exchange is refused before the expiration
of three weeks from the date of the closing of the application lists, or such longer period (not
exceeding six weeks) as may, within the said three weeks, be notified to the Company by or
on behalf of the Stock Exchange.
H SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
Subject to the granting of listing of, and permission to deal in, the H Shares on the Stock
Exchange and our compliance with the stock admission requirements of HKSCC, the H Shares
will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in
CCASS with effect from the date of commencement of dealings in the H Shares on the Stock
Exchange or any other date as determined by HKSCC. Settlement of transactions between
participants of the Stock Exchange is required to take place in CCASS on the second settlement
day after any trading day. All activities under CCASS are subject to the General Rules of
HKSCC and HKSCC Operational Procedures in effect from time to time. Investors should seek
the advice of their stockbroker or other professional advisors for the details of the settlement
arrangements as such arrangements may affect their rights and interests. All necessary
arrangements have been made for the H Shares to be admitted in to CCASS.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–1 1 8–


--- page 128 ---
REGISTER OF MEMBERS AND STAMP DUTY
All of the H Shares issued pursuant to applications made in the Global Offering will be
registered on our H Share register to be maintained in Hong Kong by our H Share Registrar.
Our principal register of members will be maintained by us at our headquarters in the PRC.
Dealings in the H Shares registered in our H Share register will be subject to Hong Kong
stamp duty.
DIVIDENDS PAYABLE TO HOLDERS OF H SHARES
Unless determined otherwise by the Company, dividends payable in Hong Kong dollars
in respect of our H Shares will be paid to the Shareholders as recorded on the H Share register
of the Company in Hong Kong and sent by ordinary post, at the Shareholders’ risk, to the
registered address of each Shareholder.
PROFESSIONAL TAX ADVICE RECOMMENDED
You should consult your professional advisors if you are in any doubt as to the taxation
implications of subscribing for, purchasing, holding, disposal of, dealing in or the exercise of
any rights in relation to our H Shares. None of the Company, the Joint Sponsors, the Overall
Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers,
the Underwriters, the Capital Market Intermediaries, any of our or their affiliates or any of their
respective directors, officers, employees, advisors, agents or representatives, or any other
persons or parties involved in the Global Offering accepts responsibility for any tax effects on,
or liabilities of, any person resulting from the subscription, purchase, holding, disposal of,
dealing in, or the exercise of any rights in relation to, our H Shares.
LANGUAGE
If there is any inconsistency between this prospectus and its Chinese translation, this
prospectus shall prevail. For ease of reference, the names of the Chinese laws and regulations,
government authorities, institutions, natural persons or other entities (including certain of our
subsidiaries) have been included in this prospectus in both the Chinese and English languages.
In the event of any inconsistency, the Chinese version shall prevail.
ROUNDING
Certain amounts and percentage figures, such as financial data, share ownership and
operating data, included in this prospectus may have been subject to rounding adjustments.
Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of
the figures preceding them.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–1 1 9–


--- page 129 ---
CURRENCY TRANSLATIONS
Solely for your convenience, this prospectus contains translations among certain amounts
denominated in Renminbi, Hong Kong dollars and U.S. dollars.
Unless otherwise specified, this prospectus contains certain translations for the
convenience purposes at the following rates: Renminbi into Hong Kong dollars at the rate of
RMB1.00 to HK$1.0992, Renminbi into U.S. dollars at the rate of US$1.00 to RMB7.1018 and
Hong Kong dollars into U.S. dollars at the rate of US$1.00 to HK$7.8060. The RMB to HK$
and US$ to RMB exchange rates are quoted by the PBOC for foreign exchange transactions
prevailing on the Latest Practicable Date.
No representation is made that any amounts in RMB or Hong Kong dollars can be or
could have been at the relevant dates converted at the above rate or any other rates or at all.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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--- page 130 ---
DIRECTORS
Name Address Nationality
Executive Directors
Dr. Cao Hui ( ૎ሾ) Room 501
No. 35, Lane 2688
Xindu Road
Shanghai
PRC
Chinese
Dr. Wu Yanjun (ࠏRoom 803, Unit 2, Building 36
Baolong Shijia
Binhai Sixth Road
Longwan District
Wenzhou, Zhejiang
PRC
Chinese
Ms. Huang Jiehua ( රᆎശ) 11-204, Hongxi Garden
Yaoxi Road
Longwan District
Wenzhou, Zhejiang
PRC
Chinese
Non-executive Directors
Mr. Hu Xiaodong (؇Room 1501, Building 9
Hongri Xiangsheli
Puyuan Road, Lucheng District
Wenzhou, Zhejiang
PRC
Chinese
Mr. Wang Haijun (ࠏRoom PC, Building 7
Haiyi Garden
Lane 111, Songlin Road
Pudong New Area
Shanghai
PRC
Chinese
Ms. Xiang Yangyang ( ධජජ) 11 Cuscaden Walk
#2601
Singapore 249697
Singaporean
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 121 –


--- page 131 ---
Name Address Nationality
Mr. Wei Yong (ۇ489 Weihai Road
Jing’an District
Shanghai
PRC
Chinese
Mr. Yu Xinhua (ശ) Room 301
No. 29, Lane 1388
Qishun Road
Shanghai
PRC
Chinese
Independent Non-executive
Directors
Ms. Wong Sze Wing ( ර౶጑) 38/F, Tower 6
88 O King Road
New Territories
Hong Kong
Chinese
(Hong Kong)
Dr. Wang Zhenbo (تࣈRoom 1101, Unit 1
Building 3 Gongda Zuo’an
No. 73 Wendao Street
Nangang District
Harbin, Heilongjiang
PRC
Chinese
Dr. Ren Shenggang ( ΂௷፻) Room 1402, Unit 1
Building 9
Jingxiu Jiangshan District
Yuelu District
Changsha, Hunan
PRC
Chinese
Dr. Simon Chen Room 1101
No. 9, Lane 1999, Hami Road
Changning District
Shanghai
PRC
Canadian
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 122 –


--- page 132 ---
SUPERVISORS
Name Address Nationality
Mr. Qu Enci (ฉ) Room 502, Unit 1, Building 28
Jiuli Jinyuan, Laotu
Administrative Village
Qidu Street, Lucheng District
Wenzhou, Zhejiang
PRC
Chinese
Mr. Fang Yihui (⥙ฯ) Room 1502, Building 2
Yard No. 10, Xiaoying Road
Chaoyang District
Beijing
PRC
Chinese
Ms. Jin Shanyan (ዲ) Room 401, Block 4
Luonan Neighborhood
Yongzhong Street
Longwan District
Wenzhou, Zhejiang
PRC
Chinese
For further details, see “Directors, Supervisors and Senior Management.”
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 123 –


--- page 133 ---
Joint Sponsors Morgan Stanley Asia Limited
46/F, International Commerce Centre
1 Austin Road West
Kowloon
Hong Kong
CITIC Securities (Hong Kong) Limited
18/F, One Pacific Place, 88 Queensway
Hong Kong
Sponsor-OCs, Overall Coordinators and
Joint Global Coordinators
Morgan Stanley Asia Limited
46/F, International Commerce Centre
1 Austin Road West
Kowloon
Hong Kong
CLSA Limited
18/F, One Pacific Place, 88 Queensway
Hong Kong
Joint Bookrunners Morgan Stanley Asia Limited
46/F, International Commerce Centre
1 Austin Road West
Kowloon
Hong Kong
CLSA Limited
18/F, One Pacific Place, 88 Queensway
Hong Kong
The Hongkong and Shanghai Banking
Corporation Limited
1 Queen’s Road Central
Hong Kong
China Galaxy International Securities
(Hong Kong) Co., Limited
20/F Wing On Centre
111 Connaught Road Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 124 –


--- page 134 ---
DBS Asia Capital Limited
73rd Floor, The Center
No. 99 Queen’s Road Central
Hong Kong
China International Capital Corporation
Hong Kong Securities Limited
29/F, One International Finance Centre
1 Harbour View Street
Central
Hong Kong
Guotai Junan Securities (Hong Kong)
Limited
26/F-28/F, Low Block Grand
Millennium Plaza
181 Queen’s Road Central
Hong Kong
CMB International Capital Limited
45th Floor, Champion Tower
3 Garden Road
Central, Hong Kong
BOCI Asia Limited
26/F, Bank of China Tower
1 Garden Road
Central, Hong Kong
ABCI Capital Limited
11/F, Agricultural Bank of China Tower,
50 Connaught Road Central
Hong Kong
Joint Lead Managers Morgan Stanley Asia Limited
46/F, International Commerce Centre
1 Austin Road West
Kowloon
Hong Kong
CLSA Limited
18/F, One Pacific Place, 88 Queensway
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 125 –


--- page 135 ---
The Hongkong and Shanghai Banking
Corporation Limited
1 Queen’s Road Central
Hong Kong
China Galaxy International Securities
(Hong Kong) Co., Limited
20/F Wing On Centre
111 Connaught Road Central
Hong Kong
DBS Asia Capital Limited
73rd Floor, The Center
No. 99 Queen’s Road Central
Hong Kong
China International Capital Corporation
Hong Kong Securities Limited
29/F, One International Finance Centre
1 Harbour View Street
Central
Hong Kong
Guotai Junan Securities (Hong Kong)
Limited
26/F-28/F, Low Block Grand
Millennium Plaza
181 Queen’s Road Central
Hong Kong
CMB International Capital Limited
45th Floor, Champion Tower
3 Garden Road
Central, Hong Kong
BOCI Asia Limited
26/F, Bank of China Tower
1 Garden Road
Central, Hong Kong
ABCI Securities Company Limited
10/F, Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 126 –


--- page 136 ---
Tiger Brokers (HK) Global Limited
1/F, FWD Financial Centre
308 Des V oeux Road Central
Hong Kong
Futu Securities International (Hong
Kong) Limited
Unit C1-2, 13/F, United Centre
No. 95 Queensway
Hong Kong
Valuable Capital Limited
RM 3601-06 & 3617-19, 36/F
China Merchants Tower, Shun Tak Centre
168-200 Connaught Road
Central Hong Kong,
Hong Kong
Legal Advisers to the Company As to Hong Kong and U.S. laws:
Freshfields Bruckhaus Deringer
55th Floor, One Island East
Taikoo Place, Quarry Bay
Hong Kong
As to PRC laws:
Fangda Partners
24/F, HKRI Center Two
HKRI Taikoo Hui
288 Shi Men Yi Road
Shanghai
PRC
Legal Advisers to the Joint Sponsors and
the Underwriters
As to Hong Kong and U.S. laws:
Allen & Overy
9/F, Three Exchange Square
Central
Hong Kong
As to PRC laws:
Commerce & Finance Law Offices
10/F, Tower 1, Jing An Kerry Center
1515 West Nanjing Road
Shanghai 200040
PRC
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 127 –


--- page 137 ---
Auditor and Reporting Accountants Ernst & Y oung
Certified Public Accountants
Registered Public Interest Entity Auditor
27/F, One Taikoo Place
979 King’s Road
Quarry Bay
Hong Kong
Compliance Advisor Red Solar Capital Limited
Unit 402B, 4/F
China Insurance Group Building
No. 141 Des V oeux Road Central
Central
Hong Kong
Industry Consultant Frost & Sullivan (Beijing) Inc.
Unit 2401-02, Level 24, China World Office 2
1 Jianguomenwai Avenue
Beijing 100004
PRC
Receiving Bank China CITIC Bank International Limited
61-65 Des V oeux Road Central
Hong Kong
Standard Chartered Bank
(Hong Kong) Limited
18/F Standard Chartered Tower
388 Kwun Tong Road
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 128 –


--- page 138 ---
Registered Office and Head Office Room A205, Building C
No. 205, Binhai 6th Road
Airport New Area, Longwan District
Wenzhou, Zhejiang
PRC
Place of Business in Hong Kong
Registered under Part 16 of the
Companies Ordinance
40th Floor, Dah Sing Financial Centre
No. 248 Queen’s Road East
Wanchai
Hong Kong
Joint Company Secretaries Dr. Wu Y anjun (ࠏ)
Room 803, Unit 2, Building 36
Baolong Shijia
Binhai Sixth Road
Longwan District
Wenzhou, Zhejiang
PRC
Ms. Zhang Xiao ( ੵᖋ)
(an associate member of The Hong Kong
Chartered Governance Institute and The
Chartered Governance Institute in the
United Kingdom)
40th Floor, Dah Sing Financial Centre
No. 248 Queen’s Road East
Wanchai
Hong Kong
Authorized Representatives Dr. Wu Y anjun (ࠏ)
Room 803, Unit 2, Building 36
Baolong Shijia
Binhai Sixth Road
Longwan District
Wenzhou, Zhejiang
PRC
Ms. Zhang Xiao ( ੵᖋ)
(an associate member of The Hong Kong
Chartered Governance Institute and The
Chartered Governance Institute in the
United Kingdom)
40th Floor, Dah Sing Financial Centre
No. 248 Queen’s Road East
Wanchai
Hong Kong
CORPORATE INFORMATION
– 129 –


--- page 139 ---
Audit Committee Ms. Wong Sze Wing ( ර౶጑)( Chairlady )
Dr. Simon Chen
Dr. Ren Shenggang ( ΂௷፻)
Nomination Committee Dr. Cao Hui ( ૎ሾ)( Chairman )
Dr. Wang Zhenbo (تࣈ)
Dr. Ren Shenggang ( ΂௷፻)
Remuneration and Appraisal Committee Dr. Wang Zhenbo (تࣈ()Chairman )
Dr. Cao Hui ( ૎ሾ)
Ms. Wong Sze Wing ( ර౶጑)
H Share Registrar Computershare Hong Kong Investor
Services Limited
Shops 1712-1716
17th Floor, Hopewell Centre
183 Queen’s Road East
Wan Chai
Hong Kong
Principal Bankers China Merchants Bank Co., Ltd.,
Wenzhou Longwan Sub-branch
No. 2666, Longxiang Road
Longwan District
Wenzhou, Zhejiang
PRC
China CITIC Bank Corporation Limited,
Wenzhou Branch
1F-2F, 17F-20F, China Life Building
No. 1398 Huizhan Road, Binjiang Street
Lucheng District
Wenzhou, Zhejiang
PRC
China Minsheng Banking Corp., Ltd.,
Wenzhou Longwan Sub-branch
Room 117 and 118, Building 1
Wanda Plaza
No. 1188 Yongding Road, Yongzhong Street
Longwan District
Wenzhou, Zhejiang
PRC
CORPORATE INFORMATION
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Company’s Website www.chinarept.com
(A copy of this prospectus is available on
the Company’ s website. Except for the
information contained in this prospectus,
none of the other information contained on
the Company’ s website forms part of this
prospectus)
CORPORATE INFORMATION
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OUR HISTORY
Overview
We are a lithium-ion battery manufacture in China. We focus on the R&D, production and
sales of EV and ESS lithium-ion battery products including battery cells, modules and packs
(including battery boxes, battery racks and energy storage containers for ESS packs).
Leveraging our various strengths, we grew rapidly since our inception and quickly gained a
prominent position in the industry. For details, see “Business – Competitive Strengths.”
With an aim to expand into the fast-growing and prospective new energy industry, the
Company was established by Tsingshan Group and other Shareholders on October 25, 2017 as
a limited liability company under the laws of the PRC. On April 7, 2022, pursuant to a
promoters’ agreement among the then shareholders of the Company, the Company was
converted into a joint stock limited liability company under the laws of the PRC with its
corporate name changed from REPT Energy Co., Ltd. (ʮ̡) to the current name
of REPT BATTERO Energy Co., Ltd. (ʮ̡).
Between January 2018 and October 2022, the Company went through a series of share
transfers and capital increases and brought in new Shareholders and Pre-IPO Investors. For
details, see “– Establishment and Development of the Company.” As of the Latest Practicable
Date, the registered share capital of the Company was RMB2,160,803,850, comprising
2,160,803,850 Shares with a nominal value of RMB1.00 each.
Milestones
The following sets out a summary of our key development milestones:
Y ear Milestone(s)
2017 The Company was established.
Our Shanghai R&D center was put into operation, and our Wenzhou
Facility I started construction.
2018 We commenced trial production in our Wenzhou Facility I.
2019 50Ah LFP batteries produced by us were delivered to SolaX Power ( एϪ
Ўᖯ), a well-known global photovoltaic inverter manufacturer, indicating
the opening of a new chapter of our business in the household ESS market.
80MWh standalone frequency adjustment energy storage systems produced
by us were delivered to overseas customers.
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Y ear Milestone(s)
EV batteries produced by us were delivered to the commercial EV sector
for use in city buses and urban distribution logistics vehicles; EV batteries
produced by us formally entered the domestic passenger car market,
including the bulk delivery of ternary batteries and the entry of our LFP
batteries into the supply chain of DFPV (Aeolus) (͜ԓ(ग़)).
2020 With the development and mass production of 180Wh/kg high energy
density EV battery, we entered the supply chain supporting system of
SAIC-GM-Wuling ( ɪӛஷ͜ʞഷ), and our EV battery installations
exceeded 1GWh in that year, making us one of the top ten EV battery
manufacturers in China for the first time. The high-voltage series NCM523
battery replacing the NCM811 was successfully developed by us, for which
we quickly achieved mass production and delivery.
We were awarded the title of the Digital Workshop of Zhejiang Province in
2020.
2021 Our Wenzhou Facility II commenced production. Our Wenzhou laboratory
obtained the national CNAS laboratory certification.
Our long cycle life 280Ah ESS battery cells were launched.
We participated in the construction of domestic large-scale commercial and
industrial ESS projects in provinces including Gansu and Shandong.
We obtained the 2021 Zhejiang Provincial Green Low Carbon Factory
award, and were awarded the title of the 2021 “waste-free factories” of
Zhejiang Province in 2021.
We were selected as a designated supplier of EV batteries to a well-known
domestic automaker Leapmotor ( ཧൺӛԓ) and an emerging auto parts
manufacturer Vremt (ြཥਗ), as well as an established vehicle company
in Europe.
2022 The Company was converted into a joint stock limited liability company
under the laws of the PRC with its corporate name changed to the current
name of REPT BATTERO Energy Co., Ltd. (ʮ̡).
Qingdao SAIC and Jiaxing SAIC became our shareholders as part of our
Pre-IPO Investments.
HISTORY AND DEVELOPMENT
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Y ear Milestone(s)
We established two joint ventures at Guangxi, Liuzhou with a wholly-
owned sub-subsidiary of SAIC Motor ( ɪӛණྠ) to build two production
facilities for EV battery cell and battery pack with designed annual
production capacity of 20GWh each.
We were selected as a designated supplier of EV batteries to SAIC-
Passenger Automobile (͜ԓ), FAW ( ɓӛֆᙜ), DNPV (Venucia)
(˚ପ(઼ԕ)), Hozon Auto ( Υ଺ӛԓ), Hycan ( Υ௴ӛԓ) and a
number of other domestic OEMs for new energy vehicle models. Our
Group has achieved cooperation with a number of major domestic energy
storage integrators such as Sungrow Energy Storage ( ජΈᎷঐ), CLOU
Intelligent Energy (௔౽ᅆঐ๕) and Ronghe BESS ( ፄձʩᎷ), and
established cooperation with a number of well-known international energy
storage integrators in respect of our ESS battery products, entering into the
international market.
Our Group launched the WenDing (“ ਪ௟”) technology, and the volumetric
energy density, mass energy density and driving range of batteries utilizing
this technology can exceed industry average.
2023 In June 2023, the Global Battery Alliance officially accepted our Company
as one of its members.
Benefiting from our WenDing (“ ਪ௟”) technology, we launched 320Ah
and 340Ah ESS battery products, to meet the market demands for large
capacity ESS battery products. In particular, our 320Ah ESS battery
product had already obtained many international certifications, such as EU
TÜV certification IEC62619, North America UL certification (UL1973,
UL9540A), and became the first ESS battery product with energy capacity
of more than 300Ah to obtain the UL9540A certification in the industry.
HISTORY AND DEVELOPMENT
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ESTABLISHMENT AND DEVELOPMENT OF THE COMPANY
1. Establishment of the Company in 2017
On October 25, 2017, the Company was established as a limited liability company in the
PRC with a registered capital of RMB100 million. At the time of the establishment, the
shareholders of the Company were Irestal (Shanghai) Stainless Steel Pipe Co., Ltd. (ןܠ(ɪ
ऎ)ʮ̡,“ Irestal ”), Zhejiang Tsingshan, Mr. Yu Zhaoyu (ρ), Mr. Liu Si ( ᄎ
ܠMr. Bao Zheng ( ͍̍), Mr. Jiang Sen (ಌ) and REPT Technology Group Co., Ltd. ( ๿
ʮ̡,“ REPT Technology ”), holding 48%, 19%, 19%, 8%, 3%, 2% and 1% of
the Company’s then registered capital, respectively. At the time of the establishment of the
Company, Irestal, Zhejiang Tsingshan and REPT Technology are limited liability companies
incorporated under the laws of the PRC controlled by our Controlling Shareholders. Mr. Xiang,
one of the Controlling Shareholders, has been the controlling shareholder of the Company
since its date of establishment. Mr. Yu Zhaoyu is a vice president of the Company. Mr. Liu Si
is a member of the management team of the Company. Mr. Jiang Sen is the president of
Yongqing Technology, one of our Controlling Shareholders. Mr. Bao Zheng is an independent
third party.
2. Major equity transfers and capital increases since the establishment from 2018 to
2020
Following the establishment of the Company, with a view to, among other things, (i)
developing and expanding the Company’s business, (ii) attracting and retaining the talents for
the Group and (iii) streamlining the shareholding structure, the Company undertook several
rounds of increases in registered capital and/or share transfers. Details of such major equity
transfer and capital increase are summarized below:
 in January 2018, Mr. Yu Zhaoyu transferred his shareholdings in the Company,
representing 9% and 7% of the Company’s then registered capital, to Irestal and Dr.
Cao Hui at a consideration of nil and RMB6 million, respectively; Mr. Liu Si
transferred his shareholdings in the Company, representing 2% and 3% of the
Company’s then registered capital, to Ms. Liu Chan ( ᄎᄬ) and Dr. Cao Hui at a
consideration of RMB2 million and RMB3 million, respectively; Mr. Bao Zheng
transferred his shareholdings in the Company, representing 3% of the Company’s
then registered capital, to Dr. Hou Min at a consideration of RMB3 million. The
considerations of above equity transfers were determined based on the amount of the
paid-up register capital of the Company contributed by the transferors;
 in July 2018, Irestal, Zhejiang Tsingshan and REPT Technology transferred all their
respective shareholdings in the Company, representing 48%, 19% and 1% of the
Company’s total registered capital, to Yongqing Technology at a consideration of
RMB48 million, RMB19 million and RMB1 million, respectively. The
considerations of above equity transfers were determined based on the amount of the
paid-up register capital of the Company contributed by the transferors;
HISTORY AND DEVELOPMENT
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 in July 2018, the registered capital of the Company increased from RMB100 million
to RMB300 million, among which RMB136 million was contributed by Yongqing
Technology and RMB64 million was contributed by Shanghai Fuqin Enterprise
Development Partnership (Limited Partnership) (ΥྫΆุ(ࠢ
Υྫ), “ Shanghai Fuqin ”), a non-wholly-owned subsidiary of Yongqing
Technology;
 in June 2020, (i) Yongqing Technology, Shanghai Fuqin, Mr. Jiang Sen and Irestal
transferred all or part of their respective shareholdings in the Company, representing
68.00%, 3.33%, 0.67% and 2.47% of the Company’s then registered capital, to Ruitu
Energy, a wholly-owned subsidiary of Yongqing Technology, at a consideration of
RMB204 million, RMB10 million, RMB2 million and RMB7.4 million,
respectively; and (ii) Irestal and Mr. Liu Si further transferred their remaining
shareholding in the Company, representing 0.53% and 0.33% of the Company’s then
registered capital, to Mr. Cao Kai ( ૎ฺ) and Mr. Shen Xiangdong (؇,)
members of the management team of the Company, at the consideration of RMB1.6
million and RMB1 million respectively. The considerations of such equity transfers
were determined based on the amount of the paid-up register capital of the Company
contributed by the transferors.
All the above increases in registered capital and/or share transfers of the Company have
been duly settled and completed. The table below sets forth the shareholding structure of the
Company immediately after the increases in registered capital and share transfers listed above.
Name
Registered
capital
Equity interest
percentage
(RMB, million) (%)
Ruitu Energy........................................................... 223.4 74.47
Shanghai Fuqin....................................................... 54 18.00
Dr. Cao Hui ............................................................ 10 3.33
Mr. Yu Zhaoyu........................................................ 3 1.00
Dr. Hou Min ........................................................... 3 1.00
Mr. Liu Si............................................................... 2 0.67
Ms. Liu Chan.......................................................... 2 0.67
Mr. Cao Kai............................................................ 1.6 0.53
Mr. Shen Xiangdong............................................... 1 0.33
Total ....................................................................... 300 100.00
HISTORY AND DEVELOPMENT
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3. Subscription in the Company’s registered capital by the employee shareholding
platforms in August 2021
In August 2021, Ruitu Energy transferred its 0.47%, 2.00%, 4.00% and 68.00%
shareholding in the Company to Wenzhou Ruili, Wenzhou Qingshan, Wenzhou Jingli and
Yongqing Technology at a consideration of RMB1.4 million, RMB6 million, RMB12 million
and RMB204 million, respectively. The considerations were determined based on the amount
of the paid-up registered capital of the Company contributed by Ruitu Energy. Wenzhou Ruili,
Wenzhou Qingshan and Wenzhou Jingli are employee shareholding platforms of the Company.
For details, see “Appendix VI – Statutory and General Information.”
At the same time, all the then individual shareholders of the Company, namely Dr. Cao
Hui, Dr. Hou Min, Mr. Yu Zhaoyu, Ms. Liu Chan, Mr. Liu Si, Mr. Cao Kai and Mr. Shen
Xiangdong transferred all their respective shareholding in the Company to Wenzhou Ruili, at
a consideration of RMB10 million, RMB3 million, RMB3 million, RMB2 million, RMB2
million, RMB1.6 million and RMB1 million, respectively. In the meantime, Shanghai Fuqin
also transferred all its shareholding in the Company, representing 18.00% of the Company’s
then registered capital, to Wenzhou Jingli at a consideration of RMB54 million. The
considerations were determined based on the amount of the paid-up registered capital of the
Company contributed by the transferors.
After the equity transfers mentioned above, pursuant to a shareholders’ resolution of the
Company dated August 16, 2021, the registered capital of the Company increased from
RMB300 million to RMB1,200 million, which was subscribed and contributed by all
shareholders of the Company at that time according to their respective shareholding
proportions in the Company, including Yongqing Technology, Wenzhou Jingli, Wenzhou Ruili
and Wenzhou Qingshan, at a consideration of RMB612 million, RMB198 million, RMB72
million and RMB18 million.
All the above increases in registered capital and/or equity transfers of the Company have
duly settled and completed. The table below sets forth the shareholding structure of the
Company immediately after the equity transfer and capital increase.
Name
Registered
capital
Equity interest
percentage
(RMB, million) (%)
Yongqing Technology ............................................. 816 68.00
Wenzhou Jingli ....................................................... 264 22.00
Wenzhou Ruili ........................................................ 96 8.00
Wenzhou Qingshan ................................................. 24 2.00
Total ....................................................................... 1,200 100.00
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4. Capital increase in November 2021
Pursuant to a shareholders’ resolution of the Company dated November 22, 2021, (i)
Yongqing Technology further contributed RMB1,524,444,444 to the Company, among which
RMB234,146,341 was credited as registered capital and RMB1,290,298,103 was credited as
capital reserve; and (ii) Wenzhou Zhuorui Energy Saving Technology Partnership (Limited
Partnership) ( ๝ψՙ๿ືঐҦஔΥྫΆุ(Υྫ), “ Wenzhou Zhuorui ”) contributed
RMB190,555,556 to the Company, among which RMB29,268,293 was credited as registered
capital and RMB161,287,263 was credited as capital reserve. Wenzhou Zhuorui is an employee
shareholding platform of our Controlling Shareholders, Tsingshan Group, Yongqing
Technology and their related parties.
The table below sets forth the shareholding structure of the Company immediately after
the capital increase.
Name
Registered
capital
Equity interest
percentage
(RMB) (%)
Yongqing Technology ............................................. 1,050,146,341 71.76
Wenzhou Jingli ....................................................... 264,000,000 18.04
Wenzhou Ruili ........................................................ 96,000,000 6.56
Wenzhou Zhuorui.................................................... 29,268,293 2.00
Wenzhou Qingshan ................................................. 24,000,000 1.64
Total ....................................................................... 1,463,414,634 100.00
5. Conversion into a joint stock limited liability company in April 2022
On April 7, 2022, the Company was converted into a joint stock limited liability company,
converting its total registered capital of RMB1,463,414,634 into 1,463,414,634 shares with a
par value of RMB1.00 each and with its name changed to the current name of REPT BATTERO
Energy Co., Ltd. (ʮ̡).
6. Capital increase in June 2022
Pursuant to a shareholders’ resolution of the Company dated June 14, 2022, Yongqing
Technology further subscribed for 39,273,141 shares of the Company at a consideration of
RMB460,000,000, with RMB39,273,141 credited as registered capital, and a premium of
RMB420,726,859 credited as capital reserve. The consideration was determined based on the
cost per share paid by Series A+ Investor.
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7. Pre-IPO Investments
Series A Pre-IPO Investment
On January 30, 2022, (i) the Company, the then shareholders of the Company, and
Tsingshan Group, and (ii) Qingdao SAIC and Jiaxing SAIC (together referred to as the
“Series A Investors ”), entered into a capital increase agreement, pursuant to which, each
of Qingdao SAIC and Jiaxing SAIC agreed to subscribe for the increased registered
capital of the Company.
Series A+ Pre-IPO Investment
On February 28, 2022, (i) the Company and (ii) Wenzhou Transportation Group (the
“Series A+ Investor ”) entered into a capital increase agreement, pursuant to which,
Wenzhou Transportation Group agreed to subscribe for the increased registered capital of
the Company.
Series B Pre-IPO Investment
On August 11, 2022, (i) the Company and Yongqing Technology, and (ii) Tianjin
Hexie Haihe, Wuhu Wenming, Pingan Investment, CNGR, CITICS Investment,
Guangdong Jiarui, XCMG No. 1 Fund, Wuhan Yunshang, Wenzhou Chengyuan,
Guangdong Guangxin Private Equity, Jiaxing Rongpu, Jiaxing Yuzhi, Jiaxing Aohao,
Junying Changhong No. 16 Equity Investment Fund (Zibo) Partnership (Limited
Partnership) (ږ(଍௹)ΥྫΆุ(Υྫ), “ Junying
Changhong ”), Wenzhou Zhenxu, Mr. Zhang Xiangkang ( ੵୂੰ), Huzhou Lianjie, Silver
Saddle Fund and Zhejiang University Education Foundation (collectively, the “ First
Batch of Series B Investors ”) entered into a capital increase agreement, pursuant to
which, each of the First Batch of Series B Investors agreed to subscribe for the increased
registered capital of the Company.
On August 11, 2022, Junying Changhong transferred its 7,112,404 shares in the
Company to Zibo Junci. As Junying Changhong had not paid the relevant consideration
to the Company for its subscription of the 7,112,404 shares, such shares were transferred
to Zibo Junci at nil consideration, and Zibo Junci agreed to pay the subscription
consideration to the Company according to the terms under the capital increase agreement
dated August 11, 2022.
On September 22, 2022, (i) the Company and Yongqing Technology, and (ii) SCGC,
HOPU Orient, Foshan Manufacturing Transformation & Development Fund, Chuangyi
Chengtun, Longwan Financial Holdings, Wenzhou Gongchuang, Suzhou NewMargin,
Zhongyuan Hejia, Guangdong Guangxin Equity Investment, Qingdao Heaven-Sent,
Xiamen Fuxinrui, Hangzhou Longqi, Lishui Xiangxi, and 3W Global I (collectively, the
“Second Batch of Series B Investors ,” together with First Batch of Series B Investors
(with Zibo Junci substituted for Junying Changhong), the “ Series B Investors ”) entered
into a capital increase agreement, pursuant to which, each of the Second Batch of Series
B Investors agreed to subscribe for the increased registered capital of the Company.
HISTORY AND DEVELOPMENT
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On October 20, 2022, the Company, Yongqing Technology and Hangzhou Longqi
entered into a supplemental agreement to the capital increase agreement dated September
22, 2022, pursuant to which the amount of increased registered capital that Hangzhou
Longqi shall subscribe for was adjusted.
For details of the amount of register capital subscribed for by each of the Series A
Investors, Series A+ Investor, and Series B Investors (collectively, the “ Pre-IPO
Investors ”) and the subscription price paid, see “– Details of The Pre-IPO Investments”
below.
The consideration for the Pre-IPO Investments was determined based on arm’s
length negotiation between the parties with reference to, among other things, the amount
of the registered capital and the capital reserve, the timing of the investment, the agreed
pre-investment valuation of the Company taking into account the arm’s length
negotiations when the parties engaged in discussion of each round of the Pre-IPO
Investments, the historical performance of the Company, and the business prospects of the
Company.
The table below sets forth the shareholding structure of the Company in November
2022 immediately after the Pre-IPO Investments, the capital increase and share transfer.
Name
Number of
Shares held
Shareholding
percentage
(%)
Yongqing Technology ..................................... 1,089,419,482 50.42
Wenzhou Jingli ............................................... 264,000,000 12.22
Jiaxing SAIC .................................................. 187,828,067 8.69
Wenzhou Ruili ................................................ 96,000,000 4.44
Wuhu Wenming .............................................. 56,899,236 2.63
Qingdao SAIC ................................................ 56,285,178 2.60
Wenzhou Zhuorui ........................................... 29,268,293 1.35
Wenzhou Qingshan ......................................... 24,000,000 1.11
Tianjin Hexie Haihe ....................................... 21,337,214 0.99
Pingan Investment .......................................... 21,337,214 0.99
CNGR............................................................. 21,337,214 0.99
Foshan Manufacturing Transformation &
Development Fund ...................................... 21,194,965 0.98
HOPU Orient.................................................. 20,625,973 0.95
Wenzhou Chengyuan ...................................... 18,442,465 0.85
Wenzhou Transportation Group ...................... 17,075,279 0.79
Longwan Financial Holdings .......................... 14,224,809 0.66
Wenzhou Gongchuang .................................... 14,224,809 0.66
Chuangyi Chengtun ........................................ 14,224,809 0.66
HISTORY AND DEVELOPMENT
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Name
Number of
Shares held
Shareholding
percentage
(%)
Zhongyuan Hejia ............................................ 14,224,809 0.66
Jiaxing Yuzhi .................................................. 13,157,948 0.61
Guangdong Guangxin Private Equity.............. 12,091,088 0.56
Wenzhou Zhenxu ............................................ 11,059,789 0.51
SCGC ............................................................. 10,668,607 0.49
Suzhou NewMargin ........................................ 10,064,052 0.47
3W Global I.................................................... 9,778,041 0.45
CITICS Investment......................................... 7,112,404 0.33
Guangdong Jiarui............................................ 7,112,404 0.33
XCMG No. 1 Fund......................................... 7,112,404 0.33
Jiaxing Rongpu............................................... 7,112,404 0.33
Wuhan Yunshang ............................................ 7,112,404 0.33
Jiaxing Aohao................................................. 7,112,404 0.33
Zibo Junci....................................................... 7,112,404 0.33
Mr. Zhang Xiangkang..................................... 7,112,404 0.33
Huzhou Lianjie ............................................... 6,401,164 0.30
Qingdao Heaven-Sent ..................................... 5,689,924 0.26
Lishui Xiangxi................................................ 5,689,924 0.26
Silver Saddle Fund ......................................... 4,978,683 0.23
Xiamen Fuxinrui............................................. 3,911,822 0.18
Hangzhou Longqi ........................................... 3,840,697 0.18
Guangdong Guangxin Equity Investment........ 3,200,582 0.15
Zhejiang University Education Foundation..... 1,422,481 0.07
Total............................................................... 2,160,803,850 100.00
HISTORY AND DEVELOPMENT
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DETAILS OF THE PRE-IPO INVESTMENTS
Details of the Pre-IPO Investments are set out below:
Name of Pre-IPO
Investors Date of agreement
Number of
Shares
subscribed
Cost per
Share (1)
Total
consideration (2)
Corresponding
pre-subscription
valuation of the
Company
Date on which the
consideration was
fully settled
Discount to
the mid-point
of the Offer
Price Range
Shareholding
in the
Company as
of the Latest
Practicable
Date
Shareholding in
the Company
upon Listing
(RMB billion)
Series A Pre-IPO Investment
Qingdao SAIC January 30, 2022 56,285,178 RMB8.88 RMB500,000,000 13.0 May 30, 2022 49.69% 2.60% 2.47%
Jiaxing SAIC January 30, 2022 187,828,067 RMB11.71 RMB2,200,000,000 17.8 May 30, 2022 33.65% 8.69% 8.25%
Series A+ Pre-IPO Investment
Wenzhou
Transportation Group
February 28, 2022 17,075,279 RMB11.71 RMB200,000,000 17.8 April 15, 2022 33.65% 0.79% 0.75%
Series B Pre-IPO Investment
Tianjin Hexie Haihe August 11, 2022 21,337,214 RMB14.06 RMB300,000,000 24.8 August 25, 2022 20.34% 0.99% 0.94%
Wuhu Wenming August 11, 2022 56,899,236 RMB14.06 RMB800,000,000 24.8 August 29, 2022 20.34% 2.63% 2.50%
Pingan Investment August 11, 2022 21,337,214 RMB14.06 RMB300,000,000 24.8 August 17, 2022 20.34% 0.99% 0.94%
SCGC September 22, 2022 10,668,607 RMB14.06 RMB150,000,000 24.8 October 13, 2022 20.34% 0.49% 0.47%
Foshan Manufacturing
Transformation &
Development Fund
September 22, 2022 21,194,965 RMB14.06 RMB298,000,000 24.8 September 30, 2022 20.34% 0.98% 0.93%
HISTORY AND DEVELOPMENT
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Name of Pre-IPO
Investors Date of agreement
Number of
Shares
subscribed
Cost per
Share (1)
Total
consideration (2)
Corresponding
pre-subscription
valuation of the
Company
Date on which the
consideration was
fully settled
Discount to
the mid-point
of the Offer
Price Range
Shareholding
in the
Company as
of the Latest
Practicable
Date
Shareholding in
the Company
upon Listing
(RMB billion)
HOPU Orient September 22, 2022 20,625,973 RMB14.06 RMB290,000,000 24.8 October 8, 2022 20.34% 0.95% 0.91%
CNGR August 11, 2022 21,337,214 RMB14.06 RMB300,000,000 24.8 August 22, 2022 20.34% 0.99% 0.94%
CITICS Investment August 11, 2022 7,112,404 RMB14.06 RMB100,000,000 24.8 August 17, 2022 20.34% 0.33% 0.31%
Chuangyi Chengtun September 22, 2022 14,224,809 RMB14.06 RMB200,000,000 24.8 October 10, 2022 20.34% 0.66% 0.62%
XCMG No. 1 Fund August 11, 2022 7,112,404 RMB14.06 RMB100,000,000 24.8 August 18, 2022 20.34% 0.33% 0.31%
Wenzhou Chengyuan August 11, 2022 18,442,465 RMB14.06 RMB259,300,000 24.8 August 18, 2022 20.34% 0.85% 0.81%
Jiaxing Yuzhi August 11, 2022 13,157,948 RMB14.06 RMB185,000,000 24.8 August 17, 2022 20.34% 0.61% 0.58%
Guangdong Guangxin
Private Equity
August 11, 2022 12,091,088 RMB14.06 RMB170,000,000 24.8 August 22, 2022 20.34% 0.56% 0.53%
Wenzhou Zhenxu August 11, 2022 11,059,789 RMB14.06 RMB155,500,000 24.8 August 12, 2022 20.34% 0.51% 0.49%
Guangdong Jiarui August 11, 2022 7,112,404 RMB14.06 RMB100,000,000 24.8 August 16, 2022 20.34% 0.33% 0.31%
Jiaxing Rongpu August 11, 2022 7,112,404 RMB14.06 RMB100,000,000 24.8 August 23, 2022 20.34% 0.33% 0.31%
Wuhan Yunshang August 11, 2022 7,112,404 RMB14.06 RMB100,000,000 24.8 August 17, 2022 20.34% 0.33% 0.31%
Jiaxing Aohao August 11, 2022 7,112,404 RMB14.06 RMB100,000,000 24.8 September 2, 2022 20.34% 0.33% 0.31%
Zibo Junci
(3) August 11, 2022 7,112,404 RMB14.06 RMB100,000,000 24.8 August 31, 2022 20.34% 0.33% 0.31%
Mr. Zhang Xiangkang August 11, 2022 7,112,404 RMB14.06 RMB100,000,000 24.8 August 19, 2022 20.34% 0.33% 0.31%
Huzhou Lianjie August 11, 2022 6,401,164 RMB14.06 RMB90,000,000 24.8 August 18, 2022 20.34% 0.30% 0.28%
Silver Saddle Fund August 11, 2022 4,978,683 RMB14.06 RMB70,000,000 24.8 August 18, 2022 20.34% 0.23% 0.22%
Zhejiang University
Education
Foundation
August 11, 2022 1,422,481 RMB14.06 RMB20,000,000 24.8 August 16, 2022 20.34% 0.07% 0.06%
HISTORY AND DEVELOPMENT
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Name of Pre-IPO
Investors Date of agreement
Number of
Shares
subscribed
Cost per
Share (1)
Total
consideration (2)
Corresponding
pre-subscription
valuation of the
Company
Date on which the
consideration was
fully settled
Discount to
the mid-point
of the Offer
Price Range
Shareholding
in the
Company as
of the Latest
Practicable
Date
Shareholding in
the Company
upon Listing
(RMB billion)
Longwan Financial
Holdings
September 22, 2022 14,224,809 RMB14.06 RMB200,000,000 24.8 September 28, 2022 20.34% 0.66% 0.62%
Wenzhou Gongchuang September 22, 2022 14,224,809 RMB14.06 RMB200,000,000 24.8 September 26, 2022 20.34% 0.66% 0.62%
Zhongyuan Hejia September 22, 2022 14,224,809 RMB14.06 RMB200,000,000 24.8 October 8, 2022 20.34% 0.66% 0.62%
Suzhou NewMargin September 22, 2022 10,064,052 RMB14.06 RMB141,500,000 24.8 October 12, 2022 20.34% 0.47% 0.44%
3W Global I September 22, 2022 9,778,041 RMB14.06 US$20,000,000 24.8 November 8, 2022 20.34% 0.45% 0.43%
Qingdao Heaven-Sent September 22, 2022 5,689,924 RMB14.06 RMB80,000,000 24.8 September 30, 2022 20.34% 0.26% 0.25%
Lishui Xiangxi September 22, 2022 5,689,924 RMB14.06 RMB80,000,000 24.8 October 8, 2022 20.34% 0.26% 0.25%
Xiamen Fuxinrui September 22, 2022 3,911,822 RMB14.06 RMB55,000,000 24.8 September 27, 2022 20.34% 0.18% 0.17%
Hangzhou Longqi September 22, 2022 3,840,697 RMB14.06 RMB54,000,000 24.8 October 19, 2022 20.34% 0.18% 0.17%
Guangdong Guangxin
Equity Investment
September 22, 2022 3,200,582 RMB14.06 RMB45,000,000 24.8 September 27, 2022 20.34% 0.15% 0.14%
Notes:
(1) The cost per Share is calculated by dividing the consideration paid by each Pre-IPO Investors by the number of Shares subscribed for by each Pre-IPO Investor.
(2) The total consideration represents the amount paid by each Pre-IPO Investor for subscription of the Shares. Under the Pre-IPO Investment, each Pr e-IPO Investor also contributed
an amount to the Company which was credited as capital reserve of the Company. For details, see “– 7. Pre-IPO Investments” above.
(3) On August 11, 2022, Junying Changhong transferred its 7,112,404 shares in the Company to Zibo Junci. For details, see “– 7. Pre-IPO Investments” ab ove.
HISTORY AND DEVELOPMENT
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--- page 154 ---
The Company received proceeds of an aggregate amount of approximately RMB8.5
billion from the Pre-IPO Investments, which shall be utilized by the Company for expansion
of production capacity of its principal business, capital expenditure, operations, sales and
supplement of working capital. As at the Latest Practicable Date, approximately RMB2.8
billion of the proceeds raised by the Company from the Pre-IPO Investments had not been
utilized.
The Directors were of the view that the Company would benefit from the capital raised
through the Pre-IPO Investments, the Pre-IPO Investors’ knowledge and experience, and the
endorsement of the Company’s performance, strength and prospects reflected by the Pre-IPO
Investments.
The Shares held by the Pre-IPO Investors are not subject to any lock-up pursuant to the
terms of the Pre-IPO Investments. However, according to the PRC Company Law, the Pre-IPO
Investors shall not transfer their Shares in the Company within one year from the Listing Date.
The Pre-IPO Investors were granted certain special rights, including veto right in the
general meeting and board meeting, right of first refusal, tag-along right, preemptive right,
anti-dilution right, information right, liquidation preference right, right of most favored
treatment, and redemption right (the “ Special Rights ”). In addition, Yongqing Technology,
Tsingshan Group and the Company have undertaken to the Series B Investors that the market
capitalization of the Company calculated based on the offer price multiplied by the total
number of issued shares of the Company immediately prior to its initial public offering (the
“Pre-IPO Target Market Capitalization ”) shall be no less than the pre-agreed amount set out
in the shareholders’ agreement. Yongqing Technology, Tsingshan Group, the Company and the
Series B Investors further agreed that, if there is a material change in the industry in which the
Company operates, capital market conditions or other situations as agreed among the
aforementioned parties, the Pre-IPO Target Market Capitalization may be adjusted accordingly
by consent of the parties.
Except for the redemption right as described below, all the other Special Rights or
undertaking with respect to the Pre-IPO Target Market Capitalization calculated based on the
low end of the indicative Offer Price range will be terminated or otherwise fulfilled upon
Listing, and all Special Rights other than the redemption right as described below shall resume
to be exercisable automatically upon (i) the relevant regulatory authorities reject the listing
application; (ii) the listing application is returned or is ultimately disapproved by the relevant
regulatory authorities; or (iii) the Company fails to achieve the initial public offering of the
H Shares on the Hong Kong Stock Exchange within 12 months after the listing application is
approved.
HISTORY AND DEVELOPMENT
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--- page 155 ---
Redemption Right
Pursuant to the shareholders’ agreement, each Series A Investor and Series B Investor is
given the redemption right to, upon the occurrence of specified redemption events, request that
Yongqing Technology, a Controlling Shareholder of the Company purchase the Shares such
investor then holds at the specified purchase price. Such redemption events include: (a) the
Company could not complete the listing on the Hong Kong Stock Exchange, listing on the
Shanghai Stock Exchange or listing on the Shenzhen Stock Exchange by December 31, 2025;
or (b) the Company fails to complete all necessary formalities for the listing and circulation of
the Domestic Unlisted Shares held by such investor (where applicable) within 12 months after
the Listing (except when such investor chooses not to apply for full circulation, or the Pre-IPO
Investor fails to provide necessary materials for application of full circulation). The purchase
price per Domestic Unlisted Share will be determined according to the following formula:
Cost per share paid × (1+8%×n) – D
“n” equals to the cumulative number of days between the date of settlement of the
subscription price by such investor and the date of receipt of the repurchase amount by such
investor divided by 365; and “D” equals to the dividend or bonus paid by the Company to such
investor in respect of such Domestic Unlisted Share from the date of settlement of the
subscription price by such investor in respect of such Domestic Unlisted Share to the date of
receipt of the repurchase amount by such investor.
The redemption right to request that Yongqing Technology purchase the Domestic
Unlisted Shares each Series A Investor and Series B Investor then holds at the specified
purchase price remains effective and exercisable by the Series A Investors and Series B
Investors.
Following the Listing, the share capital of the Company will comprise H Shares and
Domestic Unlisted Shares. Whereas H Shares will be freely transferable on the Hong Kong
Stock Exchange after the Listing, Domestic Unlisted Shares which are not converted into H
Shares are not tradeable publicly. As such, our Shareholders who hold Domestic Unlisted
Shares upon Listing, if unable to convert such Shares into H Shares, are subject to significantly
different risks relating to the lack of liquidity of such Domestic Unlisted Shares they invested
in, compared to investors in the Global Offering who invest in H Shares. The redemption right
to request that Yongqing Technology, a Controlling Shareholder of the Company, shall
purchase the Domestic Unlisted Shares was retained to cater for such risks which investors in
the Global Offering are not subject to. In addition, Yongqing Technology bears the
corresponding purchase obligation, and such purchase will not be funded by the Company.
Therefore, the Company considers that such redemption right does not fall within Guidance
Letter HKEx-GL43-12 issued in October 2012 and updated in July 2013 and March 2017 by
the Hong Kong Stock Exchange and can survive the Listing.
HISTORY AND DEVELOPMENT
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--- page 156 ---
On the basis that (i) the consideration for each of the Pre-IPO Investments was settled at
least 28 clear days prior to the date of the Company’s Submission, and (ii) the Special Rights
and undertakings granted under the shareholders’ agreement to the Pre-IPO Investors will be
terminated or otherwise fulfilled upon Listing (save for the redemption right to request that
Yongqing Technology, a Controlling Shareholder of the Company, shall purchase the Domestic
Unlisted Shares each Pre-IPO Investor then holds at the specified purchase price, which does
not fall within Guidance Letter HKEx-GL43-12 issued in October 2012 and updated in July
2013 and March 2017 by the Hong Kong Stock Exchange as described above), the Joint
Sponsors have confirmed that, the Pre-IPO Investments are in compliance with the Interim
Guidance on Pre-IPO Investments issued by the Hong Kong Stock Exchange in January 2012
and updated in March 2017, the Guidance Letter HKEx-GL43-12 issued by the Hong Kong
Stock Exchange in October 2012 and updated in July 2013 and March 2017, and the Guidance
Letter HKEx-GL44-12 issued by the Hong Kong Stock Exchange in October 2012 and updated
in March 2017.
As advised by the PRC legal advisers to the Company, the Company has complied with
applicable PRC laws and regulations in material respects in relation to the changes of
shareholdings (including the Pre-IPO Investments) as set out above.
Background of the Pre-IPO Investors
Set out below are the background of the Pre-IPO Investors based on information available
to us:
Name of Pre-IPO
Investors Background
Qingdao SAIC A limited partnership established in the PRC, the general
partners of which are Shanghai Shangqi Investment
Management Partnership (Limited Partnership) (☃ҳ༟
၍ଣΥྫΆุ(Υྫ),“ Shangqi Capital ”) and Shanghai
Saic Hengxu Capital Co., Ltd (ʮ
̡), “ SAIC Hengxu ”) and the fund manager of which is
Shangqi Capital. As of the Latest Practicable Date, Shangqi
Capital and SAIC Hengxu held approximately 0.02%
partnership interests in Qingdao SAIC, respectively. The general
partner of Shangqi Capital is Shanghai Qiyuan Business
Consulting Co., Ltd. (ʮ̡,“ Shanghai
Qiyuan”), and Shanghai Qiyuan is ultimately controlled by Mr.
Feng Ji ( ඹౘ). The largest limited partner of Qingdao SAIC
is SAIC Motor Corporation Limited (ʮ
̡), a company listed on the Shanghai Stock Exchange, stock
code: 600104), which held approximately 99.63% partnership
interests in Qingdao SAIC as of the Latest Practicable Date.
Qingdao SAIC focuses on investments in the automotive
industry chain and its related fields, including but not limited to
new energy, intelligent networking, sharing, smart
manufacturing and new materials.
HISTORY AND DEVELOPMENT
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--- page 157 ---
Name of Pre-IPO
Investors Background
Jiaxing SAIC A limited partnership established in the PRC, the general
partner and fund manager of which is Shangqi Capital, which
held approximately 0.10% partnership interests in Jiaxing
SAIC as of the Latest Practicable Date, and the largest
limited partner of which is Qingdao SAIC, which held
49.95% partnership interests in Jiaxing SAIC. No other
limited partners held 30% or more partnership interests in
Jiaxing SAIC as of the Latest Practicable Date. Jiaxing SAIC
is an investment fund established solely for the purpose of
investing in the Group.
Wenzhou Transportation
Group
A limited liability company established in the PRC, which is
wholly owned by the Wenzhou Municipal People’s
Government State-owned Assets Supervision and
Administration Commission (਷Ϟ༟ପ္ຖ
ึ). Wenzhou Transportation Group primarily
focuses on road passenger transport services operations and
urban public transportation.
Tianjin Hexie Haihe A limited partnership established in the PRC, the general
partner of which is Tianjin Yuhui Management Consulting
Co., Ltd. (ʮ̡,“ Tianjin Yuhui ”),
which held approximately 0.015% partnership interests in
Tianjin Hexie Haihe as of the Latest Practicable Date. Tianjin
Yuhui is wholly owned by Tianjin Chenhui Investment
Management Co., Ltd. (ʮ̡,
“Tianjin Chenhui ”). The largest shareholder of Tianjin
Chenhui is Cui Guangfu ( ੦ᄿ၅), holding 20% equity
interests in Tianjin Chenhui as of the Latest Practicable Date.
The fund manager of Tianjin Hexie Haihe is Tianjin Chenhui.
The largest limited partner of Tianjin Hexie Haihe is Yiwu
Hexie Jinhong Equity Investment Partnership (Limited
Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ)),
which held approximately 99.97% partnership interests in
Tianjin Hexie Haihe as of the Latest Practicable Date. Tianjin
Hexie Haihe is an equity investment fund which principally
focuses on investments in advanced manufacturing and new
energy industries.
HISTORY AND DEVELOPMENT
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--- page 158 ---
Name of Pre-IPO
Investors Background
Wuhu Wenming A limited partnership established in the PRC, the general
partner and fund manager of which is Beijing Wenming
Investment Fund Management Co., Ltd. (ږ
ʮ̡,“ Beijing Wenming ”), which held 0.1%
partnership interests in Wuhu Wenming as of the Latest
Practicable Date. Beijing Wenming is ultimately controlled
by Hou Changqing (ڡڗڨThe only limited partner of
Wuhu Wenming is Hebei Yangyuan Zhihui Beverage Co.,
Ltd. (ʮ̡, a company listed on
the Shanghai Stock Exchange, stock code: 603156), which
held 99.9% partnership interests in Wuhu Wenming as of the
Latest Practicable Date. Wuhu Wenming is an investment
fund which principally focuses on investments in
semiconductor, new energy and technology industries.
Pingan Investment A limited partnership established in the PRC, the general
partner and fund manager of which is Ping An Capital Co.,
Ltd. (ப΂ʮ̡,“ Ping An Capital ”), which
held 0.02% partnership interests in Pingan Investment as of
the Latest Practicable Date. Ping An Capital is an indirectly
wholly owned subsidiary of Ping An Insurance (Group)
Company of China, Ltd. (ᎈ(ණྠ)ʮ̡,
a company listed on the Hong Kong Stock Exchange, stock
code: 2318, and a company listed on the Shanghai Stock
Exchange, stock code: 601318). Ping An Insurance (Group)
Company of China, Ltd. is a leading integrated financial
services company, and Ping An Capital is the core equity
investment platform of Ping An Insurance (Group) Company
of China, Ltd., focusing on investments in high-end
manufacturing, energy conservation and environmental
protection, medical and health, modern technology and
services, and consumer sectors. Pingan Investment is an
investment fund managed by Ping An Capital.
HISTORY AND DEVELOPMENT
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--- page 159 ---
Name of Pre-IPO
Investors Background
SCGC A limited liability company established in the PRC, and its
controlling shareholder is the State-owned Assets
Supervision and Administration Commission of the People’s
Government of Shenzhen Municipal (਷Ϟ༟
ึ), and no other shareholders hold or
control 30% or more equity interests of SCGC. SCGC
primarily focuses on venture capital investments to nurture
and cultivate entrepreneurship and innovation. SCGC mainly
invests in companies in information technology, biomedicine
and health, intelligent manufacturing, new energy, new
materials, Internet, consumer goods and modern services, etc.
during their emerging phrases.
Foshan Manufacturing
Transformation &
Development Fund
A limited partnership established in the PRC, the general
partner of which is Foshan Laterite Winning Venture Capital
Management Co., Ltd. (ʮ̡,
“Foshan Laterite ”), which held approximately 1.34%
partnership interests in Foshan Manufacturing Transformation
& Development Fund as of the Latest Practicable Date. Foshan
Laterite is wholly owned by SCGC. The fund manager of
Foshan Manufacturing Transformation & Development Fund is
Foshan Red Earth Innovation and Entrepreneurship Industry
Guidance Fund Investment Management Co., Ltd. (ߎ
ʮ̡). The largest
limited partner of Foshan Manufacturing Transformation &
Development Fund is Foshan Financial Investment Holding
Co., Ltd. (ʮ̡), holding
approximately 67.11% partnership interests in Foshan
Manufacturing Transformation & Development Fund as of the
Latest Practicable Date. No other limited partners held 30% or
more partnership interests in Foshan Manufacturing
Transformation & Development Fund as of the Latest
Practicable Date. Foshan Manufacturing Transformation &
Development Fund is an private equity investment fund
primarily focusing on investment in new materials, new
generation of information technology, power equipment, and
basic and new manufacturing sectors.
HISTORY AND DEVELOPMENT
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--- page 160 ---
Name of Pre-IPO
Investors Background
HOPU Orient A limited partnership established in the PRC, the general
partner and fund manager of which is Ningbo Meishan
Free Trade Port Guopuxing Investment Management Co.,
Ltd. (ʮ̡,“ Ningbo
Guopuxing ”). The largest shareholders of Ningbo
Guopuxing are Zhang Ran ( ੵ್) and Chen Rui ( ௓ጶ), each
holding 41% equity interests. As of the Latest Practicable
Date, the only limited partner of HOPU Orient is China
Orient Asset Management Co., Ltd. (΅
ʮ̡, COAMC). HOPU Orient is an investment fund
established solely for the purpose of investing in the Group.
CNGR A joint stock limited liability company established in the PRC
with its shares listed on the Shenzhen Stock Exchange (stock
code: 300919). The ultimate beneficial owners of CNGR are
Deng Weiming (׼and Wu Xiaoge ( юʃဂ). CNGR
mainly engages in the R&D, production, and sales of new
energy materials.
CITICS Investment A limited liability company established in the PRC and a
wholly owned subsidiary of CITIC Securities Company
Limited (ʮ̡, a company listed on the
Hong Kong Stock Exchange, stock code: 6030, and a
company listed on the Shanghai Stock Exchange, stock code:
600030). CITICS Investment is a related party of CITIC
Securities (Hong Kong) Limited. CITICS Investment
primarily focuses on financial product investment, securities
investment, and equity investment.
HISTORY AND DEVELOPMENT
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--- page 161 ---
Name of Pre-IPO
Investors Background
Chuangyi Chengtun A limited partnership established in the PRC, the general
partners of which are SDIC Chuangyi Industry Fund
Management Co., Ltd. (ʮ̡,
“SDIC Chuangyi ”), and Beijing Chengtun Tianyu Private
Equity Fund Management Co., Ltd. (ږ
ʮ̡,“ Chengtun Tianyu ”), which held
approximately 0.33% and 1.67% partnership interests in
Chuangyi Chengtun, respectively, as of the Latest Practicable
Date. SDIC Chuangyi is a wholly owned subsidiary of State
Development & Investment Corporation Ltd. (ක೯ҳ༟
ʮ̡, SDIC). SDIC is wholly owned by the State-
owned Assets Supervision and Administration Commission of
the State Council (ึ).
Chengtun Tianyu is also the fund manager of Chuangyi
Chengtun, and is ultimately controlled by Yao Xiongjie (ඪ
௫). The limited partners of Chuangyi Chengtun are Central
Enterprises Rural Industry Investment Fund Co., Ltd. ( ʕ̯Ά
ʮ̡), which held
approximately 49.67% partnership interests in Chuangyi
Chengtun as of the Latest Practicable Date, and Xiamen
Changsheng Investment Partnership (Limited Partnership)
(ᬅସҳ༟ΥྫΆุ(Υྫ)), which held
approximately 48.33% partnership interests in Chuangyi
Chengtun as of the Latest Practicable Date. Chuangyi
Chengtun is an investment fund which principally focuses on
investments in new energy industries.
XCMG No. 1 Fund A limited partnership established in the PRC, the general
partner and fund manager of which is XCMG Equity
Investment Co., Ltd. (ʮ̡,“ XCMG
Investment ”), which held approximately 0.98% partnership
interests in XCMG No. 1 Fund as of the Latest Practicable
Date. The largest shareholder of XCMG Investment is XCMG
Construction Machinery Group Co., Ltd. (ʈණྠʈ೻ዚ૛
ʮ̡, a company listed on the Shenzhen Stock
Exchange, stock code: 000425, “ XCMG”), which held 40%
equity interests in XCMG Investment. No other shareholders
held more than 30% equity interests in XCMG Investment.
XCMG is a leading construction machinery company in
China. The largest limited partner of XCMG No. 1 Fund is
XCMG Industrial Investment Partnership (Limited
Partnership) (ʈପุҳ༟ΥྫΆุ(Υྫ)), which
held approximately 98.04% partnership interests in XCMG
No. 1 Fund as of the Latest Practicable Date. XCMG No. 1
Fund is an investment fund which principally focuses on
investments in new energy industries.
HISTORY AND DEVELOPMENT
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--- page 162 ---
Name of Pre-IPO
Investors Background
Wenzhou Chengyuan A limited partnership established in the PRC, the general
partners of which are CNCB Shanghai (ᐚ(ɪऎ)ᛆҳ༟
၍ଣΥྫΆุ(Υྫ)) and Wenzhou Haiyu New Material
Technology Co., Ltd. (ʮ̡),
“Wenzhou Haiyu ,” which held approximately 0.004% and
0.38% partnership interests, respectively, in Wenzhou
Chengyuan as of the Latest Practicable Date. CNCB
Shanghai is ultimately controlled by China CITIC Bank
Corporation Limited (a company listed on the Hong Kong
Stock Exchange, stock code: 998). The largest shareholder of
Wenzhou Haiyu is Zhang Heng ( ੵፅ), holding 22% equity
interests in Wenzhou Haiyu as of the Latest Practicable Date.
The fund manager of Wenzhou Chengyuan is CNCB
Shanghai. The largest limited partner of Wenzhou Chengyuan
is Wenzhou Xinjing Equity Investment Partnership (Limited
Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ),
“Wenzhou Xinjing ”), which held approximately 51.07%
partnership interests in Wenzhou Chengyuan as of the Latest
Practicable Date. The general partner of Wenzhou Xinjing is
CNCB Shanghai as of the Latest Practicable Date. China
CITIC Bank Corporation Limited is an associate to CITIC
Securities (Hong Kong) Limited. Wenzhou Chengyuan is an
investment fund which principally focuses on investments in
new energy industries.
Jiaxing Yuzhi A limited partnership established in the PRC, the general
partner and fund manager of which is Shanghai Yuda
Investment Management Co., Ltd. (ʮ
̡,“ Yuda Capital ”), which held approximately 0.01%
partnership interests in Jiaxing Yuzhi as of the Latest
Practicable Date. Yuda Capital is wholly owned by Li Yi ( ҽ
ᆇ). Yuda Capital is a professional equity fund management
firm in the PRC with a focus on technology, robotics, new
energy, consumer and service industries. The largest limited
partner of Jiaxing Yuzhi is Yue Hongwei (ਃ), who held
approximately 30.81% partnership interests in Jiaxing Yuzhi
as of the Latest Practicable Date. No other limited partners
held 30% or more partnership interests in Jiaxing Yuzhi as of
the Latest Practicable Date. Jiaxing Yuzhi is an investment
vehicle which focuses on investments in lithium battery
related opportunities.
HISTORY AND DEVELOPMENT
– 153 –


--- page 163 ---
Name of Pre-IPO
Investors Background
Guangdong Guangxin
Private Equity
A limited partnership established in the PRC, the general
partner and fund manager of which is Guangdong Guangxin
Emerging Industry Investment Private Equity Fund
Management Co., Ltd. (၍ଣ
ʮ̡,“ Guangxin Fund ”), which held approximately
1.18% partnership interests in Guangdong Guangxin Private
Equity as of the Latest Practicable Date. The largest
shareholder of Guangxin Fund holding 35% of its equity
interests is Guangdong Guangxin Holdings Group Ltd. (؇
ʮ̡), which is owned as to 90% by
Guangdong People’s Government, and 10% by the
Department of Finance of Guangdong Province. The limited
partners of Guangdong Guangxin Private Equity are Wenzhou
Hongfu Dayu Equity Investment Partnership (Limited
Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ)),
which held approximately 58.82% partnership interests
in Guangdong Guangxin Private Equity as of the
Latest Practicable Date, and Guangdong Guangxin
Industrial Investment Fund Partnership (Limited Partnership)
(ΥྫΆุ(Υྫ), “ Guangdong
Guangxin Industrial Investment ”), which held 40%
partnership interests in Guangdong Guangxin Private Equity
as of the Latest Practicable Date. Guangdong Guangxin
Private Equity is an investment fund which primarily focuses
on investments in new energy and new materials sectors.
Wenzhou Zhenxu A limited partnership established in the PRC, the general
partner and fund manager of which is Shanghai Yijia Private
Fund Management Co., Ltd. (ʮ
̡,“ Shanghai Yijia ”), which held approximately 0.06%
partnership interests in Wenzhou Zhenxu as of the Latest
Practicable Date. Shanghai Yijia is controlled by Lin Gongyi
(ʮ່), who is also a limited partner of Wenzhou Zhenxu
holding approximately 6.14% partnership interests as of the
Latest Practicable Date. The largest limited partner of
Wenzhou Zhenxu is Rong Yanlin ( ϐᜮ೙), who held
approximately 30.68% partnership interests in Wenzhou
Zhenxu as of the Latest Practicable Date. No other limited
partners held 30% or more partnership interests in Wenzhou
Zhenxu as of the Latest Practicable Date. Wenzhou Zhenxu is
an investment fund established solely for the purpose of
investing in the Group.
HISTORY AND DEVELOPMENT
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--- page 164 ---
Name of Pre-IPO
Investors Background
Guangdong Jiarui A limited partnership established in the PRC, the general
partner and fund manager of which is Beijing Dezaihou
Investment Management Center (Limited Partnership) ( ̏ԯ
ҳ༟၍ଣʕː(Υྫ), “ Beijing Dezaihou ”),
which held approximately 0.98% partnership interests of
Guangdong Jiarui as of the Latest Practicable Date. The
general partner of Beijing Dezaihou is Beijing Dezaihou
Enterprise Management Co., Ltd. (“ Dezaihou Enterprise
Management ”), which held approximately 7.21%
partnership interests in Beijing Dezaihou as of the Latest
Practicable Date. Dezaihou Enterprise Management is
ultimately controlled by Dong Yang ( ໨౮). The largest
limited partner of Guangdong Jiarui is Guangdong Dezaihou
Yingxing Equity Investment Partnership (Limited
Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ)),
which held approximately 41.98% partnership interests in
Guangdong Jiarui as of the Latest Practicable Date. No other
limited partners held 30% or more partnership interests in
Guangdong Jiarui as of the Latest Practicable Date.
Guangdong Jiarui is an investment fund which principally
focuses on investments in new energy vehicle industries.
Jiaxing Rongpu A limited partnership established in the PRC, the general
partner and fund manager of which is Zhejiang Winreal
Investment Management Co., Ltd. (ʮ
̡,“ Zhejiang Winreal ”), which held approximately 0.10%
partnership interests in Jiaxing Rongpu as of the Latest
Practicable Date. Zhejiang Winreal is ultimately controlled
by Huang Jinping (̻). The largest limited partner of
Jiaxing Rongpu is Zhejiang Rongteng Venture Capital
Partnership (Limited Partnership) (ᙜ௴ุҳ༟ΥྫΆ
ุ(Υྫ), “ Zhejiang Rongteng ”), which held
approximately 59.94% partnership interests in Jiaxing
Rongpu as of the Latest Practicable Date. The general partner
of Zhejiang Rongteng is Zhejiang Winreal as of the Latest
Practicable Date. No other limited partners held 30% or more
partnership interests in Jiaxing Rongpu as of the Latest
Practicable Date. Jiaxing Rongpu is an investment fund
established solely for the purpose of investing in the Group.
HISTORY AND DEVELOPMENT
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--- page 165 ---
Name of Pre-IPO
Investors Background
Wuhan Yunshang A limited partnership established in the PRC, the general
partner of which is Zhejiang Silicon Paradise Chaoyang
Venture Capital Co., Ltd. (ʮ
̡,“ Zhejiang Silicon Paradise ”), which held approximately
1.00% partnership interests in Wuhan Yunshang as of the
Latest Practicable Date. Zhejiang Silicon Paradise is
ultimately controlled by Heaven-Sent Industrial Group Co.,
Ltd. (ʮ̡, a company listed on
the National Equities Exchange and Quotations, stock code:
833044, “ Heaven-Sent Group ”) as of the Latest Practicable
Date. Heaven-Sent Group is a comprehensive industrial
group, whose principal business includes private equity fund
management business, as well as new energy, new materials,
smart manufacturing, precious metals and other industry-
related industrial operation. The fund manager of Wuhan
Yunshang is TTGG Venture Capital Group Co., Ltd. ( ˂ੀᾼ
ʮ̡). The largest limited partner of
Wuhan Yunshang is Wuhan Silicon Paradise Yunke Venture
Capital Partnership (Limited Partnership) (ဏ˂ੀᾼԋථ
௴ุҳ༟ΥྫΆุ(Υྫ)), which held approximately
29.39% partnership interests in Wuhan Yunshang as of the
Latest Practicable Date. Wuhan Yunshang is an investment
fund which principally focuses on investments in new energy
industries.
Jiaxing Aohao A limited partnership established in the PRC, the general
partner and fund manager of which is Aoyang (Shanghai)
Private Equity Fund Management Co., Ltd. (ݱ(ɪऎ)ӷ෍ਿ
ʮ̡,“ Aoyang Shanghai ”), which held 0.92%
partnership interests in Jiaxing Aohao as of the Latest
Practicable Date. The largest shareholder of Aoyang Shanghai
is Gan Qian ( ଑ᑹ), holding 41% equity interests as of the
Latest Practicable Date. The largest limited partner of Jiaxing
Aohao is Wang Yuanxin ( ˮ๕㒥), who held approximately
20.15% partnership interests in Jiaxing Aohao as of the Latest
Practicable Date. Jiaxing Aohao is an investment fund which
focuses on investment in new energy industries.
HISTORY AND DEVELOPMENT
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Name of Pre-IPO
Investors Background
Zibo Junci A limited partnership established in the PRC, the general partner
and fund manager of which is Shanghai Junci Investment Co.,
Ltd. (ʮ̡,“ Shanghai Junci ”), which
held approximately 1.96% partnership interests in Zibo Junci as
of the Latest Practicable Date. Shanghai Junci is ultimately
controlled by Zhang Fenglin (؍The limited partners of
Zibo Junci are Wenzhou Junying No. 18 Venture Capital
Partnership (Limited Partnership) ( ๝ψཡᙊɤɞ໮௴ุҳ༟Υ
ྫΆุ(Υྫ), “Wenzhou Junying ”), Zibo Huahui Equity
Investment Partnership (Limited Partnership) (ᛆҳ
༟ΥྫΆุ(Υྫ), “ Zibo Huahui ”), Zibo Qingxian
Equity Investment Partnership (Limited Partnership) ( ଍௹ᅅሬ
ᛆҳ༟ΥྫΆุ(Υྫ), “ Zibo Qingxian ”), Zibo
Shunlong Equity Investment Partnership (Limited Partnership)
(ᛆҳ༟ΥྫΆุ(Υྫ), “ Zibo Shunlong ”)
and Zibo Junci Hongchuang No. 2 Equity Investment Fund
Partnership (Limited Partnership) (ᛆҳ༟
ΥྫΆุ(Υྫ), “ Junci Hongchuang ”), which held
approximately 42.14%, 21.02%, 11.67%, 11.61% and 11.61%
partnership interests in Zibo Junci, respectively, as of the Latest
Practicable Date. All of the general partners of Wenzhou
Junying, Zibo Huahui, Zibo Qingxian, Zibo Shunlong and Junci
Hongchuang are Shanghai Junci. Zibo Junci is an investment
fund which principally focuses on investments in technology
industries.
Mr. Zhang Xiangkang A PRC individual, being an individual private investor.
HISTORY AND DEVELOPMENT
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--- page 167 ---
Name of Pre-IPO
Investors Background
Huzhou Lianjie A limited partnership established in the PRC, the general
partner and fund manager of which is Hangzhou Fusion
Assets Management Co., Ltd. (ʮ̡,
“Hangzhou Fusion ”), which held approximately 1.09%
partnership interests in Huzhou Lianjie as of the Latest
Practicable Date. Hangzhou Fusion is ultimately controlled
by Jiang Ping ( Ϫ̻). The largest limited partners of Huzhou
Lianjie are Qingdao Guochao Chuangfu Equity Investment
Partnership (Limited Partnership) (ᛆҳ༟Υ
ྫΆุ(Υྫ), “ Qingdao Guochao ”) and Qingdao
Carbon Neutral Equity Investment Partnership (Limited
Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ),
“Qingdao Carbon Neutral ”), each holding approximately
43.62% partnership interests in Huzhou Lianjie as of the
Latest Practicable Date. The general partner of each of
Qingdao Guochao and Qingdao Carbon Neutral is Hangzhou
Fusion. Huzhou Lianjie is an investment fund which
principally focuses on investments in power batteries and
other new energy vehicle-related industries.
Silver Saddle Fund A limited partnership established in the PRC, the general
partner and fund manager of which is Shanghai Silver Saddle
Equity Investment Management Co., Ltd. (ᛆҳ༟
ʮ̡,“ Shanghai Silver Saddle ”), which held
approximately 1.10% partnership interests in Silver Saddle
Fund as of the Latest Practicable Date. The largest
shareholder of Shanghai Silver Saddle holding 27.5% of its
equity interests is Sinochem International Corporation ( ʕʷ
਷ყ(ٰ)ʮ̡, a company listed on the Shanghai
Stock Exchange, stock code: 600500, “ Sinochem
International ”). The largest limited partner of Silver Saddle
Fund is Sinochem International, which held approximately
30.84% partnership interests in Silver Saddle Fund as of the
Latest Practicable Date. No other limited partners held 30%
or more partnership interests in Silver Saddle Fund as of the
Latest Practicable Date. Silver Saddle Fund is an investment
fund which principally focuses on investments in new
materials and new energy.
HISTORY AND DEVELOPMENT
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Name of Pre-IPO
Investors Background
Zhejiang University
Education Foundation
A nation-wide non-public foundation approved by the
Ministry of Education of the PRC and registered at the
Ministry of Civil Affairs of the PRC in July 2006. The
foundation accepts donation from all sectors of the society
and the funds are mainly used in areas including supporting
Zhejiang University’s construction of teaching and scientific
research facilities, the admission of talents, international
exchange funds, fellowships, scholarships and bursaries, the
university’s educational and other public interest projects.
Longwan Financial
Holdings
A limited liability company established in the PRC which is
controlled by Wenzhou High-tech Industrial Development
Zone State-owned Holding Group Co., Ltd. (“ Wenzhou
Gaoxin Guokong Group ”) as to 90% of its equity interests
as of the Latest Practicable Date. Wenzhou Gaoxin Guokong
Group is wholly owned by the Wenzhou High-tech Industrial
Development Zone Finance Bureau ( ๝ψ৷อҦஔପุක೯
҅). Longwan Financial Holdings primarily focuses on
investment holding.
Wenzhou Gongchuang A limited liability company established in the PRC and a
subsidiary of Wenzhou Industry and Energy Development
Group Co., Ltd. (ʮ̡,
“Wenzhou Industry ”) as of the Latest Practicable Date.
Wenzhou Industry is controlled by Wenzhou Municipal
People’s Government State-owned Assets Supervision and
Administration Commission (਷Ϟ༟ପ္ຖ
ึ) as to approximately 91.63% of its equity
interests. Wenzhou Gongchuang primarily focuses on
investment and asset management.
HISTORY AND DEVELOPMENT
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Name of Pre-IPO
Investors Background
Zhongyuan Hejia A limited partnership established in the PRC, the general
partner and fund manager of which is Zhongyuan Hechuang
Equity Investment Fund Management (Zhuhai) Co., Ltd. ( ʕ
၍ଣ(मऎ)ʮ̡,“ Zhongyuan
Hechuang ”), which held 0.125% partnership interests in
Zhongyuan Hejia as of the Latest Practicable Date.
Zhongyuan Hechuang is ultimately controlled by Fan
Weizhou (ݲThe largest limited partner of Zhongyuan
Hejia is Beijing Miaosen Investment Co., Ltd. ( ̏ԯ↿ಌҳ༟
ʮ̡), which held 99.25% partnership interests in
Zhongyuan Hejia as of the Latest Practicable Date.
Zhongyuan Hejia is an investment fund which principally
focuses on investments in high-tech industries such as new
energy, new energy vehicles, autonomous driving, and high-
end manufacturing.
Suzhou NewMargin A limited partnership established in the PRC, the general
partner and fund manager of which is Suzhou NewMargin
Future Venture Capital Management Co., Ltd. ( ᘽψᑌ௴͊Ը
ʮ̡,“ NewMargin Future ”), which held
approximately 0.70% partnership interests in Suzhou
NewMargin as of the Latest Practicable Date. NewMargin
Future is ultimately controlled by Yin Baining (ྐྵ). The
largest limited partner of Suzhou NewMargin is Jiaxing
Changfeng Ruijun Venture Capital Partnership (Limited
Partnership) (๿ඓ௴ุҳ༟ΥྫΆุ(Υྫ),
“Jiaxing Ruijun ”), holding approximately 70.42%
partnership interests in Suzhou NewMargin as of the Latest
Practicable Date. The general partner of Jiaxing Ruijun is
Jiaxing Changfeng Equity Investment Co., Ltd. (ٰࠬڗ
ʮ̡), which is ultimately controlled by Jin
Minfan (ઽɭ). Suzhou NewMargin is an investment fund
primarily focusing on investment in energy conservation,
environmental protection and green energy industries.
3W Global I A limited liability company incorporated under the laws of
the Cayman Islands, and a wholly owned subsidiary of 3W
Global Fund as of the Latest Practicable Date. 3W Global
Fund is managed by 3W Fund Management Limited as its
investment manager. 3W Fund Management Limited is an
investment management firm with expertise in equity
investments. 3W Global I primarily focuses on investment in
new energy sector.
HISTORY AND DEVELOPMENT
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Name of Pre-IPO
Investors Background
Qingdao Heaven-Sent A limited partnership established in the PRC, the general
partner and fund manager of which is Tibet Shannan Heaven-
Sent Changji Investment Management Co., Ltd. (ᾼ
ʮ̡,“ Tibet Heaven-Sent ”),
which held 1% partnership interests in Qingdao Heaven-Sent
as of the Latest Practicable Date. Tibet Heaven-Sent is a
wholly owned subsidiary of Heaven-Sent Group. The limited
partners of Qingdao Heaven-Sent holding 30% or more of its
partnership interests are Heaven-Sent Group and Qingdao
Rongguang Huitong Investment Co., Ltd. (࿲Έිஷҳ༟
ʮ̡), which held 49.0% and 37.4% partnership interests
in Qingdao Heaven-Sent, respectively, as of the Latest
Practicable Date. Qingdao Heaven-Sent is an investment fund
established solely for the purpose of investing in our Group.
Lishui Xiangxi A limited partnership established in the PRC, the general
partner and fund manager of which is Hangzhou Xiangxing
Private Equity Fund Management Co., Ltd. (ጳӷ෍ਿ
ʮ̡,“ Hangzhou Xiangxing ”), which held
0.75% partnership interests in Lishui Xiangxi as of the Latest
Practicable Date. Hangzhou Xiangxing is controlled by
Huang Jinshuai (܏ږas to 95% of its equity interests. The
largest limited partner of Lishui Xiangxi is Guanbang Saide
(Zibo) Equity Investment Partnership (Limited Partnership)
(஫Ԟᒄᅃ(଍௹)ᛆҳ༟ΥྫΆุ(Υྫ), “ Guanbang
Saide ”), which held 53.00% partnership interests in Lishui
Xiangxi as of the Latest Practicable Date. The general partner
and fund manager of Guanbang Saide is Zhejiang Guanbang
Private Equity Fund Management Co., Ltd. ( एϪ஫Ԟӷ෍ਿ
ʮ̡), which is controlled by Zhao Lingzhi ( Ⴛᜳ
ٺNo other limited partners held 30% or more partnership
interests in Lishui Xiangxi as of the Latest Practicable Date.
Lishui Xiangxi is an investment fund established solely for
the purpose of investing in our Group.
HISTORY AND DEVELOPMENT
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Name of Pre-IPO
Investors Background
Xiamen Fuxinrui A limited partnership established in the PRC, the general
partner of which is Fujian Fulv Lianxin Fund Management
Co., Ltd. (ʮ̡,“ Fulv
Lianxin ”), which held approximately 0.02% partnership
interests in Xiamen Fuxinrui as of the Latest Practicable
Date. Fulv Lianxin is controlled by Shanghai Lianxin
Jusheng Venture Capital Management Co., Ltd. (ၳ
ʮ̡,“ Shanghai Lianxin ”) as to 52%
of its equity interests, and the largest shareholder of Shanghai
Lianxin is Liao Baoqin ( ࿋ᘒೞ), holding 48.82% of its
equity interests. The fund manager of Xiamen Fuxinrui is
Fulv Lianxin. The largest limited partner of Xiamen Fuxinrui
is Xiang Hongxia (ᒳ), who held approximately 70.89%
partnership interests in Xiamen Fuxinrui as of the Latest
Practicable Date. Xiamen Fuxinrui is an investment fund
which principally focuses on investments in new energy
industries.
Hangzhou Longqi A limited partnership established in the PRC, the general
partner and fund manager of which is Hangzhou Longqi
Investment Management Co., Ltd. (ʮ
̡,“ Longqi Management ”), which held approximately
1.54% partnership interests in Hangzhou Longqi as of the
Latest Practicable Date. Longqi Management is controlled by
Lin Jian (ᒟ) as to 75% of its equity interests. The largest
limited partners of Hangzhou Longqi are Dai Lerong ( Ꮦᆀ
࢙and Chen Xiuzhen (ޜeach holding approximately
34.94% partnership interests in Hangzhou Longqi as of the
Latest Practicable Date. Hangzhou Longqi is an investment
fund which principally focuses on investments in new energy
industries.
HISTORY AND DEVELOPMENT
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Name of Pre-IPO
Investors Background
Guangdong Guangxin
Equity Investment
A limited partnership established in the PRC, the general
partner and fund manager of which is Guangxin Fund, which
held approximately 0.54% partnership interests in
Guangdong Guangxin Equity Investment as of the Latest
Practicable Date. The largest limited partner of Guangdong
Guangxin Equity Investment is Guangxinrui (Guangzhou)
Consulting Partnership (Limited Partnership) ( ᄿอ๿(ᄿψ)
ፔ༔ΥྫΆุ(Υྫ)), which held approximately 51.07%
partnership interests in Guangdong Guangxin Equity
Investment as of the Latest Practicable Date. Guangdong
Guangxin Industrial Investment is also a limited partner of
Guangdong Guangxin Equity Investment, which held
approximately 39.46% partnership interests in Guangdong
Guangxin Equity Investment. Guangdong Guangxin Equity
Investment is an investment fund which principally focuses
on investments in new energy industries.
To the best of our knowledge, information and belief and having made all reasonable
enquiries, all the Pre-IPO Investors are independent third parties.
Public Float
The 1,969,495,912 Shares held by certain of our existing Shareholders, representing
approximately 91.15% of our total issued Shares as of the Latest Practicable Date, or
approximately 86.50% of our total issued Shares upon completion of the Global Offering, will
not be considered as part of the public float as the Shares they hold are Domestic Unlisted
Shares which will not be converted into H Shares and public float following the completion of
the Global Offering.
The remaining 191,307,938 Domestic Unlisted Shares held by certain of our existing
Shareholders, representing approximately 8.85% of our total issued Shares as of the Latest
Practicable Date, or approximately 8.40% of our total issued Shares upon completion of the
Global Offering, will be converted into H Shares on a one-for-one basis following the
completion of the Global Offering. Such H Shares will be counted towards the public float of
the Company following the completion of the Global Offering. See “Share Capital –
Conversion of Domestic Unlisted Shares into H Shares.”
Pursuant to the applicable PRC law, within the 12 months following the Global Offering,
all current Shareholders are not allowed to dispose of any of the Shares held by them.
HISTORY AND DEVELOPMENT
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--- page 173 ---
It is currently expected that the Company will have a market capitalization of over
HK$10.0 billion at the time of the Listing (after completion of the Global Offering). The
Company has applied to the Stock Exchange, and the Stock Exchange has granted, a waiver
from strict compliance with the requirements of Rule 8.08(1) of the Listing Rules. Therefore,
the minimum public float of the Company will be 13.5% of the enlarged issued share capital
of the Company upon the completion of the Global Offering, subject to our undertakings
including that we will increase the public float percentage to not less than 15.0% through
further H-share capital issuance plans, failing which the Company will procure one or more its
current Shareholders to apply for H share full circulation to convert certain Domestic Unlisted
Shares they own into H shares, completion of which is subject to CSRC’s approval, within a
period of three years from the Listing Date and make appropriate announcement and/or
disclosure after the Listing pursuant to the Listing Rules in respect of such conversion of
Domestic Unlisted Shares into H Shares. See “Waivers from Strict Compliance with the Listing
Rules” for details.
ACQUISITION OF BATTEROTECH SHANGHAI
BatteroTech Shanghai was a limited liability company incorporated in the PRC on July
23, 2020 and was primarily engaged in the R&D, production and sales of EV and ESS
lithium-ion batteries from cell level to system application. At the time of establishment,
BatteroTech Shanghai was owned by Wenzhou Futang Enterprise Management Partnership
(Limited Partnership) ( ๝ψబੀΆุ၍ଣΥྫΆุ(Υྫ), “ Wenzhou Futang ”) as to
11.40%, by Wenzhou Chenshan as to 28.60%, by Shenzhen Jiawei Investment Development
Co., Ltd. (ʮ̡,“ Shenzhen Jiawei ”), an independent third party, as
to 9.00%, by Ruizhou Energy Co., Ltd. (ʮ̡,“ Ruizhou Energy ”), a wholly
owned subsidiary of Yongqing Technology, as to 11.00% and by Ruitu Energy as to 40.00%.
Wenzhou Futang and Wenzhou Chenshan are shareholding platforms of the employees of
BatteroTech Shanghai, the general partners of which are Mr. Zhong Kaifu ( ᒤකబ), a member
of the management team of BatteroTech Shanghai, and Mr. Zhang Wutang ( ੵʞੀ), a director
and the general manager of BatteroTech Shanghai. BatteroTech Shanghai has been controlled
by the Controlling Shareholders since its establishment.
On August 16, 2021, the Company acquired the 51% shareholding in BatteroTech
Shanghai from Ruitu Energy and Ruizhou Energy at a consideration of RMB40 million and
RMB11 million, respectively. The considerations were determined based on the amount of the
registered capital of BatteroTech Shanghai being transferred, and were fully settled on August
24, 2021. On the same day, Shanghai Wanlu Investment Co., Ltd. (ʮ̡,
“Shanghai Wanlu ”), an independent third party, acquired the 9% shareholding in BatteroTech
Shanghai from Shenzhen Jiawei at a consideration of RMB11 million. Such consideration was
determined based on arm’s length negotiations between Shenzhen Jiawei and Shanghai Wanlu.
Upon completion of the equity transfer, BatteroTech Shanghai was owned as to 51% of its
equity interests by the Company.
HISTORY AND DEVELOPMENT
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On August 16, 2021, the Company, Wenzhou Chenshan, Wenzhou Futang and Shanghai
Wanlu further contributed RMB659 million, RMB114.4 million, RMB45.6 million and RMB81
million to BatteroTech Shanghai, respectively, which were fully credited as the registered
capital of BatteroTech Shanghai. Upon completion of the capital contribution, the registered
capital of BatteroTech Shanghai increased from RMB100 million to RMB1,000 million.
The table below sets forth the shareholding structure of BatteroTech Shanghai as at the
Latest Practicable Date.
Name
Registered
capital
Equity interest
percentage
(RMB, million) (%)
The Company ......................................................... 710 71.00
Wenzhou Chenshan................................................. 143 14.30
Shanghai Wanlu ...................................................... 90 9.00
Wenzhou Futang ..................................................... 57 5.70
Total ....................................................................... 1,000 100.00
As advised by our PRC Legal Advisor, the acquisition of BatteroTech Shanghai has been
properly and legally completed according to applicable PRC laws and regulations and any
necessary approvals from the relevant authorities have been obtained as at the Latest
Practicable Date. The Company had not carried out any major acquisitions during the Track
Record Period and up to the Latest Practicable Date pursuant to Rule 4.05A of the Listing
Rules.
OUR SUBSIDIARIES
BatteroTech Shanghai
For details of BatteroTech Shanghai, see “– Acquisition of BatteroTech Shanghai” above.
BatteroTech Jiashan
BatteroTech Jiashan was incorporated in the PRC on December 9, 2020. As of the Latest
Practicable Date, BatteroTech Jiashan is a wholly owned subsidiary of BatteroTech Shanghai
and is primarily engaged in the R&D, production and sales of EV and ESS lithium-ion batteries
from cell level to system application.
HISTORY AND DEVELOPMENT
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REPT Qingchuang
REPT Qingchuang was incorporated in the PRC on January 2, 2018. REPT Qingchuang
has been wholly owned by the Company since its establishment and primarily serves as a R&D
base for EV and ESS lithium-ion batteries from cell level to system application.
Wenzhou Qianshi
Wenzhou Qianshi was incorporated in the PRC on November 15, 2021. Wenzhou Qianshi
is an employee shareholding platform of Guangdong REPT BATTERO. As of the Latest
Practicable Date, the general partner of Wenzhou Qianshi is Zhejiang Ruiyuan, and its only
limited partner is Mr. Xiang Bingqiu (߇٢an independent third party.
Zhejiang Ruixu
Zhejiang Ruixu was incorporated in the PRC on December 6, 2019. Zhejiang Ruixu has
been wholly owned by the Company since its establishment. As of the Latest Practicable Date,
Zhejiang Ruixu has not commenced business operation, and intends to primarily engage in
sales of battery products overseas.
Zhejiang Ruiyuan
Zhejiang Ruiyuan was incorporated in the PRC on June 6, 2022. Zhejiang Ruiyuan has
been wholly owned by the Company since its establishment. As of the Latest Practicable Date,
Zhejiang Ruiyuan has not commenced business operation, and intends to primarily serve as an
investment holding platform of the Group.
Guangdong REPT BATTERO
Guangdong REPT BATTERO is a limited liability company incorporated in the PRC on
July 27, 2021. As of the Latest Practicable Date, Guangdong REPT BATTERO is controlled by
the Company, with 80% of its equity interests directly held by the Company, and 20% of its
equity interests indirectly controlled by the Company through Wenzhou Qianshi. As of the
Latest Practicable Date, Guangdong REPT BATTERO has not commenced business operation,
and intends to primarily engage in the production and sales of EV and ESS lithium-ion batteries
from cell level to system application.
HISTORY AND DEVELOPMENT
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REPT SAIC
REPT SAIC is a limited liability company incorporated in the PRC on April 15, 2022. As
of the Latest Practicable Date, REPT SAIC is owned as to 51% of its equity interests by the
Company, 44% of its equity interests by Liuzhou Saike Technology Development Co., Ltd. (ݣ
ʮ̡,“ Liuzhou Saike ”), and 5% of its equity interests by Liuzhou Ruiyu
Technology Partnership (Limited Partnership) (ҦΥྫΆุ(Υྫ), “ Liuzhou
Ruiyu ”). Liuzhou Saike is a wholly owned sub-subsidiary of SAIC Motor ( ɪӛණྠ). Liuzhou
Ruiyu is a shareholding platform intended for the employees of REPT SAIC, the general
partner of which is Liuzhou Qingyu Information Technology Services Co., Ltd. (ڦ
ʮ̡), which is wholly owned by Mr. Yu Zhaoyu, our vice president. As of the
Latest Practicable Date, REPT SAIC has commenced trial production, and intends to primarily
engage in the production and sales of EV and ESS lithium-ion batteries from cell level to
system application.
BatteroTech Wuhan
BatteroTech Wuhan was incorporated in the PRC on August 20, 2019. As of the Latest
Practicable Date, BatteroTech Wuhan is wholly owned by BatteroTech Shanghai. As of the
Latest Practicable Date, BatteroTech Wuhan has not commenced business operation.
Chongqing REPT BATTERO
Chongqing REPT BATTERO was incorporated in the PRC on March 1, 2023. As of the
Latest Practicable Date, Chongqing REPT BATTERO is wholly owned by the Company. As of
the Latest Practicable Date, Chongqing REPT BATTERO has not commenced business
operation.
BatteroTech Jiaxing
BatteroTech Jiaxing was incorporated in the PRC on April 11, 2023. As of the Latest
Practicable Date, BatteroTech Jiaxing is wholly owned by BatteroTech Jiashan. As of the
Latest Practicable Date, BatteroTech Jiaxing has not commenced business operation.
Foshan REPT BATTERO
Foshan REPT BATTERO is a limited liability company incorporated in the PRC on
October 13, 2023. As of the Latest Practicable Date, Foshan REPT BATTERO is wholly owned
by Guangdong REPT BATTERO. As of the Latest Practicable Date, Foshan REPT BATTERO
has not commenced business operation, and intends to primarily engage in the production and
sales of EV and ESS lithium-ion batteries from cell level to system application.
HISTORY AND DEVELOPMENT
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REPT Battero Germany
REPT Battero Germany was incorporated in Germany on November 3, 2023. As of the
Latest Practicable Date, REPT Battero Germany is wholly owned by the Company. As of the
Latest Practicable Date, REPT Battero Germany has not commenced business operation, and
intends to primarily engage in sales of battery products of the Group in Europe.
Infinitude Holding
Infinitude Holding was incorporated in the Cayman Islands on November 15, 2023. As of
the Latest Practicable Date, Infinitude Holding is wholly owned by the Company. As of the
Latest Practicable Date, Infinitude Holding has not commenced business operation, and intends
to primarily serve as an overseas investment holding platform of the Group.
COMPLIANCE WITH LA WS AND REGULATIONS
As advised by the PRC Legal Advisor, the Company has fulfilled asset evaluation, capital
verification and other necessary procedures in respect of its establishment, and the
establishment method and procedures were in compliance with the then applicable PRC laws
and regulations; the promoters’ agreement among the then shareholders of the Company,
pursuant to which the Company was converted into a joint stock limited liability company, was
in compliance with applicable PRC laws and regulations and there is no potential dispute
regarding such promoters’ agreement; the shareholding and capital structure of the Company
at the time of its establishment were valid and in compliance with applicable PRC laws and
regulations, and the Company has complied with applicable PRC laws and regulations in all
material respects in relation to the changes of its shareholdings.
HISTORY AND DEVELOPMENT
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CORPORATE STRUCTURE OF THE COMPANY
Corporate Structure Immediately prior to the Global Offering
20%
GP
80%
22.3%
100%
51.0% 3.0% 1.5% 1.0%
Zhejiang Ruiyuan REPT Qingchuang Zhejiang Ruixu BatteroTech Shanghai(3) REPT SAIC(4)
Wenzhou Qianshi(2)
Guangdong REPT
BATTERO
Foshan REPT
BATTERO
Chongqing REPT
BATTERO
BatteroTech Jiashan BatteroTech Wuhan
Tsingshan Group(8)
Yongqing Technology
Ruitu Energy
Wenzhou Jingli(9)
Shanghai Decent(5) Zhejiang Tsingshan(6)
Mr. Xiang
GP
12.2% 50.4% 8.7% 4.4% 1.4% 1.1%
71.5% 80%
23.7%
43.5%
11.5%
21.8%
100% 100% 100% 100%
REPT Battero
Germany
100% 71% 51%
100% 100%
Jiaxing SAIC Other pre-IPO investors(1)Wenzhou Ruili Wenzhou Zhuorui Wenzhou Qingshan
The Company
Mr. Hu Xiaodong(7)Mr. Jiang Sen(7) Mr. Cao Hui(7)
100%
BatteroTech Jiaxing
100%
100%
Infinitude Holding
HISTORY AND DEVELOPMENT
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--- page 179 ---
Notes:
(1) See “– Details of The Pre-IPO Investments ” for more information about other Pre-IPO Investors and their respective shareholding.
(2) The only limited partner of Wenzhou Qianshi is Mr. Xiang Bingqiu, an independent third party, who held 0.0005% partnership interests in Wenzhou Qi anshi.
(3) The remaining shareholders of BatteroTech Shanghai are Wenzhou Chenshan, which held 14.30% equity interests in BatteroTech Shanghai, Shanghai Wanlu, which held 9.00%
equity interests in BatteroTech Shanghai, and Wenzhou Futang, which held 5.70% equity interests in BatteroTech Shanghai. Wenzhou Futang and Wenzho u Chenshan are
shareholding platforms of the employees of BatteroTech Shanghai, and Shanghai Wanlu is an independent third party of the Company.
(4) The remaining shareholders of REPT SAIC are Liuzhou Saike, which held 44% equity interests in REPT SAIC, and Liuzhou Ruiyu, which held 5% equity int erests in REPT
SAIC. Liuzhou Saike is a wholly owned sub-subsidiary of SAIC Motor ( ɪӛණྠ). Liuzhou Ruiyu is a shareholding platform intended for the employees of REPT SAIC, the
general partner of which is Liuzhou Qingyu Information Technology Services Co., Ltd., which is wholly owned by Mr. Yu Zhaoyu, our vice president.
(5) The remaining shareholders of Shanghai Decent (the “ Remaining Shanghai Decent Shareholders ”) are Mr. Xiang Guangtong ( ධΈஷ), who held 16% equity interests in
Shanghai Decent, Mr. Zhang Jimin ( ੵጐઽ), who held 5% equity interests in Shanghai Decent, Mr. Huang Weifeng (ࢤwho held 3% equity interests in Shanghai Decent,
Mr. Wang Haijun, who held 1.5% equity interests in Shanghai Decent, Mr. Lv Shen ( ѐ͡), who held 1.5% equity interests in Shanghai Decent, and Ms. Sun Jianfen (ځܔ࢑,)
who held 1.5% equity interests in Shanghai Decent. Mr. Xiang Guangtong is Mr. Xiang’s brother. Mr. Zhang Jimin is the spouse of Ms. Xiang Airong (࢙who is Mr.
Xiang’s sister. Mr. Wang Haijun is our non-executive Director. Mr. Huang Weifeng, Mr. Lv Shen and Ms. Sun Jianfen are independent third parties of the C ompany.
(6) The other shareholder of Zhejiang Tsingshan is Mr. Xiang Guangtong, who held 20% equity interests in Zhejiang Tsingshan.
As (i) none of the Remaining Shanghai Decent Shareholders or Mr. Xiang Guangtong is a close associate of any members of the group of Controlling Shareho lders, (ii) there
is no act-in-concert agreement between any of the Remaining Shanghai Decent Shareholders or Mr. Xiang Guangtong and the members of the group of Contro lling Shareholders;
and (iii) each of Shanghai Decent and Zhejiang Tsingshan is not established solely for the purpose of acting as a common investment holding company (na mely SPV) for its
shareholders to invest in the Company, and also engages in other businesses, and therefore is not an SPV (the shareholders of which would be presumed to be a group of
controlling shareholders pursuant to Guidance Letter HKEx-GL89-16) within the meaning of Guidance Letter HKEx-GL89-16, Mr. Xiang Guangtong and th e Remaining
Shanghai Decent Shareholders do not form a part of the group of Controlling Shareholders.
(7) As (i) Mr. Jiang Sen, Mr. Hu Xiaodong and Dr. Cao Hui are not close associates of any members of the group of Controlling Shareholders, (ii) there is no act-in-concert agreement
between any of Mr. Jiang Sen, Mr. Hu Xiaodong, Dr. Cao Hui and the other members of the group of Controlling Shareholders; and (iii) Yongqing Technology is not established
solely for the purpose of acting as a common investment holding company (namely SPV) for its shareholders to invest in the Company and Yongqing Technol ogy also has other
equity investments and operates trading business, and therefore is not an SPV (the shareholders of which would be presumed to be a group of controlling shareholders pursuant
to Guidance Letter HKEx-GL89-16) within the meaning of Guidance Letter HKEx-GL89-16, Mr. Jiang Sen, Mr. Hu Xiaodong and Dr. Cao Hui do not form a part of the group
of Controlling Shareholders.
HISTORY AND DEVELOPMENT
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--- page 180 ---
(8) The remaining shareholders of Tsingshan Group (the “ Remaining Tsingshan Group Shareholders ”) are Mr. Xiang Guangtong, who held 8% equity interest in Tsingshan Group,
Mr. Sun Yuanlin (ʩᐟ), who held 5% equity interest in Tsingshan Group, Mr. Zhang Jimin, who held 5% equity interest in Tsingshan Group, Mr. He Congzhen (ޜ,)
who held 4% equity interest in Tsingshan Group, Mr. Feng Shaode ( ඹୗᅃ), who held 4% equity interest in Tsingshan Group, Mr. Jiang Haihong (ݳwho held 4% equity
interest in Tsingshan Group, Mr. Xiang Bingxue (௛), who held 4% equity interest in Tsingshan Group, Mr. Chen Shangsong (ؒwho held 3% equity interest in
Tsingshan Group, Mr. Zhang Jilun (ࡐwho held 2% equity interest in Tsingshan Group, Ms. Xiang Haiyan ( ධऎዲ), who held 2% equity interest in Tsingshan Group,
and Mr. Xu Yonghe ( ஢͑ᚲ), who held 1.5% equity interest in Tsingshan Group. Mr. Xiang Guangtong is Mr. Xiang’s brother. Ms. Xiang Haiyan is Mr. Xiang’s sister. Mr. Zhang
Jimin is the spouse of Mr. Xiang’s sister. Mr. Zhang Jilun is Mr. Zhang Jimin’s brother. Mr. Sun Yuanlin, Mr. He Congzhen, Mr. Feng Shaode, Mr. Jiang Haih ong, Mr. Xiang
Bingxue, Mr. Chen Shangsong, and Mr. Xu Yonghe are independent third parties of the Company.
As (i) none of the Remaining Tsingshan Group Shareholders is a close associate of any members of the group of Controlling Shareholders, (ii) there is no act-in-concert
agreement between any of the Remaining Tsingshan Group Shareholders and the other members of the group of Controlling Shareholders; and (iii) Tsings han Group is not
established solely for the purpose of acting as a common investment holding company (namely SPV) for its shareholders to invest in the Company and Tsin gshan Group also
has other businesses, and therefore is not an SPV (the shareholders of which would be presumed to be a group of controlling shareholders pursuant to Gui dance Letter
HKEx-GL89-16) within the meaning of Guidance Letter HKEx-GL89-16, the Remaining Tsingshan Group Shareholders do not form a part of the group of Contr olling
Shareholders.
(9) The general partner of Wenzhou Jingli is Ruitu Energy, holding 9.09% partnership interests in Wenzhou Jingli, and the limited partners of Wenzhou Jingli are Shanghai Fuqin
and Wenzhou Fuchen, holding 72.73% and 18.18% partnership interests in Wenzhou Jingli, respectively. Jinli No. 1, Jinli No. 2, Jinli No. 3, Jinli No. 4 , Jinli No. 5 and Jinli
No. 6 are limited partners of Shanghai Fuqin. The number of employees, including former employees, who participates in each of these employee shareho lding platforms are
48, 46, 45, 45, 46 and 33, respectively.
HISTORY AND DEVELOPMENT
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--- page 181 ---
Corporate Structure Immediately Following the Global Offering
20%
GP
80%
22.3%
100%
Zhejiang Ruiyuan REPT Qingchuang Zhejiang Ruixu
Wenzhou Qianshi(2)
Guangdong REPT
BATTERO
Foshan REPT
BATTERO
Chongqing REPT
BATTERO
Tsingshan Group(8)
Yongqing Technology
Ruitu Energy
Wenzhou Jingli(9)
Shanghai Decent(5) Zhejiang Tsingshan(6)
Mr. Xiang
GP
11.6% 47.8% 8.2% 4.2% 1.3% 1.1%
71.5% 80%
23.7% 11.5%
20.7%
100% 100% 100% 100%
Jiaxing SAIC Other pre-IPO investors(1)(10) Other Public ShareholdersWenzhou Ruili Wenzhou Zhuorui Wenzhou Qingshan
The Company
5.1%
Mr. Hu Xiaodong(7)Mr. Jiang Sen(7) Mr. Cao Hui(7)
51.0% 3.0% 1.5% 1.0%
43.5%
BatteroTech Shanghai(3) REPT SAIC(4)
BatteroTech Jiashan BatteroTech Wuhan
REPT Battero
Germany
100% 71% 51%
100% 100%
100%
BatteroTech Jiaxing
100%
Infinitude Holding
100%
HISTORY AND DEVELOPMENT
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Notes: See Notes (1) to (9) to the Corporate Structure Immediately prior to the Global Offering.
(10) Among these pre-IPO investors, 24 Shareholders have applied to convert 191,307,938 Domestic Unlisted Shares in aggregate held by them into H Sha res upon Listing,
representing approximately 8.40% of the enlarged issued share capital of the Company. As each of these 24 Shareholders will hold less than 10% of the Sh ares of the Company
upon Listing and is not accustomed to take instructions from core connected persons in relation to the acquisition, disposal, voting or other disposi tion of their Shares and their
acquisition of Shares were not financed directly or indirectly by core connected persons, they will not be the core connected persons of the Company up on Listing, and the H
Shares held by them will be counted towards the public float for the purpose of Rule 8.08 of the Listing Rules after the Listing. See “Share Capital – Conv ersion of Domestic
Unlisted Shares into H Shares.”
HISTORY AND DEVELOPMENT
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The information and statistics presented in this section and other sections of this
prospectus, unless otherwise indicated, were extracted from different official government
publications and other publications, and from the industry report prepared by Frost &
Sullivan, an independent market research and consulting company that was
commissioned by us, in connection with this Global Offering. The information from
official government sources has not been independently verified by us, the Joint Sponsors,
the Overall Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the
Joint Lead Managers, the Underwriters, the Capital Market Intermediaries, any of their
respective directors and advisers, or any other persons or parties involved in the Global
Offering, and no representation is given as to its accuracy.
SOURCES OF INFORMATION
We have engaged Frost & Sullivan, an independent market research consultant, to analyze
China’s lithium-ion battery industry and prepare a report for use in this prospectus, for which
we have agreed to pay an engagement fee of RMB600,000. Frost & Sullivan has prepared this
report based on data published by government agencies and non-governmental organizations
and its research. The forecasts and assumptions contained in the F&S Report are inherently
uncertain and may differ materially from actual results due to events or combinations of events
that cannot be reasonably foreseen, including the actions of governments, individuals, third
parties and competitors. Specific factors resulting in such differences may include risks
inherent in the lithium-ion battery industry in China, financial risks, labor risks, supply risks,
regulatory risks and environmental issues. Unless otherwise stated, all data and forecasts
contained in this section have been derived from the F&S Report and were based on desktop
research, expert interviews, and analysis and estimates by Frost & Sullivan. The Directors
confirm that, having exercised reasonable care, there have been no adverse changes in market
information, taken as a whole since the date of the F&S Report, that would materially limit,
contradict or adversely affect these data.
F&S Report
Frost & Sullivan is an independent global consulting firm founded in 1961 in New York
and its services include, among others, industry consulting, market strategic consulting and
corporate training. Frost & Sullivan conducted (i) primary research, which involved
discussing the status of the industry with certain leading industry participants, and interviews
with industry experts on a best-effort basis to collect information in aiding in-depth analysis;
and (ii) secondary research, which involved reviewing company reports, independent research
reports and data based on its own research database.
INDUSTRY OVERVIEW
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OVERVIEW OF LITHIUM-ION BATTERY INDUSTRY
Definition and Classification of Lithium-ion Battery
A lithium-ion battery is a type of rechargeable battery composed of cells in which lithium
ions move from the negative electrode through electrolytes to the positive electrode during
discharge and back when charging.
By cathode materials, lithium-ion batteries can be classified into: (1) LFP battery, with its
cathode materials mainly composed of lithium, iron and phosphate; (2) ternary battery, with its
cathode materials mainly composed of lithium, nickel, cobalt and manganese (NCM) or
lithium, nickel, cobalt and aluminum oxides (NCA); (3) other lithium-ion batteries, including
LCO batteries (lithium and cobalt), LMO batteries (lithium and manganese oxide), LMFP
batteries (lithium, iron, manganese and phosphate), LTO batteries (lithium titanate oxide). LFP
and ternary batteries currently dominate the lithium-ion battery market for new energy
applications.
By the package shape of the battery cell, lithium-ion batteries can be classified into
cylindrical cell, prismatic cell and pouch cell. Prismatic cell currently takes up the majority
share of the lithium-ion battery market for new energy applications.
Overview of Lithium-ion Battery Value Chain
The lithium-ion battery value chain mainly includes five stages: (1) mining and
processing of minerals; (2) cell components manufacturing; (3) battery cell, battery module and
battery pack manufacturing; (4) battery end uses; (5) battery recycling.
Lithium-ion batteries are mainly used in (1) electric vehicles (“EVs”) to power the
electric motors; (2) energy storage systems (“ESSs”) to store electrical energy in renewables
resources and power stations; (3) other uses including consumer electronics, electric
two-wheelers and electric tools. Lithium-ion batteries used in EVs and ESSs are together
referred to as lithium-ion batteries for new energy applications.
INDUSTRY OVERVIEW
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--- page 185 ---
Value Chain Analysis of Lithium-ion Battery Industry
Lithium Ore
Nickel Ore
Cobalt Ore
Cathode
Anode
Electrolyte
Separator
Battery Cell
Battery Pack
Phosphate Ore
Others
Iron Phosphate
Others
• NCM/NCA
•L F P
•L C O
…
Battery Module
Major Minerals Major Chemicals Major Components Manufacturing Recycling
Our core business
Upstream
Raw Materials
Midstream
Manufacturing
Downstream
Application
Major
Applications
Lithium
Carbonate
Nickel/cobalt/
manganese
Hydroxide
Electric
Vehicles
Energy
Storage
Second-life EV
Battery for
Energy Storage
Battery Material
Recycling
Others1
Consumer
Electronics
Source: Frost & Sullivan
1 Others include electric two-wheelers, electric tools, etc.
LITHIUM-ION BATTERY MARKET DEMAND
Overview of EV Battery Demand
Overview of EV Market
Electric vehicles mainly comprise of battery electric vehicle (“BEV”) and plug-in hybrid
electric vehicle (“PHEV”). BEV refers to vehicles propelled solely by electric motors using
battery. PHEV refers to vehicles that have an internal combustion engine with a motor along
with a battery connected in parallel to the internal combustion engine. The extended-range
electric vehicle (“EREV”) is also a type of PHEV . Electric vehicles can be categorized by
vehicle type, into passenger electric vehicle (“passenger EV”) and commercial electric vehicle
(“commercial EV”).
Major economies have issued favorable policies that will drive the growth of the EV
market. Major policies mainly focus on setting electrification target, providing subsidies for
EV manufacturers, and promoting carbon neutrality and higher emission standards. For
example, China 14th Five-Year Plan defines the EV industry as one of the new pillars of
China’s industrial system and the Chinese government encourages public institutions to adopt
more EVs, and targets more than 30% of newly added vehicles to be EVs; in September 2022,
Chinese authorities also announced to extend the exemption of purchase taxes on NEVs to the
end of 2023. In China, the EV subsidy policy is a fiscal policy that directly subsidizes the EV
buyers who purchase the EV . The EV subsidy amount varies depending on the model types,
selling prices etc. The EV subsidy policy in China was first introduced in 2010 through Notice
of Launching Pilot Subsidies for Private Purchases of New Energy V ehicles issued by the
Ministry of Finance, Ministry of Technology, Ministry of Industry and Information
Technology, and National Development and Reform Commission in May 2010, which provided
INDUSTRY OVERVIEW
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--- page 186 ---
up to RMB 60,000 and RMB 50,000 subsidies per car for electric vehicles and plug-in hybrid
vehicles respectively in five pilot cities including Shanghai, Shenzhen, Hangzhou, Hefei and
Changchun. In 2013, the subsidy program was expanded to more cities in China through Notice
of on Continuing on the Promotion and Application of New Energy V ehicles issued by the four
ministries mentioned above in September 2013, and the subsidies were set to be based on
vehicle types and driving ranges. Since 2018, the subsidy policies have been tightened with
decreased subsidies year over year. In December 2021, the four ministries issued Notice of
Government Subsidies for Promotion and Application of New Energy V ehicles in 2022 , which
informed that the subsidies for new energy vehicles would terminate since January 1, 2023. In
addition, the Chinese government also announced a tax policy that exempts the vehicle
purchase tax of 10% to EV buyers effective since January 1, 2014. Such tax policy has been
extended for several times. On June 19, 2023, the PRC government published the
Announcement on Extending and Optimizing the V ehicle Purchase Tax Exemption Policy for
New Energy V ehicles , according to the which, EVs purchased from January 1, 2024, to
December 31, 2025, will be exempted from vehicle purchase tax, with a maximum tax
exemption of RMB30,000 for each new energy passenger vehicle, and for new energy vehicles
purchased from January 1, 2026, to December 31, 2027, the vehicle purchase tax will be
reduced by half, with a maximum tax reduction of RMB15,000 for each new energy passenger
vehicle. In the U.S., the Clean Energy for America Act further increases the tax credit per EV
assembled in the U.S. Driven by the favorable government policies, continuous technology
improvement and cost reduction, global EV market has achieved remarkable growth in the past
and is expected to continue to grow. Global EV sales volume increased from 1,444 thousand
units in 2017 to 11,048 thousand units in 2022 at a CAGR of 50.2%. The sales volume is
expected to further increase to 35,219 thousand units in 2027, representing a 26.1% CAGR
between 2022 and 2027, with penetration rates amounting to 44.6% and 3.1% for passenger and
commercial EV respectively.
EV Sales Volume Forecast, Global, 2017 – 2027E
1,444 2,226 2,281 3,201
6,591
11,048
19,928
24,424
29,964
35,219
0
20,000
10,000
40,000
Passenger EV Commercial EV
%
Thousand Units
2017-2022 2022-2027E
50.2% 26.1%CAGR
3.1%2.6%2.2%1.9%1.6%1.4%1.1%0.8%0.8%1.1%1.1%
44.6%39.1%33.0%28.0%22.4%16.7%10.0%5.1%3.0%2.6%1.6%
Rate:
Penetration
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
15,418
30,000
Source: Frost & Sullivan
INDUSTRY OVERVIEW
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China was the world’s largest EV market by sales volume in 2022, with a sales volume
of 6,883 thousand units. Over the past few years, China has promulgated favorable policies that
drive the development of the EV industry. Chinese government started granting subsidies to EV
buyers in 2010 to level the price difference with the combustion engine vehicles and to support
the commercialization of EV . Originally the subsidy was set to end at the end of 2020 and it
was extended to the end of 2022 due to the pandemic impact. Since January 1, 2023, the
government no longer provides subsidies to EV buyers. Some EV OEMs cut prices in early
2023, considering the increasing competition due to weak demand in Q1 2023 as the first
quarter is typically low season for vehicle sales, as well as price cuts in Internal Combustion
Engine (“ICE”) vehicles as traditional automakers were selling off their older inventories
before stricter national emissions standards come into effect in July 2023. However, the price
cuts from some of EV OEMs are not expected to be an ongoing trend across the industry, but
rather were commercial decisions made by these OEMs at that point of time. The pricing
strategies of EV OEMs are affected by a number of factors including customer demands, raw
materials costs, competitive dynamics, corporate strategies, etc. and therefore are dynamic. We
have seen some EV OEMs increased the selling prices of their car models in the second quarter
of 2023. In addition, we have also seen some EV OEMs cutting prices on old car models while
keeping launching new car with higher selling prices. The price cuts on the one hand boosted
EV sales, but on the other hand added pressure on the margin to the EV OEMs, which may also
consequentially impact the EV battery selling prices and the margin for the EV battery
manufacturers.
As a result of the termination of the government subsidies and the competition from the
ICE vehicles as mentioned above, the EV market in China experienced a temporary slowdown
in the beginning of 2023. Total EV sales volume in the first quarter of 2023 was 1,585 thousand
units with 26.3% y-o-y growth rate, which was significantly lower than the y-o-y growth rate
of 144.1% achieved in the first quarter of 2022. The demand started to recover since the second
quarter, in the second quarter of 2023, total EV sales volume in China was 2,159 thousand units
with y-o-y growth rate of 60.9%, compared to the y-o-y growth rate of 94.3% achieved in the
second quarter of 2022. In the first half of 2023, the total EV sales volume in China reached
3,744 thousand units, with a 44.1% y-o-y growth rate.
The EV market is expected to continue growing significantly, though with relatively
lower growth rate compared to previous years. EV sales volume in China is expected to reach
18,063 thousand units, growing at a 21.3% CAGR from 2022 to 2027, with penetration rates
being 65.3% and 19.1% for passenger EV and commercial EV respectively.
INDUSTRY OVERVIEW
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--- page 188 ---
EV Sales Volume Forecast, China, 2017 – 2027E
777 1,255 1,203 1,366
3,519
6,883
9,082
11,182
13,396
15,782
18,063
0
5,000
10,000
15,000
20,000
Passenge r EV Comme rcial EV
%
2017-2022 2022-2027E
Thousand Units CAGR 21.3% 54.7%
19.1%17.6%16.2%14.6%12.6%10.1%3.9%2.3%3.3%4.6%4.8%
65.3%58.7%51.3%43.8%36.2%27.8%15.5%6.2%4.9%4.4%2.3%Penetration
Rate:
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
Source: China Association of Automobile Manufacturers, China Passenger Cars Association, Frost & Sullivan
Overview of EV Battery Market
EV battery is the power source of the entire EV and directly affects the performance
including cruise range, safety, service life, charging time and adaptability of temperature.
Lithium-ion batteries are widely adopted in EVs with its advantages of high energy density,
more compact, long cycle life and high safety performance. Although there are several
emerging new technology paths for EV batteries such as sodium-ion batteries and fuel cells,
those are still in the early development stage and there remains gaps to realize mass production.
Lithium-ion batteries will continue to dominate the EV battery market in the near future.
Driven by the increasing demand of downstream EVs, the global and China EV battery
markets experienced strong growth and strong momentum is expected to continue in the near
future. The global annual EV battery installations increased from 63.8GWh in 2017 to
504.5GWh in 2022 with a CAGR of 51.2%. It is expected to further grow to 2,597.1GWh in
2027, representing a CAGR of 38.8% between 2022 to 2027.
INDUSTRY OVERVIEW
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--- page 189 ---
EV Battery Annual Installations 1, Global, 2017 – 2027E
3,000
1,500
1,000
500
GWh
0
63.8 93.2 116.2 138.5
293.7
504.5
732.9
1,038.6
1,444.8
1,985.4
2,597.1
2017-2022 2022-2027E
CAGR 51.2% 38.8%
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
2,500
2,000
Passenger EV Commercial EV
Source: Frost & Sullivan
The annual installation of EV battery in China increased from 36.1GWh in 2017 to
294.6GWh in 2022, representing a CAGR of 52.2%.
As a result of the temporary slowdown in the downstream EV market in the beginning of
2023, the EV battery market experienced the similar trend. In the first quarter of 2023, the total
EV battery installation in China was 65.9GWh, representing y-o-y growth rate of 28.4%
compared to the 120.7% y-o-y growth rate achieved in the first quarter of 2022. As the demand
gradually recovered since the second quarter of 2023, the total EV battery installation in China
also recovered and recorded 86.2GWh in the second quarter of 2023 with 46.6% y-o-y growth
rate. In the first half of 2023, the total EV battery installation in China was 152.1GWh,
representing y-o-y growth rate of 38.1% compared to the 109.8% y-o-y growth rate achieved
in the first half of 2022. In the third quarter of 2023, the total EV battery installation in China
was 103.5GWh with 23.9% y-o-y growth rate. The EV battery market is expected to continue
growing significantly through with relatively lower growth rate compared to previous years. It
is expected to reach 1,648.6GWh by 2027, with a CAGR of 41.1% between 2022 and 2027.
Note:
(1) Installations refer to the actual batteries volume installed in downstream applications such as EVs and ESSs,
which is an industry recognized metric for market size and market share analysis.
INDUSTRY OVERVIEW
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--- page 190 ---
EV Battery Annual Installations, China, 2017 – 2027E
2,000
4,000
1,000
GWh
0
36.1 56.9 61.6 63.6 154.5 294.6 461.0
666.7
929.0
1,261.9
1,648.6
2017-2022 2022-2027E
CAGR 52.2% 41.1%
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
3,000
Passenger EV Commercial EV
Source: China Automotive Battery Innovation Alliance, Frost & Sullivan
Selection Criteria and Selection Process of EV Battery Suppliers
EV OEMs typically select EV battery suppliers based on the overall viability of the
proposal put forward by potential suppliers. There are various factors that are taken into
consideration during the selection process, including technical specifications and other
qualitative criteria. For the technical specifications, EV manufacturers these days typically
expect EV batteries to have an energy density of 170Wh/kg or above (for LFP batteries) or
240Wh/kg or above (for ternary batteries), cycle life of 3,000 times or above (for LFP batteries
for mid-to-high end passenger vehicles) or 4,000 times or above (for LFP batteries for
commercial vehicles) or 1,500 time (for ternary batteries), and capacity of 100Ah or above.
Apart from the technical specifications, there are also qualitative criteria including the
ability to customize products, the consistency of product quality, capability to maintain a stable
supply, production lead time, production capacity and allocation of resources, team reputation,
customer communication and service, as well as the supplier’s historical performance.
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Below is a flow of a typical selection process from EV OEMs for EV battery suppliers.
Initial Approach Provide Product Specification and Requirement Tender
Initial Approach and Tender Process
Conceptual Design
Project Initiation Scheme Design
Product Development
• Cell concept validation based on
customer requirements
• Realize basic functions, battery
capacity fulfill requirements
• Cell design validation
• Electrical and cycle life characteristic,
size design are frozen
• Module and pack testing
A Sample Decision B Sample Decision C Sample Decision
• Cell process validation
• Safety design fulfill requirements
• Pack testing and vehicle
integration for prototypes
D Sample – Pilot Production Mass Production Decision
• Production validation
• Core processes reach mass production requirement
• Vehicle level testing
Product Validation and Pilot Production Mass Production
Source: Frost & Sullivan
Ternary and LFP Batteries for EV in China
Ternary battery and LFP battery are the major types of lithium-ion batteries that are
applied in EVs. Generally, ternary batteries have higher energy density and higher charging
efficiency but have to meet higher technical requirements to assure battery safety, while LFP
batteries have longer cycle life and lower materials cost. Benefiting from government
subsidies, ternary batteries with higher energy density gained the most of market share from
2018 to 2020 in China. From 2021 onwards, LFP battery has become more widely applied in
EVs than ternary battery in China mainly due to the following drivers:
 Inherent advantages over ternary battery: LFP battery has better thermal stability
with better safety characteristic, higher cycle life which normally reaches 2,000 –
4,000 times, as well as lower cost. In comparison, ternary batteries usually have a
cycle life of 1,500-2,000 times;
 Abundant upstream raw materials: Ferrous lithium phosphate is used as cathode
material of LFP battery, which is abundant in nature, while ternary battery contains
metals such as cobalt and nickel, which are scarce resources that are more
vulnerable to supply and price fluctuations;
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 Suitability for vehicle application: Although the energy density of LFP battery is
lower than that of ternary battery, the battery capacity is sufficient for daily
commuting, which makes LFP battery more suitable for low-and middle-end EVs to
keep costs down and provide cost-effective options, which caters to the affordability
needs of the large population base in China;
 OEMs applying LFP battery successively: As Chinese EV battery manufacturers
continue to develop and introduce LFP battery with higher energy density based on
cutting-edge technologies, downstream OEMs continue to apply more LFP batteries
to their vehicle models, in consideration of the improving drive range and lower
safety risks LFP battery provides.
EV Battery Annual Installations Percentage Breakdown, by Battery Type, China,
2017 – 2023E
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2017 2018 2019 2020 2021 2022
NCM/NCA LFP Others
2023E
Source: China Automotive Battery Innovation Alliance, Frost & Sullivan
Overview of ESS Battery Demand
Introduction of Energy Storage System and ESS Battery
Energy storage system refers to the device of converting various energy forms from power
generating systems into a form that can be stored for converting back to electrical energy when
needed. With the development of renewable energy, the demand for ensuring energy stability
has increased significantly, since renewable energy such as wind and solar power frequently
meets problems of intermittency and volatility. There are two major energy storage
technologies, namely mechanical energy storage which takes advantage of kinetic or
gravitational forces to store energy, as well as electrochemical energy storage which stores
energy in a chemical form. Pumped hydro storage is a kind of mechanical energy storage
technology and is the most mature power storage technology, accounting for approximately
90% of cumulative installed energy storage capacities globally. Compared to pumped hydro
technology, electrochemical energy storage has been growing rapidly in recent years, with its
advantage of strong environmental adaptability and economic suitability. Electrochemical
energy storage batteries include lithium-ion batteries, lead-acid batteries, sodium-sulfur
batteries and flow batteries, among which lithium-ion batteries currently have the dominant
position due to cost effectiveness and optimal physical performance.
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Electrochemical energy storage battery system is mainly composed of ESS battery (in the
form of module), battery management system (“BMS”), energy management system (“EMS”),
and power conversion system (“PCS”). According to Frost & Sullivan, ESS battery module
takes up approximately 60% of the total cost.
Energy Storage System Overview
ESS
Installation
ESS
Operation &
Maintenance
Energy Storage System
Power  Conversion
System (PCS)
Battery Management
System (BMS)
Energy Storage
Batteries
Energy Management
System (EMS)
Controlled
Information
Controlled
Information
Controlled
Information
Status
Information
Status
Information
Status
Information
Status
InformationDirect-current
Discharge
Direct-current
Charge
Energy Storage Battery System
Subsystems
End
Application
ESS
Integration
Our Business
Electrochemical energy storage battery system is widely used in various applications in
the energy storage systems from power generation, power transmission and distribution to
power consumption.
Reserve Electric Generating Capacity
Renewable Energy Grid Connection
• Power plants charge the battery at low-
demand times and release the stored
power during peak demand
Peak Shaving and Valley Filling
HouseholdCommercial & Industrial
• Telecommunication carriers,
IDCs, 5G base stations, UPS,
etc.
Power Generation Power Transmission & Distribution Power Consumption
• Renewable energy power generation is
smoothly controlled based on power
generation prediction, in order to meet
the requirements of grid connection
• Wind and solar energy curtailment is stored
and transferred to other periods for grid
connection, in order to improve the
utilization rate of renewable energy
• Store the energy that cannot be transmitted in energy
storage systems when power grid is congested and
discharge the electricity to the grid when the power
grid load is less than the capacity• Improve the grid power transmission and
distribution capacity, which delays the construction
and upgrade of large power transmission and
distribution equipment and reduce the cost
• Assist power systems to modulate
frequency to improve the efficiency
and safety of power generation
Alleviate Power Grid Congestion
Delay Large T&D 2 Equipment Upgrade
• In power market with peak-valley electricity prices,
charge the ESS in power valley periods and
discharge in power peak periods, which leads to
peak-valley electricity price difference arbitrages
• Photovoltaic power generation in the day
can meet user electricity demand at night,
which reduce electricity costs
Peak-valley Spread Arbitrage
System Frequency Modulation Electricity Generation by PV1 Devices
Source: Frost & Sullivan
1 PV refers to photovoltaic
2 T&D refers to power transmission and distribution
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Overview of ESS Market
The ESS market is primarily driven by government policies globally. With the
“carbon-neutral” target, governments in major economies have released a series of policies to
encourage the development of renewable energy and ESS projects. For example, China issued
14th Five-Year Plan on New Energy Storage Development Implementation Plan, which
promotes the scale-up and industrialization of ESS market, targeting to enhance the
technological performance of electrochemical ESSs and reduces the systematic cost by over
30% by 2025. To achieve this goal, R&D and commercialization of new energy storage
solutions are encouraged to support China’s carbon neutrality target. China also issued Blue
Book of New Power System Development in January 2023, which encourages the development
of energy storage multi-technology routes in multi-application scenarios in large scale to meet
the demand of the power system for intra-day balance adjustment. In April 2023, China
published Guiding Opinions on Strengthening the Stability of New Power Systems , pointing out
that the government should actively promote the construction of new energy storage and fully
leverage the advantages of various new energy storage technologies and explore new scenarios
for integrated energy storage development so as to improve the power system security and
efficiency. U.S.’s Better Energy Storage Technology Act provides US$50 million for
demonstration programs of ESSs in each of fiscal years from 2020 through 2024. Supportive
policies, lucrative subsidies and more established business models are expected to drive ESS
adoption around the world. Growing integration needs for renewable energy and the increased
frequency of extreme events will make energy storage a critical element in many power
systems globally.
From 2016 to 2022, the global cumulative installations of the ESS market increased from
168.7 GW to 274.6 GW, and the global cumulative installations of electrochemical energy
storage increased from 1.8 GW to 80.3 GW, accounting for 29.3% of the total energy storage
market in 2022. In particular, from 2016 to 2022, the global cumulative installations of
lithium-ion battery energy storage increased from 1.2 GW to 78.8 GW, accounting for 98.2%
of the total electrochemical energy storage market in 2022. Lithium-ion battery energy storage
is dramatically expanding its market share in the global energy storage industry.
Overview of ESS Lithium-ion Battery Market
According to Frost & Sullivan, global annual ESS battery installations increased at a
CAGR of 121.4% from 2.4GWh in 2017 to 119.3GWh in 2022. ESS battery will be applied in
a wider range of scenarios in the future. With the increasing global penetration of energy
storage in industrial, commercial and household uses, and the rapidly growing number of 5G
base stations, power consumption will become one of the most important categories for ESS
batteries uses. As a result, it is expected that annual ESS battery installation will continue to
increase at a CAGR of 53.7% from 2022 to 2027 and achieve 1,023.1GWh by 2027.
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According to Frost & Sullivan, LFP batteries dominate the ESS battery market with over
90% market share. Most of the leading Chinese ESS battery manufacturers have served the
global downstream customers and played a critical role in the value chain of global ESS
market. According to Frost & Sullivan, over half of the ESS batteries that are produced in
China are sold to end customers overseas. As such, compared to the China ESS battery market,
the global ESS battery market is more meaningful and relevant for the industry players such
as the Company. The leading Chinese manufacturers have established mature energy storage
industry chains with large-scale lithium-ion battery production bases, which have contributed
to significant competitive advantages in terms of safety and performance, production cost and
supply chain.
ESS Battery Annual Installations, by Downstream Applications, Global,
2017 – 2027E
2.4 3.8 5.5 9.9 23.5
119.3
195.6
322.9
522.8
733.4
1,023.1
Power Transmission & Distribution Power Generation Power Consumption
GWh 2017-2022 2022-2027E
CAGR 121.4% 53.7%
0
500
1000
1,500
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
Source: Frost & Sullivan
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According to Frost & Sullivan, China annual ESS battery installations increased at a
CAGR of 162.6% from 0.2GWh in 2017 to 22.6GWh in 2022. It is expected that annual ESS
battery installation will continue to increase at a CAGR of 51.5% from 2023 to 2027 and
achieve 234.4GWh by 2027.
ESS Battery Annual Installations, by Downstream Applications, China, 2017-2027E
0.2 0.5 0.9 2.4 4.2
22.6
43.3
69.7
108.9
162.9
234.4
Power Transmission & Distribution Power Generation Power Consumption
GWh 2017-2022 2023-2027E
CAGR 162.6% 51.5%
0
100
200
300
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
Source: Frost & Sullivan
Selection Criteria and Selection Process of ESS Battery Suppliers
Similar to EV OEMs, ESS customers also select ESS battery suppliers based on the
overall viability of the proposal put forward by potential suppliers and consider various factors
including technical specification and other qualitative criteria as mentioned above. For
example, regarding technical specifications, ESS customers typically expect ESS batteries to
have a cycle life of 6,000 times or above.
Below is a flow of a typical selection process from ESS customers for ESS battery
suppliers.
Purchase
Orders/
Procurement
Requirements
Qualified
Supplier
Inquiry/Price
Comparison
Procurement
Contract
Review
Order
Tracking and
Product
Delivery
Review and
Send
Purchase
Orders to
Suppliers
Signing of
Procurement
Contract
Suppliers
Designation
Confirm
Procurement
Requirements
Refer to Market
Conditions and
Quotations
ESS Battery Supplier Selection Process
Source: Frost & Sullivan
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LITHIUM-ION BATTERY PRODUCTION
Lithium-ion Battery Cost Breakdown
EV batteries that are installed in EVs are typically integrated from cell, module to pack.
Raw materials are the largest component of the costs of lithium-ion battery cell, taking
around 80% of total costs, followed by manufacturing cost and direct labor cost.
Cost Breakdown of Battery Cell, China, 2022
Raw Materials Others Direct Labor Manufacturing Overhead
84.3%
2.9%
3.0%
9.9%
78.9%
3.9%
3.9%
13.2%
Raw Materials Others Direct Labor Manufacturing Overhead
NCM/NCA Battery Cell LFP Battery Cell
Source: Frost & Sullivan
Lithium-ion Battery Raw Materials Price Analysis
The major raw materials for cathode mainly include lithium carbonate/lithium hydroxide,
cobalt sulphate, nickel sulphate and iron phosphate. Prices of these raw materials have
increased significantly in 2021 and 2022 due to the strong demand from the growth of EV and
ESS markets and constrained raw materials supply globally. Increasing prices in 2021 and 2022
motivated the raw materials suppliers to expand production capacity and also attracted new
players to enter the market. As a result, the raw materials supply increased since 2023. In
addition, due to the challenging macro economy and the temporary slowdown in the EV market
in early 2023, the demand for the raw materials was also impacted. As a result, the prices of
the key raw materials decreased significantly in 2023, especially for the key raw material
lithium carbonate. The average price of lithium carbonate decreased from RMB496,000 per ton
in 2022 to RMB168,900 per ton as at the end of September 2023, which further decreased to
RMB131,000 per ton as at the end of November 2023.
According to Frost & Sullivan, the current lithium carbonate prices have fallen to the
marginal costs of some players. Starting from September 2023, some of the lithium carbonate
producers have announced production cuts, which is expected to provide some support to the
price. It is expected that the average price of lithium carbonate to be RMB184,000 per ton in
2024 and RMB147,000 per ton in 2025. In addition, it is expected that the lithium industry to
become more mature in the next few years with more big players entering the market, and the
fluctuation in lithium carbonate prices would be less significant compared to that in 2022 and
2023.
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--- page 198 ---
Average Price of Major Raw Materials, China, 2017 – 2027E
148 124
71 47
131
496
253
184
147 125 111
94
110
51
52
81 83 74 68 65 62 61
26
27
27 28 37 45 39 36 34 33 32
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E
Li2CO3 CoSO4 NiSO4
Thousand RMB / Ton
0
100
200
300
400
500
600
2027E
Source: Frost & Sullivan
Lithium-ion Battery Cost Forecast
Driven by continued technology advancement and increasing production scale, the cost of
lithium-ion battery had been steadily declining from 2017 to 2020. The recent cost upswing in
2021 and 2022 is largely caused by the rising prices of major raw materials as mentioned
above. In the long run, with the supply expansion for upstream raw materials, it is expected that
the raw material price will decrease gradually, which will lead to a decline of the cost of
lithium-ion battery cell and pack.
Average Cost of EV Battery Cell, China, 2017 – 2027E
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E
0
500
1,000
RMB/kWh
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E
Raw Material 705.6 590.0 470.8 361.9 426.1 692.6 460.4 410.9 354.5 334.2
Labor 29.7 26.3 24.9 20.1 19.2 18.5 17.8 17.2 16.6 16.1
Manufacturing and others 177 132.1 112.8 87.3 83.0 79.6 76.7 74.4 72.5 70.9
Total 912.4 748.4 608.4 469.3 528.4 790.6 554.9 502.5 443.6 421.2
Raw Material Labor Manufacturing and others
2027E
2027E
318.9
15.6
69.6
404.1
Source: Frost & Sullivan
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--- page 199 ---
LITHIUM-ION BATTERY PRICES
As the cost of lithium-ion batteries declined significantly from 2017 to 2020, the price of
lithium-ion batteries also declined from 2017 to 2020. From 2017 to 2020, the price of EV
battery cell decreased from 1.23 RMB/Wh to 0.56 RMB/Wh.
However, in 2021 and 2022, due to the rising price of raw materials, the price of
lithium-ion batteries also increased. The price of EV battery cell increased from 0.56 RMB/Wh
in 2020 to 0.57 RMB/Wh in 2021 and further increased to 0.86 RMB/Wh in 2022. Similarly,
the price of ESS battery pack increased from 1.15 RMB/Wh in 2020 to 1.18 RMB/Wh in 2021
and further increased to 1.34 RMB/Wh in 2022.
In the future, it is expected that the price of lithium-ion batteries will continue to move
in line with the cost. The decrease of the raw materials costs and the economics of scale of
production are expected to drive down the production cost and the market prices of the
lithium-ion batteries.
KEY DRIVERS FOR LITHIUM-ION BATTERY MARKET GROWTH
EV battery market growth
Accelerating vehicle electrification process : With the “net-zero” targets, traditional
automotive companies and new EV companies continue to accelerate their deployment of EVs.
The accelerating vehicle electrification process will lead the EV battery market to grow
rapidly.
Favorable government policies : As mentioned in “- Overview of EV market” in this
section, major economies have issued favorable policies that will drive the growth of the EV
market. Major policies mainly focus on setting electrification target, providing subsidies for
EV manufacturers, and promoting carbon neutrality and higher emission standards. It is
expected that such favorable policies will continue to promote the EV penetration and the
growth of the EV battery market.
Continuous price and cost reduction for EV batteries : EV battery accounts for 30-40%
of the total electric vehicle cost. With the improvements in battery technology, coupled with
economies of scale by battery suppliers, battery production costs have dropped significantly in
past few years and are expected to continue to reduce in the future. EV battery cost reduction
will motivate the further price reduction of EVs, driving the growth of the EV battery industry.
INDUSTRY OVERVIEW
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--- page 200 ---
ESS battery market growth
Energy transition in wide application scenarios : Energy storage batteries are deployed
in a wide span of scenarios in power system including power generation, power transmission
& distribution, power consumption, etc. The rapidly growing renewable energy power system
construction will lay the solid foundation for the large-scale deployment of energy storage. As
the energy transition accelerates, the energy storage batteries will embrace more opportunities.
Favorable government policies : As mentioned in “- Overview of ESS market” in this
section, with the “carbon-neutral” target, governments in major economies have released a
series of policies to encourage the development of renewable energy and ESS projects. It is
expected that such favorable policies will continue to promote the growth of the installation of
energy storage projects and the growth of the ESS battery market.
Continuous price and cost reduction for ESS batteries and energy storage systems :
During the past few years, with the advancement in manufacturing technology, expansion of
production scale, and the standardization of products, the cost and price of lithium-ion battery
storage system have witnessed a decreasing trend. As more market players accumulate
experience in R&D and improve the production efficiency, the production cost and other
indirect expenses of lithium-ion battery storage system are expected to further decrease, which
will further foster the scalable commercialization of lithium-ion battery storage technology.
COMPETITIVE LANDSCAPE
Lithium-ion battery industry, especially EV battery market is highly concentrated in
China, with top 10 producers accounting for over 90% of total installations in China in 2022.
The ESS battery market is also highly concentrated, with the top 10 global ESS lithium-ion
battery producers accounting for nearly 80% of total installations in the world in 2022. As a
relatively new player into the industry that established in 2017 and achieved commercial
production in 2019, the Group is growing quickly and has been gaining market shares.
In terms of lithium-ion battery installations for new energy applications, we ranked
No. 10 globally and No. 6 among the China-based manufacturers in both 2022 and the first half
of 2023, according to Frost & Sullivan. In terms of EV battery installations in China, we ranked
No. 10 in both 2022 and the first half of 2023, according to the same source. In terms of ESS
battery installations, we ranked No. 3 globally in 2022, and No. 4 globally in the first half of
2023, according to the same source.
Although the downstream battery demand from EV market and ESS market remain solid,
the competition level in the lithium-ion battery industry has been increasing, as major players
expanding the production capacity quite aggressively during the past few years. With the
increasing production capacity and battery supply, the capacity utilization rate for the major
players declined in 2023 compared to 2022. The change in our market ranking among the
lithium-ion battery manufacturers globally in terms of global ESS battery installations also
reflected the intense industry competition and the challenging competitive landscape.
INDUSTRY OVERVIEW
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--- page 201 ---
There may be risks of overcapacity if the demand was not able to keep pace with the rapid
capacity expansions. Under such competitive environment, leading companies with strengths
in production scale, cost effectiveness, integrated and stable supply chain will be well-
positioned to continue to stay competitive. While companies with smaller scale, less stable
supply chain with less cost advantages will be faced with challenges.
Ranking of Manufacturers of Lithium-ion
Battery for New Energy Application
1,
Global, 2022
Ranking of Manufacturers of Lithium-ion
Battery for New Energy Application 1,
Global, 2023H1
1 CATL˾
2 BYD
Rank Company
229.4
82.6
Installations,
(GWh)
Market
share (%)2
36.8%
13.2%
7
Samsung SDI݋SDI 30.4 4.9%
8
EVEᄂᇗ቞ঐ 16.3 2.6%
CALBʕ௴อঘ 20.0
9
3.2%
4 Panasonicɨ
 39.2 6.3%
5
Gotion
߅17.7 2.8%
6 SK On 27.8 4.5%
10 The Company๿ऌᚆඓ㕙3 15.6 2.5%
3 73.5 11.8%LG EnergyLGอঐ๕
1 CATL˾
2 BYD
Rank Company
146.1
60.6
Installations,
2023H1
(GWh)
Market
share (%)2,
2023H1
35.8%
14.8%
7
CALBʕ௴อঘ 16.2 4.0%
8
Gotion 9.4 2.3%
EVEᄂᇗ቞ঐ 15.6
9
3.8%
4 Panasonicɨ
 22.8 5.6%
5
Samsung SDI݋SDI
 14.9 3.7%
6 SK On 15.9 3.9%
10 The Company๿ऌᚆඓ㕙3 7.7 1.9%
3 46.3 11.3%LG EnergyLGอঐ๕
Source: Frost & Sullivan
Ranking of Manufacturers of
EV Battery, China, 2022
Ranking of Manufacturers of
EV Battery, China, 2023H1
Rank Company
1 CATL˾
2 BYD
3 CALB ʕ௴อঘ
4 Gotion
5 Sunwoda༺
6
7 SVOLT ໶੫ঐ๕
8
9
FarasisҦ
10
LG EnergyLGอঐ๕
Installations
(GWh)
142.0
69.1
19.2
13.3
7.7
7.2
6.1
5.4
5.2
Market
share (%)4
48.2%
23.5%
6.5%
4.5%
2.6%
2.4%
2.1%
1.8%
1.8%
The Company๿ऌᚆඓ 5.1 1.7%
EVEᄂᇗ቞ঐ
Rank Company
1 CATL˾
2 BYD
3 CALB ʕ௴อঘ
4 EVE ᄂᇗ቞ঐ
5 Gotion
6
7 LG Energy LGอঐ๕
8
9
SVOLT໶੫ঐ๕
10
FarasisҦ
Installations
 2023H1
(GWh)
66.0
45.4
12.6
6.6
6.1
3.7
2.8
2.0
1.9
Market
share (%)4,
2023H1
43.4%
29.9%
8.3%
4.4%
4.0%
2.5%
1.9%
1.3%
1.2%
The Company๿ऌᚆඓ 1.8 1.2%
Sunwoda༺
Source: China Automotive Battery Innovation Alliance, Frost & Sullivan
INDUSTRY OVERVIEW
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--- page 202 ---
Ranking of Manufacturers of
ESS Battery, Global, 2022
Ranking of Manufacturers of
ESS Battery, Global, 2023H1
Rank Company
1 CATL˾
2 BYD 
3
EVEᄂᇗ቞ঐ4
The Company๿ऌᚆඓ
Installations
(GWh)
37.8
12.2
9.1
10.5
Market
share (%)
31.7%
10.2%
7.6%
8.8%
6
HithiumऎԕᎷঐ 3.0 2.5%
3.1 2.6%
7
Gotion 3.6 3.0%
9
Samsung SDI݋SDI 6.1 5.1%5
8
10
3.3 2.8%Great Powerᘄሾঐ๕
ZTTҦ 2.8 2.4%
LG EnergyLGอঐ๕
Rank Company
1 CATL˾
2 BYD 
3
The Company๿ऌᚆඓ4
EVEᄂᇗ቞ঐ
Installed Capacity,
2023H1
(GWh)
34.1
12.9
5.9
9.0
Market
share (%),
2023H1
32.8%
12.4%
5.7%
8.7%
6
Gotion 2.9 2.8%
3.2 3.0%
7
Great Powerᘄሾঐ๕ 5.1 4.9%
9
HithiumऎԕᎷঐ 5.2 5.0%5
8
10
3.4 3.3%EnvisionჃ౻ঐ๕
Ganfeng Lithiumᜯቜ቞ཥ 2.5 2.4%
CALBʕ௴อঘ
Source: Frost & Sullivan
Notes:
1 New energy applications mainly include electric vehicles and energy storage systems.
2 The market share is calculated by dividing lithium-ion battery installations of global manufacturers for new
energy application by the market size of global EV battery installations plus ESS battery installations.
3 The Company ranked 6th among the China-based lithium-ion battery manufacturers for new energy
application.
4 The market share is calculated based on installed capacity in China.
KEY SUCCESS FACTORS OF LITHIUM-ION BATTERY MANUFACTURERS
R&D Capabilities : EV and ESS battery products iterate fast with the development of
technologies. Battery manufacturers with strong R&D capabilities that can cater to customers’
specific needs tend to attract leading EV OEMs and ESS customers. The battery innovation lies
in all aspects including battery materials, battery structure, technical characteristics,
production process, etc.
Product Customisation Capabilities : Different customers tend to have different
technical specification requirements for batteries with different designs, which requires battery
manufacturers to have strong product development capabilities to develop new products that
cater to the specific needs in a short period of time.
Safety Performance : The safety performance has always been the most crucial factor of
EV and ESS battery products. Heat insulation and good heat dissipation system such as
air-cooling, liquid-cooling system as well as battery management system which can monitor
real-time battery status are important for the safety performance.
INDUSTRY OVERVIEW
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--- page 203 ---
Technical Performance : There are various technical parameters that EV OEMs and ESS
customers will consider when selecting battery suppliers, including energy density, battery
capacity, high-temperature performance, low-temperature performance, cycle times, self-
discharge rate (i.e. rate at which the battery loses charge while the battery is not being used),
battery degradation, fast charging features, etc.
Product Consistency: Battery product consistency refers to the ability of EV/ESS battery
manufacturers to produce batteries with consistent performance and characteristics across
multiple units. Consistency is a crucial aspect in ensuring that EV/ESS batteries meet the
specified performance criteria and to be reliably integrated into EVs/ESSs.
Production Cost : As selling price is one of the crucial factors that EV OEMs and ESS
customers consider when selecting suppliers. Therefore, battery manufacturers which have
large production scale, mass production capabilities, high production utilisation rate and
production efficiency, as well as stable and low-cost supply chain are able to achieve lower
production costs and are in turn more competitive.
Production Lead Time and Production Capabilities : As the downstream demand from
EV and ESS industries are increasing rapidly, battery manufacturers with enough production
capacity and with capabilities to deliver the products in shorter lead time are more competitive.
KEY TRENDS OF LITHIUM-ION BATTERY MARKETS
Securing Access to Upstream Raw Materials
In light of the recent supply shortage and rising prices of key raw materials, battery
manufacturers are adopting multiple strategies to achieve greater upstream control, including
acquiring and investing in upstream mineral assets, entering into long-term contracts with key
suppliers, establishing joint ventures with key suppliers, as well as establishing in-house
production capabilities of key battery components. It is expected that major players will
continue to deepen their upstream integration in order to be more competitive. However, direct
investment into upstream mine assets goes with risks as this requires large amount of capital,
technologies and experiences in mining operations, which could be challenging for battery
manufacturers that lack relevant experience in mining industry. On the other hand, the Chinese
government has been promoting the development of the key upstream resources such as lithium
and nickel for battery materials to ensure stable supply and prices of these materials. For
example, in January 2023, Ministry of Industry and Information Technology of PRC, together
with the other 5 ministries issued Guiding Opinions on Promoting the Development of the
Energy Electronics Industry, which encouraged the industry players to secure the key upstream
lithium, nickel, cobalt and platinum resources and promoted the development of substitute
materials. In November 2022, Ministry of Industry and Information Technology of PRC and
State Administration of Market Regulation together issued Notice on Promoting the
Coordinated and Stable Development of the Lithium-ion Battery Industry Supply Chain, which
encouraged lithium battery manufacturers, lithium battery material manufacturers, upstream
mineral resource companies, lithium battery recycling companies, etc., to coordinate and
together guide the upstream and downstream players to stabilize market expectations, clarify
supply, demand and prices, and to ensure stable supply.
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Continuous Technology Innovation and Breakthroughs on Battery Performance
In recent years, with the advancement of technologies, battery energy density, operating
temperature range, charging efficiency, and safety performance have continued to be improved,
and the innovation is expected to progress. On anode and cathode materials, more high-
performance cathode materials such as high nickel content, lithium-rich manganese bases, and
silicon carbon as anode materials will gradually be widely used. On electrolytes, the R&D of
solvents, additives, solid electrolytes will continue to progress. Regarding separators,
high-strength, high-safety composite separators will become the direction. In addition, battery
operation and analysis platforms will also be developed to provide customers with battery
intelligent solutions. It is also expected that the technology evolution will be more progressive
rather than disruptive, and most of the innovation will be based on the current technologies.
Continuous Price and Cost Reduction
With the advancement of manufacturing technologies, expansion of production scale,
standardization of products and intensified competition among manufacturers, the production
cost and selling price of lithium-ion batteries have witnessed a decreasing trend. In the future,
as most of the market players will accumulate experience in R&D and simplify manufacturing
procedures, the production cost and other indirect expenses will decrease further, which will
further foster the scalable commercialization of the lithium-ion battery technology.
Battery Recycling
As lithium-ion batteries reach their end-of-service on EV and ESS, treatment of such
waste battery would be an important topic. For example, due to different characteristics of
downstream applications, waste EV batteries could be recovered for further use in energy
storage, low-speed EVs and other fields that require lower battery electrochemical
performance. Lithium-ion batteries can also be recycled to extract metals or battery materials.
As the cost of battery raw materials has been increasing in recent years, waste battery recycling
process can help extract the valuable metals such as nickel, cobalt and lithium to be re-used
as raw materials for lithium-ion batteries production, which could to some extent lower raw
material cost and provide additional raw materials supply for the battery manufacturers. It is
expected that major battery manufacturers will enter into and expand presence in battery
recovery and recycle business to achieve cost reduction and environmental protection. Battery
recycling will also be an important source of battery supply in the future, and the recycling
industry of EV batteries will gradually develop towards standardization, centralization and
industrialization.
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BARRIERS OF ENTRY
The lithium-ion battery industry is characterized by intensive input of capital and
technology, as well as high dependence on stable supply chain. For newcomers, it requires
significant amount of efforts and capital for them to build up and demonstrate competitive
R&D and production capabilities. As the industry continues to grow, players also need to
improve control of its supply chain to stay competitive.
Technology Barrier
It takes significant amount of time and capital for lithium-ion battery manufacturers to
achieve breakthroughs in key technologies and mature applications through independent R&D.
The industry is still undergoing rapid technical iteration, with a variety of technological paths.
A strong team of R&D professionals is also required to realize such technological capabilities.
Such characteristics of the industry would create substantial technological entry barriers.
Scale Barrier
The lithium-ion battery industry has significant scale barrier, as its production has the
characteristics of economies of scale. Companies with large production scale and abundant
capital have considerable scale advantages in raw materials procurement and production
operations. Additionally, research and development of lithium-ion batteries requires constant
and large amount of capital, which is only affordable to large-scale players.
Brand Barrier
Due to the long service life of lithium-ion batteries, it takes a relatively long period of
time for downstream customers to make an accurate assessment of the battery product’s
performance and safety, which are important for both EV and ESS applications. For EV
batteries, OEMs would require constant supply throughout an EV model’s life cycle and would
not easily switch battery suppliers once the cooperation and brand recognition are established.
As newcomers lack brand recognition and reputation, it would be challenging for them to
acquire customers and build brand equity in a short period of time.
Supply Chain Barrier
As raw materials costs account for the majority of the total costs of lithium-ion batteries,
securing stable, low-cost, and high-quality raw materials is one of the key competitiveness for
the battery manufacturers. For newcomers, they face a high barrier in supply chain
management as they are not as established and connected as major incumbents especially in
terms of scale and reputation, and therefore tend to have less bargaining power when
negotiating with suppliers.
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Capital Investment Barrier
The lithium-ion battery industry is a capital-intensive manufacturing industry. The cost of
product design and development is relatively high in the early stages, and a large amount of
capital is required upfront. Simultaneously, operational capital must be used in the production
and operation process to ensure raw materials purchases, capital turnover, and production and
sales scale expansion. As a result, new entrants face a high barrier.
ALTERNATIVE BATTERY TECHNOLOGIES
While it is expected that lithium-ion batteries will remain dominant in battery
technologies in the near future, researchers and industry players continue to explore new
materials and technologies to reduce the costs and enhance the performance of batteries to
facilitate the energy transition, including sodium-ion batteries which uses sodium as the charge
carriers.
Sodium-ion battery technology aims to reduce dependence on lithium resources and
develop low-cost and high-safety battery systems. Like lithium-ion batteries, sodium-ion
batteries are mainly made up of cathode and anode materials, electrolytes, and separators.
Compared to lithium-ion batteries, the advantages of sodium-ion batteries lie in their
affordability and safety. Sodium, being more abundant and less expensive, offers a more
affordable alternative to lithium-ion batteries. In addition, compared with lithium batteries,
sodium-ion batteries are relatively safer and are less prone to overheating or explosion.
However, compared to lithium-ion batteries, sodium-ion batteries generally has lower energy
density.
It is expected that sodium-ion batteries could take up places in applications that currently
use lead-acid batteries, such as electric two-wheeled vehicle, backup power supplies, and
low-speed electric vehicle, etc.
However, the sodium-ion battery industry is still in pre-commercialization stage, where
the industry players are still conducting R&D and pilot-scale production. Lithium-ion battery
producers in China, such as CATL, Great Power, and the Company, as well as non-lithium-ion
battery producers such as HiNa Battery Technology Co., Ltd, Natrium Energy Co., Ltd,
Zoolnasm Energy Technology Co., Ltd are actively exploring the technologies and its
applications. Due to the dynamic and evolving nature, the landscape is yet to reveal clear
industry leaders.
The sodium-ion battery industry is expected to commercialize in the next 2-3 years.
However, this depends on several factors, especially on raw material pricing, technological
breakthroughs, and the implementation of downstream applications. The successful
commercialization will rely on addressing these critical aspects, ensuring not only economic
viability but also the integration of sodium-ion battery technology into diverse applications.
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AN OVERVIEW OF THE LA WS AND REGULATIONS OF THE PRC
A summary of the significant PRC laws, rules and regulations affecting our business
activities is set out in this section.
PRINCIPAL REGULATORY AUTHORITIES
We focus on the R&D, manufacturing and sales of lithium-ion EV battery products and
ESS battery products, and are mainly subject to the supervision of the National Development
and Reform Commission (the “NDRC”) and the Ministry of Industry and Information
Technology of the PRC (the “MIIT”).
The main functions undertaken by the NDRC include: formulating and implementing
strategies on national economic and social development; medium and long-term development
plans and annual plans, coordinating economic and social development, instructing the
promotion of and comprehensively coordinating the reform of economic system and strategic
adjustment of economic structure, advising on comprehensive application of economic
measures and policies, including the opinions about the development of industries such as EVs
and New Energy Storage.
The main functions undertaken by the MIIT include: formulating and implementing
industrial planning, plans and policies; monitoring the ordinary operation of industrial sector;
and conducting research and publishing relevant information; formulating and implementing
the policies on industrial energy conservation and comprehensive utilization of resources and
promotion of clean production.
PRINCIPAL REGULATORY LA WS AND REGULATIONS
Our business activities in China shall comply with a large number of legal rules that
covers the sections of R&D, manufacturing and sales of lithium-ion EV battery products and
ESS battery products, labor issues, intellectual properties, and tax issues and are subject to
government’s supervision.
REGULATIONS RELATING TO EV & ESS LITHIUM BATTERY INDUSTRIES
There has been an intensive promulgation of regulations on EV batteries since 2013. The
company complies principally with a series of regulations on EV batteries and new energy
industry including: “Conditions on the Regulation of Lithium-ion Battery Industry” ( ቞ᕎɿ
ཥϫБุ஝ᇍૢ΁) and “Interim Measures for the Management of Recycling and Use of
Power Storage Batteries for New Energy Vehicles” ( อঐ๕ӛԓਗɢႅཥϫΫϗл͜၍ଣᅲ
) while regulations on the industry were gradually enhanced.
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According to the Guiding Catalog for Industrial Restructuring (ኬͦ
፽(2011 ϋ͉) (2013͍)), which was promulgated by the NDRC on February 16, 2013 and
was effective on May 1, 2013, all of EV & ESS Lithium-ion batteries, LFP for lithium-ion
batteries and other cathode materials and lithium-ion battery automated production equipment
manufacturing fell into the encouraged industries in the catalog and remained being
encouraged according to the Guiding Catalog for Industrial Restructuring (ኬ
ͦ፽(2019 ϋ͉)) enacted on December 30, 2019 with the latest amendment on December 30,
2021 by the NDRC.
According to the “Conditions on the Standardization of Lithium Battery Industry” ( ቞
ᕎɿཥϫБุ஝ᇍૢ΁), which was promulgated by MIIT on August 31, 2015 with the latest
amendment on December 10, 2021, EV batteries are divided to Energy Module and Power
Module. For Energy Module batteries adopting ternary materials, the energy density should be
no less than 210Wh/kg for single battery and 150Wh/kg for battery pack. For Energy Module
batteries adopting other energy types, the energy density should be no less than 160Wh/kg for
single battery and 115Wh/kg for battery pack. For Power Module batteries, the power density
should be no less than 500W/kg for single battery and 350W/kg for battery pack. The capacity
maintenance rate should be no less than 80% with a cycle life of more than 1000 times.
In order to lead the common practice of the lithium battery industry, the MIIT has enacted
the “Management Measures of Standardization Announcement of Lithium Battery Industry
“() according to the “Conditions on the Standardization
of Lithium Battery Industry” ( ቞ᕎɿཥϫБุ஝ᇍૢ΁), stimulating that the responsible
departments of industry and information technology in each province, autonomous region and
municipality directly under the Central Government are responsible for the acceptance,
verification and submission of announcement applications for lithium battery industry
enterprise in the region, and for supervising and checking the implementation of the
standardization conditions. The MIIT is responsible for the management of the national lithium
battery industry Standardization announcement, the organization of reviewing, sampling,
publishing and announcing of application materials recommended by responsible industrial
departments in the province level, and for the dynamic management of list of standardization
announcement of Lithium Battery Industry.
The Interim Measures for the Management of Recycling and Use of Power Storage
Batteries for New Energy Vehicles ()
promulgated by 8 departments such as the MIIT, the Ministry of Science and Technology and
Ministry of Transportation on January 26, 2018 fully embodies the principle of whole product
lifecycle management, clarifies the corresponding responsibilities of relevant enterprises for
EV battery recycling in relation to the design, production, sale, usage, maintenance, scrapping,
recycling, utilization and other upstream and downstream aspects of the industry chain,
ensuring the effective use and environmentally friendly disposal of EV batteries and building
a close-ended management system. Vehicle manufacturers should establish recycling channels
for EV batteries and should set up recycling service outlets. The cooperation in building and
the sharing of scrapped EV battery recycling channels through various forms between vehicle
manufacturers, battery manufacturers, enterprises recycling and comprehensively utilizing
scrapped vehicles are encouraged.
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According to the “Interim Provisions on Tracing Management of Recycling of EV
Batteries for NEVs” promulgated by the MIIR on July 2, 2018 and was effective on August 1,
2018, a platform of national monitoring on new energy vehicles and comprehensive
management of recycling and utilization of EV batteries shall be established to collect
information of whole lifecycle of EV batteries including production, sale, use, scrapping,
recycling and utilization.
According to Requirements of the Industry Standards for the Comprehensive Utilization
of Wasted Power Storage Batteries of New Energy Vehicles ( อঐ๕ӛԓᄻᔚਗɢႅཥϫၝ
Υл͜Бุ஝ᇍૢ΁(2019 ϋ͉)) and Interim Measures for the Administration of the
Announcement of the Industry Standards for the Comprehensive Utilization of Wasted Power
Storage Batteries of New Energy Vehicles ( อঐ๕ӛԓᄻᔚਗɢႅཥϫၝΥл͜Бุ஝ᇍʮ
ج2019 ϋ͉)) promulgated by the MIIT on December 16, 2019 and became
effective on January 1, 2020, enterprises shall follow the principle of echelon recovery first,
and then recycling recovery to improve the comprehensive utilization according to the national
and industrial standards and technical information such as dismantling, disassembling and
historical data of power storage batteries provided by new energy vehicle manufacturers and
other manufacturers.
According to the Notice of Improving the Policies on Government Subsidies for
Promotion and Application of New Energy Vehicles (໾
) (“2020 Notice 86”) jointly promulgated by the MOF, Ministry of Industry
and Information Technology, Ministry of Science and Technology and NDRC on April 23, 2020
and came into effect on the same day, the implementation period of the policies on government
subsidies for new energy vehicles was extended to the end of 2022, and it confirms that the
subsidy standards for 2020 to 2022 will be in principle reduced by 10%, 20% and 30%
respectively from a year earlier, and the subsidized vehicles shall be in principle capped at
approximately 2 million units per year. The Notice stipulates that since 2020, new energy
passenger vehicles and commercial vehicles enterprises shall make a single application for
subsidy settlement of 10,000 and 1,000 units respectively, and new energy passenger vehicles
must be sold for not more than RMB300,000 before the subsidy, except for the vehicles
adopting battery-swapping technology. The abovementioned four departments jointly
promulgated the Notice on Further Improving the Policies on Government Subsidies for
Promotion and Application of New Energy Vehicles (ආɓӉҁഛอঐ๕ӛԓપᄿᏐ͜
) (“2020 Notice 593”) on December 31, 2020, which specifies that the
subsidy standard for new energy vehicles in 2021 will be reduced by 20% as compared to that
of 2020. The abovementioned four departments further jointly issued the Notice on the Fiscal
Subsidy Policy for the Promotion and Application of New Energy Vehicles in 2022 (“׵2022
ٝthe “2021 Notice 466”) on December 31, 2021,
which specifies that the subsidy standard for new energy vehicles in 2022 will be reduced by
30% as compared to that of 2021 and it also specifies that the 2022 policies on government
subsidies for new energy vehicles will end on December 31, 2022.
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On 16 April 2020, MOF, STA and Ministry of Industry and Information Technology
jointly issued the Announcement on Relevant Policies for the Exemption of Vehicle
Acquisition Tax on New-energy Automobiles (“ʮ
ѓ”) which came into effect on 1 January 2021. According to the New-energy Automobiles
Announcement, new-energy automobiles purchased shall be exempt from vehicle acquisition
tax between 1 January 2021 and 31 December 2022. According to the Announcement on
Continuation of Policies for Exemption of Vehicle Purchase Tax on New Energy Vehicles (“ ᗫ
ʮѓ”), which was jointly promulgated by MOF,
SAT and Ministry of Industry and Information Technology on 18 September 2022 and became
effective on the same day, the new energy vehicles purchased during the period from 1 January
2023 to 31 December 2023 will be exempted from the vehicle purchase tax. On 19 June 2023,
MOF, STA and Ministry of Industry and Information Technology jointly issued the
Announcement on the Extension and Optimization of Policies for the Exemption of Vehicle
Purchase Tax on New-energy Automobiles (“ഄ
ʮѓ”), stating that purchases of new-energy automobiles that meet the technical
specifications could enjoy tax subsidies in the form of vehicle purchase tax exemption or
reduction until 2027.
NATIONAL POLICIES THAT MAY SIGNIFICANTLY AFFECT THE EV & ESS
INDUSTRY
According to “Made in China 2025” promulgated by the State Council on May 8, 2015,
the state will continue to support the development of electric vehicles and fuel cell vehicles to
master the core technologies of low carbonization, informatization and intelligence of
automobiles, enhance the capabilities of engineering and industrialization of core technologies
such as EV batteries, drive motors, efficient internal combustion engines, advanced
transmissions, lightweight materials, intelligent controls and to form a complete industrial
system and innovation system from key components to complete vehicles, and to promote the
quality of domestic energy-efficient vehicles and EV up to international standards.
According to the Action Plan for Promoting the Development of the Automotive EV
Battery Industry () promulgated by the MIIT, the
NDRC, the Ministry of Science and Technology (the “MOST”) and the Ministry of Finance on
February 20, 2017, the direction of EV battery industry development has been pointed towards
the continuous improvement of product quality and safety and further decrease of cost to
ensure the supply of high-quality battery in 2018. Promote the R&D and industrialization of
new lithium-ion EV battery to achieve large-scale application in 2020. Strengthen the
fundamental design on new EV battery systems to achieve technological breakthrough and
pilot testing in 2025. In year 2020, China industry leader with global competitiveness and sales
of over 40 billion watt-hours shall emerge, when the total production capacity of EV battery
industry exceeding 100 billion watt-hours.
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According to the Medium and Long-term Development Plan for the Automotive Industry
promulgated and effective on 6 April 2017 by the Ministry of Industry and Information
Technology, the Development and Reform Commission and the Ministry of Science and
Technology (஝ྌ), the State will further accelerate the R&D and
industrialisation of new energy vehicle technologies and implement the power battery upgrade
project. It will give full play to the role of platforms such as the Power Battery Innovation
Center and the Power Battery Industry Innovation Alliance, carry out joint research on key
materials for power batteries, single cells, battery management systems and other technologies,
and accelerate the realization of revolutionary breakthroughs in power batteries. By 2020, the
annual production and sales of new energy vehicles will reach 2 million units, the specific
energy of power batteries will reach more than 300 Wh/kg and strive to achieve 350 Wh/kg,
and the specific energy of the system will strive to reach 260 Wh/kg and the cost will drop to
less than 1 yuan/watt-hour. By 2025, new energy vehicles will account for more than 20% of
vehicle production and sales, and the specific energy of the power battery system will reach
350 Wh/kg.
According to the Implementation Plan for Promoting the Renewal and Upgrading of Key
Consumer Products and Smooth Resource Recycling (2019-2020) (һอʺॴ
ࣩ2019-2020 ϋ)), promulgated and effective on 3 June 2019 by
the Development and Reform Commission, the Ministry of Ecology and Environment and the
Ministry of Commerce, the development and industrialisation of a new generation of
automotive power batteries will be further accelerated, the energy density and safety of
batteries will be improved, the platform of batteries will be gradually realized and
standardized, and the cost of batteries will be reduced. To guide companies to innovate
business models, promote new energy vehicle battery leasing and other alternatives that allow
vehicle and electricity to be purchased separately, thus reducing the upfront cost of vehicle
purchase.
According to the “Guidance on the Orderly Promotion of the Resumption of Work and
Production by Enterprises in the Industrial Communications Industry” promulgated and
effective on 24 February 2020 by the Ministry of Industry and Information Technology, the
State gives priority to supporting industries with long value chains that could drive the growth
in adjacent industries, such as automobiles, electronics, ships, aviation, power equipment and
machine tools. Continue to support niche industry leaders in smart photovoltaics, lithium-ion
batteries, and manufacturing industries, and further bolster the core competitive edge within
the industry value chain. Focus on supporting strategic emerging industries such as 5G,
industrial internet, integrated circuits, industrial robots, additive manufacturing, smart
manufacturing, new type of display, new energy vehicles, energy conservation and
environmental protection.
According to the “Guiding Opinions on Accelerating the Development of New Energy
Storage” promulgated by the Development and Reform Commission and the National Energy
Administration on 15 July 2021 and taking effect, by 2025, the transformation of new energy
storage from the early stage of commercialization to large-scale development will be realized.
New energy storage technology innovation capability is significantly improved, the level of
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independent and controllable core technology and equipment is significantly enhanced,
significant progress is made in terms of high safety, low cost, high reliability and long life, the
standard system is basically perfected, the industrial system becomes increasingly complete,
the market environment and business model are largely mature, and the installed scale reaches
more than 30 million kilowatts. The new energy storage plays a significant role in promoting
the process of carbon compliance and carbon neutrality in the energy sector. By 2030, the
development of new energy storage will be fully driven by the market.
According to the “Action Plan for Achieving Carbon Peaks by 2030” promulgated by the
State Council on 24 October 2021, the green and low-carbon transformation of energy will
accelerate the construction of new power systems, actively develop “new energy + energy
storage,” integrate source-grid-load-storage and multi-energy complementarity, and support
the reasonable deployment of energy storage systems for distributed new energy sources.
Accelerate the demonstration and application of new types of energy storage, and by 2025, the
installed capacity of new types of energy storage will reach more than 30 million kilowatts; in
the action of energy saving and carbon reduction and efficiency, strengthen the energy saving
and carbon reduction of new infrastructure, adopt DC power supply, distributed energy storage,
“photovoltaic + energy storage” and other modes, and explore diversified energy supply; in the
action of green and low-carbon transportation we will promote the low-carbon transformation
of transportation equipment, and by 2030, the proportion of new energy and clean energy-
powered transportation will reach about 40%.
The Implementation Plan for Accelerating the Promotion of Comprehensive Utilization of
Industrial Resources promulgated by eight departments, including the Ministry of Industry and
Information Technology, the Development and Reform Commission and the Ministry of
Science and Technology, which came into effect on 27 January 2022, proposes to improve the
recycling and utilization system of used power batteries and promote the safe gradient
application of used power batteries in areas such as power backup and charging and
replacement. Build a number of demonstration projects for gradient and recycling in key
regions such as Beijing, Tianjin and Hebei, the Yangtze River Delta, and the Guangdong, Hong
Kong and Macao Greater Bay Area. Cultivate a number of backbone enterprises for gradient
and recycling, and increase the R&D and promotion of technologies such as non-destructive
testing of power batteries, automated dismantling and efficient extraction of valuable metals.
Guiding Opinions of the Ministry of Industry and Information Technology and Other Five
Departments on Promoting the Development of the Energy Electronics Industry (ࢹڦ
ኬจԈ), including the Ministry of Industry and
Information Technology, the Development and Reform Commission and the Ministry of
Science and Technology, which came into effect on 3 January 2023, As an emerging industry
that is generated by the integration of and innovation upon electronic information technology
and new energy demand and that develops rapidly, energy electronics industry is the generic
term of electronic information technologies and products that produce energy, serve energy and
apply energy, mainly including solar photovoltaic, new energy storage batteries, application of
key terminals, key information technology and products (hereinafter referred to as
“photovoltaic, storage, terminal and information ”) and other fields. With the accelerated
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global response to climate change, the evolution of “electrification of energy consumption,
low-carbon power production and informatization of production and consumption” is
accelerating. Energy electronics is not only an important content of the implementation of the
strategy of manufacturing power and network power, but also the material basis of new energy
production, storage and utilization, and the backbone of the goal of achieving carbon peak and
carbon neutrality.
LA WS AND REGULATIONS ON PRODUCT QUALITY
According to the Product Quality Law of the PRC () (the
“Product Quality Law”), promulgated on February 22, 1993 and amended on July 8, 2000,
August 27, 2009 and December 29, 2018 by the SCNPC, producers and sellers shall establish
a sound internal product quality control system and strictly adhere to a job responsibility
system in relation to quality standards and quality liabilities together with implementing
corresponding examination and inspection measures. The counterfeiting or imitation of quality
marks such as certification marks is prohibited; falsifying the place of origin of product, and
falsifying or imitating the name or address of another factory is prohibited; adulteration of, or
mixing of improper elements with products under manufacturing or on sale, passing off the
sham as the genuine or passing off the inferior as the superior is prohibited. Any manufacturer
or seller who violates the Product Quality Law may be subject to (i) administrative penalties
including suspension of production or sale, ordered correction of illegal activities, confiscation
of products subject to illegal production or sale, imposition of fines, confiscation of illegal
gains and, in severe cases, revocation of business license; and (ii) criminal liabilities if the
illegal activity constitutes crime.
LA WS AND REGULATIONS RELATING TO PRODUCTION SAFETY
According to the Production Safety Law of the PRC ()
latest amended by the SCNPC on June 10, 2021 and came into effect on September 1, 2021,
an enterprise shall (i) provide production safety conditions as stipulated in Production Safety
Law of the PRC and other relevant laws, administrative regulations, national and industry
standards, (ii) establish a comprehensive production safety accountability system and
production safety rules, and (iii) develop production safety standards to ensure production
safety. Any entity that fails to provide required production safety conditions is prohibited from
engaging in production activities.
The person-in-charge of an enterprise shall be fully responsible for the safety of
production of the enterprise. An enterprise having more than 100 employees shall establish a
production safety management institution or be equipped with dedicated production safety
management personnel. Personnel who is responsible for managing production safety shall
inspect the safety of production regularly based on the characteristics of production of the
enterprise and shall deal with any safety issue identified during the inspection in a timely
manner. Any unsolved issue shall be reported to the person-in-charge in a timely manner and
the person-in-charge shall solve such issue immediately. The inspection and measures taken
shall be duly recorded. Enterprises and institutions shall provide their employees with training
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on production safety and shall truthfully inform their employees of any potential risks in
relation to the workplace and duties, preventive measures and emergency measures. In
addition, an enterprise shall provide its employees with protective equipment that meet the
national or industry standards and supervise and train them to use such equipment.
According to the Measures for the Supervision and Administration of “Three
Simultaneities” for the Safety Facilities of Construction Projects (ɧΝ
) promulgated by the former State Administration of Work Safety
(currently known as the Ministry of Emergency Management) on December 14, 2010 and
amended on April 2, 2015, the safety facilities in a newly built, reconstructed or expanded
construction project must be designed, constructed and put into use in production
simultaneously with the main body of the project. The enterprises shall demonstrate and
pre-assess the safety conditions of its construction projects, make a safety design chapter,
submit to the relevant work safety administrative department for examination or filing, and
apply to the work safety administrative department for the completion and acceptance or the
filing of its projects. If an enterprise violates the relevant requirements, it may be warned and
be ordered to make corrections within a specified time limit. Failure to make correction within
the specified time limit may result in the enterprise being ordered to discontinue the
construction process or suspend its production and business operation for rectification, and
being imposed a fine.
LA WS AND REGULATIONS RELATING TO FIRE PREVENTION
According to the Fire Protection Law of the People’s Republic of China ( ʕശɛ͏΍
) promulgated by the Standing Committee of the National People’s Congress on
April 29, 1998 and last amended on April 29, 2021, the fire prevention design and construction
of a construction project must conform to the national fire prevention technical standards for
engineering construction. For construction projects that require fire protection design in
accordance with the national fire protection technical standards for engineering construction,
the fire protection design review and acceptance system for construction projects shall be
implemented. If the construction project is completed and the competent department of housing
and urban-rural development under the State Council shall apply for fire control acceptance
inspection, the construction entity shall apply to the competent department of housing and
urban-rural development for fire control acceptance inspection. For construction projects other
than those specified in the preceding paragraph, the construction entity shall report to the
competent department of housing and urban-rural development for filing after the acceptance,
and the competent department of housing and urban-rural development shall conduct spot
checks. Construction projects which are subject to fire control acceptance inspection according
to law shall not be put into use without fire control acceptance inspection or failing to pass fire
control acceptance inspection. Other construction projects which fail to pass random inspection
according to law shall cease to use.
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LA WS AND REGULATIONS RELATING TO ENVIRONMENTAL PROTECTION
According to the Environmental Protection Law of the People’s Republic of China ( ʕ
) (hereinafter referred to as the “Environmental Protection Law”)
promulgated by the Standing Committee of the National People’s Congress on December 26,
1989 and last amended on April 24, 2014, any entity that discharges or will discharge pollutants
in the course of operation or other activities must implement effective environmental
protection measures to control and properly handle of hazardous substances such as waste gas,
waste water, waste residues, dust, malodorous gases, radioactive substances, noise, vibration
and electromagnetic radiation generated in the course of such activities. The State implements
a pollutant discharge permit management system in accordance with the law. According to the
Environmental Protection Law and the Regulations on the Administration of Pollutant
Discharge Licensing, which was promulgated by the State Council on January 24, 2021 and
came into effect on March 1, 2021, enterprises, business units and other producers and
operators that implement the pollutant discharge licensing management shall discharge
pollutants according to the requirements of the pollutant discharge license, and shall not
discharge pollutants without obtaining the pollutant discharge license. The competent
environmental protection authorities impose various administrative penalties on individuals or
enterprises in violation of the Environmental Protection Law.
Pursuant to the Regulations on the Administration of Environmental Protection of
Construction Projects (ᚐ၍ଣૢԷ) promulgated by the State Council on
November 29, 1998 and amended on July 16, 2017 and the Interim Measures for Environmental
Protection Acceptance Examination Upon Completion of Construction Projects promulgated by
the former Ministry of Environmental Protection on November 20, 2017, the PRC implements
a system to appraise the environmental impact of construction projects. The construction entity
shall submit an environmental impact report or an environmental impact statement for approval
prior to the commencement of the construction project, or an environmental impact registration
form as required by the environmental protection administrative department of the State
Council for record. In addition, after the completion of a construction project for which an
environmental impact report or an environmental impact statement has been prepared, the
construction entity shall, in accordance with the standards and procedures prescribed by the
competent administrative department of environmental protection under the State Council,
conduct acceptance checks on the supporting environmental protection facilities and prepare an
acceptance report. For construction projects that are constructed in phases or put into
production or use in phases, the corresponding environmental protection facilities shall be
inspected and accepted in phases. The construction project can only be put into production or
use after the completed supporting environmental protection facilities have passed the
acceptance inspection. Facilities that have not been carried out or have not passed the
acceptance examination shall not be put into production or use.
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On 29 April 2020, the newly amended Law of the People’s Republic of China on the
Prevention and Control of Environmental Pollution by Solid Waste ( ʕശɛ͏΍ձ਷ո᜗ᄻ
) (hereinafter referred to as the “Solid Waste Law”) incorporated for the
first time the extended producer responsibility system for products such as automotive power
batteries into the law, making important arrangements for the construction of a system for the
recycling and treatment of waste automotive power batteries from the top-level design. In order
to further regulate and guide the treatment process of waste lithium-ion power batteries and
implement the provisions of the Solid Waste Law, the Ministry of Ecology and Environment
promulgated on 7 August 2021 the “Technical Specification for Pollution Control of Waste
Lithium-ion Power Battery Treatment (for Trial Implementation)” (the “Technical
Specification”), which will take effect on 1 January 2022. The Technical Specification sets out
the general requirements for the treatment of waste lithium-ion power batteries, technical
requirements for pollution control in the treatment process, requirements for pollutant emission
control and environmental monitoring, and requirements for operational environmental
management. The Technical Specification is applicable to the pollution control of the waste
lithium-ion power battery treatment process, and can be used as a technical reference basis for
the environmental impact assessment, construction and operation, completion environmental
protection acceptance and emission permit management of construction projects related to
waste lithium-ion power battery treatment. For other types of waste lithium-ion batteries such
as energy storage and consumer batteries, as well as the pollution control of lithium-ion battery
production waste treatment process, please refer to the Technical Specification for
implementation.
LA WS AND REGULATIONS RELATING TO IMPORT AND EXPORT OF GOODS
According to the Foreign Trade Law of the PRC ()
promulgated by the SCNPC on May 12, 1994, amended on April 6, 2004 and November 7,
2016, foreign trade operators engaged in goods or technology import and export are required
to go through the record-filing registration procedures with the competent department of
foreign trade under the State Council or its entrusted institutions, except for those that are not
required to complete the record-filing registration as prescribed by laws, administrative
regulations and the provisions of the competent department of foreign trade under the State
Council. Where a foreign trade operator fails to go through the record-filing registration
formalities according to relevant provisions, the customs are entitled to refuse to handle the
formalities for declaration and clearance of goods imported or exported by the operator.
According to the Provisions of the PRC on the Administration of Recordation of Customs
Declaration Entities (), promulgated by the
General Administration of Customs of the PRC on November 19, 2021, which came into effect
on January 1, 2022, where the consignee or consignor of imported or exported goods or a
customs declaration enterprise applies for recordation, it shall obtain the qualification of
market entities; particularly where the consignee or consignor of imported or exported goods
applies for recordation, it shall be filed as a foreign trade business. Where the consignee or
consignor of imported or exported goods or a customs declaration enterprise has undergone the
formalities of recordation for customs declaration entities, branches that meet the requirements
of the preceding paragraph may also apply for recordation for customs declaration entities.
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LA WS AND REGULATIONS RELATING TO LABOR, SOCIAL INSURANCE AND
HOUSING PROVIDENT FUND
According to the Labor Law of the PRC () promulgated by
the SCNPC on July 5, 1994 and last amended and newly effective on December 29, 2018, the
Labor Contract Law of the PRC () promulgated by the SCNPC
on June 29, 2007, effective on January 1, 2008 and amended on December 28, 2012, newly
effective on July 1, 2013 and the Implementing Regulations of the Labor Contracts Law of the
PRC (ૢԷ) promulgated by the State Council on
September 18, 2008, effective on the same date, employers must strictly abide by state
standards and provide relevant trainings to its employees, protect their labor rights and perform
its labor obligations. Labor relationships between employers and employees must be executed
in written form. Labor contracts shall be categorized into labor contracts with fixed term, labor
contracts without fixed term and labor contracts to be expired upon completion of certain tasks.
The remuneration payable by employers to its employees shall not be less than local minimum
wage. Employers must establish a system for labor safety and sanitation, and strictly comply
with national standards and provide relevant education to its employees. Violations of the
Labor Contract Law of the PRC and the Labor Law of the PRC may result in the imposition
of fines and other administrative and criminal liability in the case of serious violations.
According to the Social Insurance Law of the PRC ()
promulgated by the SCNPC on October 28, 2010 and last amended and newly effective on
December 29, 2018 and the Provisional Regulations on Collection and Payment of Social
Insurance Premiums (ᎈ൬ᅄᖮᅲБૢԷ) recently amended by the State Council
and effective on March 24, 2019, a domestic enterprise shall pay premium for pension
insurance, unemployment insurance, maternity insurance, work injury insurance, basic medical
insurance for its employees at an appropriate percentage based on the amounts stipulated by the
laws. If the relevant payment is not paid in full and on time to the relevant local administrative
agency, the employer may be ordered to make up the gap or pay a fine. Meanwhile, the
Regulations on Work Injury Insurance (ᎈૢԷ), the Regulations on Unemployment
Insurance (ᎈૢԷ), the Trial Measures on Employee Maternity Insurance of
Enterprises () and other laws and regulations contain specific
clauses on different types of social insurance. Employers governed by such laws and
regulations shall pay corresponding insurance premiums for their employees.
According to the Regulations on the Administration of Housing Provident Fund (ג
၍ଣૢԷ) promulgated by the State Council on April 3, 1999 and last amended and
newly effective on March 24, 2019, employers shall make deposit registration for housing
provident fund at the housing provident fund management center and paid the housing
provident fund in full and on time. If employers failed to make payment of housing provident
fund within the time limit or has shortfall in payment of housing provident fund will be ordered
by the housing provident management center to make the payment or make up the shortfall
within the prescribed time limit, otherwise, the housing provident fund management center is
entitled to apply for compulsory enforcement with the people’s court.
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REGULATIONS RELATING TO INTELLECTUAL PROPERTY
Trademark
According to the Trademark Law of the PRC () promulgated
by the SCNPC on August 23, 1982 and last amended on April 23, 2019, the Trademark Office
of the administrative department for industry and commerce under the State Council shall be
responsible for the registration and administration of trademarks in the PRC. The
administrative department for industry and commerce under the State Council shall establish
a Trademark Review and Adjudication Board to be responsible for handling trademark
disputes. The registration of a trademark shall be valid for ten years from the date of approval.
If there is a continued need for the use of trademark, a renewal shall be made in accordance
with requirements within 12 months before the expiry of the trademark registration. If the
renewal is not made within the stipulated period, the valid period may be extended for a further
period of six mouths. Each renewal of registration of trademark shall be valid for ten years
from the date of the expiry of the previous trademark registration. If no application has been
filed before the extension period expires, the registered trademark shall be deregistered.
Industrial and commercial administrative authorities have the authority to lawfully investigate
any behavior in infringement of the exclusive right under a registered trademark in accordance
with the law. In case of a suspected criminal offense, the case shall be timely referred to a
judicial authority and decided according to law.
Patent
According to the Patent Law of the PRC () promulgated by
the SCNPC on March 12, 1984 and last amended on October 17, 2020, Inventions refer to new
technical solutions for a product, method or its improvement. Utility models refer to new
technical solutions for the shape, structure or the combination of both shape and structure of
a product, which is applicable for practical use. Designs refers to new designs of the shape,
pattern or the combination of shape and pattern, or the combination of the color, the shape and
pattern of the whole or part of product with esthetic feeling and industrial application value.
The validity period of patent for inventions is 20 years, while the validity of patent for utility
models is 10 years, and the validity period of patent for designs is 15 years, all starting from
the date of application.
Copyright
According to the Copyright Law of the PRC () promulgated
by the SCNPC on September 7, 1990 and last amended on November 11, 2020, Chinese
citizens, legal persons or non-legal person organizations shall, whether published or not, enjoy
copyright in their works, which include, among others, works of literature, art, natural science,
social science, engineering technology and computer software created in writing or oral or
other forms. A Copyright holder shall enjoy a number of rights, including the right of
publication, the right of authorship and the right of reproduction.
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Domain Names
According to the Administrative Measures for Internet Domain Names ( ʝᑌၣਹΤ၍
) promulgated by the MIIT on August 24, 2017 and effective on November 1, 2017,
the establishment of domain name root servers and domain name root server operation
institutions, domain name registration management institutions and domain name registration
service institutions within the territory of the PRC shall obtain permission from the MIIT or
the communications administration department of the province, autonomous region or
municipality directly under the Central Government. The application of establishment of
domain name root servers and domain name root server operation institutions, domain name
registration management institutions shall submit relevant files to the MIIT. The application of
establishment of domain name registration service institutions shall submit files to the
communications administration department of the province, autonomous region or
municipality directly under the Central Government. The validity period of permission of
domain name root server operation institutions, domain name registration management
institutions and domain name registration service institutions is 5 years.
LA WS AND REGULATIONS ON TAXATION
Enterprise Income Tax
According to the Enterprise Income Tax Law of the PRC (੻೼
) (the “EIT Law”) promulgated by the Standing Committee of the NPC on March 16, 2007
and last amended on December 29, 2018 and the Implementation Regulations on the EIT Law
(ૢԷ) promulgated by the State Council on December
6, 2007 and last amended on April 23, 2019, taxpayers consist of resident enterprises and
non-resident enterprises. Resident enterprises are defined as enterprises that are established in
China in accordance with PRC laws, or that are established in accordance with the laws of
foreign countries but whose actual or de facto control is administered from within the PRC.
Non-resident enterprises are defined as enterprises that are set up in accordance with the laws
of foreign countries and whose actual administration is conducted outside the PRC, but have
established institutions or premises in the PRC, or have no such established institutions or
premises but have income generated from inside the PRC. Under the EIT Law and relevant
implementing regulations, a uniform corporate income tax rate of 25% is applicable. However,
if non-resident enterprises have no formed permanent establishments or premises in the PRC,
or if they have formed permanent establishment institutions or premises in the PRC but there
is no actual relationship between the relevant income derived in the PRC and the established
institutions or premises set up by them, the enterprise income tax is, in that case, set at the rate
of 10% for their income sourced from inside the PRC.
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Value-added tax
According to the Provisional Regulations of the PRC on Value-added Tax ( ʕശɛ͏΍
೼ᅲБૢԷ) promulgated by the State Council on December 13, 1993 and last
amended on November 19, 2017 and the Implementation Rules of the Provisional Regulations
of the PRC on Value-Added Tax () promulgated
by the MOF on December 25, 1993 and last amended on October 28, 2011, any entities or
individuals engaged in sale of goods, provision of processing services, repairs and replacement
services or importation of goods within the territory of the PRC are taxpayers of Value-Added
Tax and shall pay the V AT in accordance with the law and regulation. The rate of V AT for sale
of goods is 17% unless otherwise specified.
According to the Circular of the Ministry of Finance and State Administration of Taxation
on Adjusting Value-Added Tax Rate () issued by the Ministry
of Finance and the State Taxation Administration on April 4, 2018 and came into force on May
1, 2018, the tax rate for the taxable sales or import of goods by the taxpayers would be changed
from 17% and 11% to 16% and 10% respectively. Afterwards, further adjustments were made
according to the Announcement on Relevant Policies for Deepening the Value-Added Tax
Reform (ʮѓ) jointly issued by the MOF, the SAT and
the General Administration of Customs of the PRC on March 20, 2019 and came into force on
April 1, 2019, for general V AT taxpayers who engaged in V AT taxable sales or import goods,
applicable tax rates that were previously subject to 16% and 10% were adjusted to 13% and
9%.
LA WS AND REGULATIONS ON FOREIGN EXCHANGE CONTROL
According to Regulations on Foreign Exchange Administration of the PRC ( ʕശɛ͏
΍ձ਷̮ි၍ଣૢԷ) promulgated by the State Council on January 29, 1996 and last
amended on August 5, 2008 and the Regulations for the Administration of Settlement, Sale and
Payment of Foreign Exchange () promulgated by the PBOC on
June 20, 1996 and came into force on July 1, 1996, under general circumstances, RMB is freely
convertible for payments of current account items, such as trade and service-related foreign
exchange transactions and dividend payments, but not freely convertible for capital account
items, such as direct investment, loan or investment in securities outside China unless prior
approval of the State Administration of Foreign Exchange or its local counterparts or branches
is obtained.
According to the Notice of the State Administration of Foreign Exchange on Issues
concerning the Foreign Exchange Administration of Overseas Listing (ྤ̮ɪ̹̮ි၍
) promulgated by the SAFE on December 26, 2014, a domestic company
shall, within 15 working days after the completion of its overseas listing, go through the
registration of overseas listing with the foreign exchange bureau at its place of registration. A
domestic issuer may transfer the capital raised through overseas listing to its local bank
account or deposit at its overseas account. The use of proceeds shall be consistent with the
purposes disclosed in this document or other public documents.
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According to the Notice of the State Administration of Foreign Exchange on Further
Simplifying and Improving Policies for the Foreign Exchange Administration of Direct
Investment () promulgated by the
SAFE on February 13, 2015, came into force on June 1, 2015 and partially repealed on
December 30, 2019, to improve the efficiency on foreign exchange management, the SAFE has
canceled the administrative approvals of foreign exchange registration of direct domestic
investment and direct overseas investment. In addition, the Notice simplifies the procedure of
registration of foreign exchange, investors shall register with banks to have the registration of
foreign exchange for the direct domestic investment and direct overseas investment.
According to the Notice of the State Administration of Foreign Exchange on Reforming
and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account
() promulgated and came
into effective on June 9, 2016 by the SAFE, enterprises registered in China may also convert
their foreign debts from foreign currency into RMB on self-discretionary basis. The Notice
provides an integrated standard for conversion of foreign exchange under capital account items
(including but not limited to foreign currency capital and foreign debts, funds recovered from
overseas listing, etc.) on self-discretionary basis, which applies to all enterprises registered in
China.
REGULATIONS RELATING TO OVERSEAS OFFERING AND LISTING
On February 17, 2023, with the approval of the State Council, the CSRC promulgated the
Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic
Companies () (the “Trial Measures”) and
relevant five guidelines, which came into force on March 31, 2023. According to the Trial
Measures, (i) PRC domestic companies that seek to offer or list securities overseas, both
directly and indirectly, should fulfill the filing procedure and submit relevant information to
the CSRC; if a domestic company fails to complete the filing procedure or conceals any
material fact or falsifies any major content in its filing documents, such domestic company may
be subject to administrative penalties, such as order to rectify, warnings, fines, and its
controlling shareholders, actual controllers, the person directly in charge and other directly
liable persons may also be subject to administrative penalties, such as warnings and fines; (ii)
domestic companies that seek to offer or list securities overseas directly means that PRC
companies limited by shares offer or list securities in overseas securities markets; and (iii) any
PRC company limited by shares are required to file with the CSRC within three business days
after its application for overseas listing is submitted. Failure to complete the filing under the
Trial Measures may subject a PRC domestic company to rectification ordered by the CSRC,
warning, and fine of RMB1 million to RMB10 million.
Besides, PRC domestic companies seeking to Overseas Offering and Listing shall strictly
comply with the laws, administrative regulations and relevant provisions of the PRC
government on foreign investment, State-owned assets, industry regulation, overseas
investment, etc., shall not disrupt domestic market order, and shall not harm national interests,
public interest and the legitimate rights and interests of domestic investors. PRC domestic
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companies that conducts Overseas Offering and Listing shall (i) formulate its articles of
association, improve its internal control system and standardize its corporate governance,
financial affairs and accounting activities in accordance with the PRC Company Law, the PRC
Accounting Law and other PRC laws, administrative regulations and applicable provisions; (ii)
abide by the legal system of the PRC on confidentiality and take necessary measures to
implement the confidentiality responsibility, shall not divulge any state secret or the work
secrets of state authorities, and shall also comply with laws, administrative regulations and the
relevant provisions of the PRC where involved in the overseas provision of personal
information and important data. In addition, the Trial Measures also provides the circumstances
where the Overseas Offering and Listing is explicitly prohibited, including: (i) such securities
offering and listing is explicitly prohibited by specific PRC laws and regulations; (ii) that
constitute threat to or endanger national security; (iii) the PRC domestic company, or its
controlling shareholder(s) and the actual controller, have committed relevant crimes such as
corruption, bribery, embezzlement, misappropriation of property or undermining the order of
the socialist market economy during the latest three years; (iv) the PRC domestic company is
currently under investigations for suspicion of criminal offenses or major violations of laws
and regulations, and no conclusion has yet been made thereof; or (v) there are material
ownership disputes over equity held by the controlling shareholder(s) or by other
shareholder(s) that controlled by the controlling shareholder(s) and/or the actual controller.
On February 24, 2023, the CSRC and other relevant government authorities promulgated
the Provisions on Strengthening the Confidentiality and Archives Administration of Overseas
Securities Issuance and Listing by Domestic Companies (“ྤʫΆุྤ̮೯БᗇՎձɪ̹
֛the “ Provision on Confidentiality ”), which came into
force on March 31, 2023. According to the Provision on Confidentiality, where any PRC
domestic company provides or publicly discloses to the relevant securities companies,
securities service institutions, overseas regulatory authorities and other entities and
individuals, or provides or publicly discloses through its overseas listing subjects, documents
and materials involving state secrets and working secrets of state organs, it shall report the
same to the competent department with the examination and approval authority for approval in
accordance with the law, and submit the same to the secrecy administration department of the
same level for filing. Domestic companies providing accounting archives or copies thereof to
entities and individuals concerned such as securities companies, securities service institutions
and overseas regulatory authorities shall perform the corresponding procedures pursuing to the
relevant provisions of the State. The working papers formed within the territory of the PRC by
he securities companies and securities service institutions that provide corresponding services
for the overseas issuance and listing of domestic companies shall be kept within the territory
of the PRC, and those that need to leave the PRC shall go through the examination and
approval formalities in accordance with the relevant provisions of the State.
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Full Circulation of H Shares
“Full Circulation” represents listing and circulating on the Stock Exchange of the
domestic unlisted shares of an H-share listed company, including unlisted domestic shares held
by domestic shareholders prior to overseas listing, unlisted domestic shares additionally issued
after overseas listing, and unlisted shares held by foreign shareholders. On August 10, 2023,
CSRC announced the Guidelines for the “Full Circulation” Program for Domestic Unlisted
Shares of H-share Listed Companies ( H΅͡ሗ“ஷ”ˏ),
which allows certain qualified H-share listed companies and H-share companies to be listed for
the application of full circulation to CSRC.
According to the Guidelines for the “Full Circulation” Program for Domestic Unlisted
Shares of H-share Listed Companies, shareholders of domestic unlisted shares may determine
by themselves through consultation the amount and proportion of shares, for which an
application will be filed for circulation, provided that the requirements laid down in the
relevant laws and regulations and set out in the policies for state-owned asset administration,
foreign investment and industry regulation are met, and the corresponding H-share listed
company may be entrusted to file the said application for “Full Circulation.” To file an
application for “Full Circulation,” an H-share listed company shall file the application with the
CSRC according to the administrative licensing procedures necessary for the “examination and
approval of public issuance and listing (including additional issuance) of shares overseas by a
joint stock company.” After the application for “Full Circulation” being approved by the
CSRC, the H-share listed company shall submit a report on the relevant situation to the CSRC
within 15 days after the registration with the China Securities Depository and Clearing
Corporation Limited of the shares related to the application has been completed.
On December 31, 2019, China Securities Depository and Clearing Corporation Limited
and Shenzhen Stock Exchange jointly announced the Measures for Implementation of
H-share“Full Circulation” Business. The businesses of cross-border share transfer registration,
maintenance of deposit and holding details, transaction entrustment and instruction
transmission, settlement, management of settlement participants, services of nominal holders,
etc. in relation to the H-share “Full Circulation” business, are subject to these Measures for
Implementation.
In order to fully promote the reform of H-shares “Full Circulation” and clarify the
business arrangement and procedures for the relevant shares’ registration, custody, settlement
and delivery, China Securities Depository and Clearing Corporation Limited has issued the
Circular on Issuing the Guidelines to the Program for “Full Circulation” of H-shares in
February 2020, which specified the business preparation, account arrangement, cross-border
share transfer registration and overseas centralized custody, etc. In February 2020, China
Securities Depository and Clearing (Hong Kong) Co., Ltd. promulgated the Guidelines to the
Program for Full Circulation of H-shares of China Securities Depository and Clearing (Hong
Kong) Co., Ltd. ( ʕ਷ᗇՎ೮াഐၑ(ಥ)ʮ̡Hٰ“ஷ”) to specify the
relevant escrow, custody, agent service of China Securities Depository and Clearing (Hong
Kong) Co., Ltd., arrangement for settlement and delivery and other relevant matters.
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OVERVIEW
Who We Are
We are a lithium-ion battery manufacturer in China. We focus on the R&D, production
and sales of EV and ESS lithium-ion battery products including battery cells, modules and
packs (including battery boxes, battery racks and energy storage containers for ESS packs).
According to the F&S Report, in China, in 2022 and the six months ended June 30, 2023, we
were:
 the tenth largest lithium-ion battery manufacturer globally in both periods in terms
of annual installation for new energy applications, which include EV battery and
ESS battery;
 the sixth largest lithium-ion battery manufacturer in China in both periods in terms
of global annual installations for new energy applications, which include EV battery
and ESS battery;
 the tenth largest lithium-ion battery manufacturer globally in both periods in terms
of China EV battery installations;
 the third and fourth largest lithium-ion battery manufacturer globally in terms of
global ESS battery installations, respectively
According to the F&S Report, there has been an undersupply of EV and ESS battery
products in recent years and the markets of EV and ESS battery products still have great
potential of increase in the future. According to the same source, the global annual installations
for EV batteries is expected to increase at a CAGR of 38.8% from 504.5GWh in 2022 to
2,597.1GWh in 2027, and the global annual installations for lithium-ion ESS batteries is
expected to increase at a CAGR of 53.7% from 119.3GWh in 2022 to 1,023.1GWh in 2027.
Against this backdrop, downstream customers are more inclined to place orders with
lithium-ion battery manufacturers who have adequate production capacity to produce high-
performing products with competitive prices. Our strong R&D capabilities and high-quality
products, combined with the ability to quickly roll out large-scale production capacity and the
pursuit of dual-focus strategy on EV and ESS batteries, enabled us to penetrate the lithium-ion
battery market, expand business scale, build up our customer base and achieve robust revenue
growth within a short timeframe. More specifically:
 Our R&D capabilities and high-quality products : Our strong R&D capabilities
enabled us to design and develop high-quality lithium-ion battery products with
features catered to the specific needs of customers in a timely manner, which in turn
enhanced our customer loyalty and built up our customer base. For example, as of
the Latest Practicable Date, we achieved mass energy density of 180-200Wh/kg for
our mass-produced LFP battery cells and 200-230Wh/kg for our prototype
composite battery cells, both of which are at the top level in the industry, according
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to the F&S Report. Se e “ – Research and Development.” For ESS batteries, the ESS
battery packs we sold in 2019 were highly customized with features such as
frequency adjustment which facilitated stable energy supply and surplus energy
storage to suit the special condition of the standalone power grid in the large-scale
industrial park in Indonesia operated by a subsidiary of the Tsingshan Group.
 Our mass production capabilities : We have strong execution capabilities in
designing, constructing and operating large-scale production facilities. In particular,
our capability in comprehensive evaluation of our investment and operating costs in
plant construction and production line planning enabled us to achieve quick
construction and commissioning of new factories within a short period since our
inception. Such capabilities can be evidenced by the 10-month period between
commencement of construction and trial production at Wenzhou Facility I and the
3-month period to reach a utilization rate of above 90% in October 2022 for the
production lines commissioned in July 2022. Such capabilities, combined with our
commitment to product quality and improving production efficiency, enabled us to
provide adequate and stable supply of high-quality products to downstream
customers. Our growth in sales volume of our battery products were generally in line
with the growth in our designed annual production capacity during the Track Record
Period.
 Our dual-focus strategy and customer acquisition : We pursue a dual-focus strategy
on EV and ESS batteries. The sales of the customized ESS battery packs to
Indonesia in 2019 jump-started our business. In 2020, as some of our EV battery
products passed the verification processes required by our EV manufacturer
customers, we allocated our increased production capacity to seize the opportunities
and satisfy the increasing demand from such EV manufacturers. In 2021 and 2022
and the six months ended June 30, 2023, we strategically increased our sales to ESS
manufacturer customers to pursue the growth potential, and thus the revenue
contribution from sales of ESS battery products increased gradually. As all of our
existing and planned production lines are designed to be compatible with the
production of different battery products, our dual-focus strategy also provides us
with flexibility in arranging our production activities for we may allocate and adjust
the production capacity between EV and ESS battery products from time to time
based on the actual market demands for our products. We have also been able to
expand the depth and breadth of our products to existing customers. For example,
we have been able to collaborate more closely with SAIC Motor ( ɪӛණྠ). The
number of SAIC Motor vehicle models that uses our products has been increased
from one in the first half of 2020 to over 10 as of June 30, 2023. The
above-mentioned efforts, together with our strategy to price our products
competitively, allowed us to quickly build up our customer base.
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As a result of the above-mentioned advantages and the supply-and-demand dynamics, our
sales volume of battery products increased significantly from 1.55GWh in 2020 to 16.61GWh
in 2022, representing a CAGR of 227.4%. Our sales volume of battery products increased by
65.3% from 4.70GWh in the six months ended June 30, 2022 to 7.77GWh in the six months
ended June 30, 2023. As of June 30, 2023, our designed annual production capacity reached
35.2GWh. From 2020 to 2022, our EV and ESS battery installations grew at a CAGR of
122.4% and 481.4% respectively. According to the F&S Report, such growth outpaced the
overall growth of EV and ESS battery installations in China. Our exponential growth from
2020 to 2022 made us a battery manufacturer among the top 10 lithium-ion battery
manufacturers in China during the period in terms of lithium-ion battery installations,
according to the F&S Report.
Due to the challenging competitive landscape in ESS battery market as a result of its rapid
development in recent years, there was a slight change in our market ranking among the
lithium-ion battery manufacturers globally in terms of global ESS battery installations. As we
have demonstrated our capabilities to quickly roll out high-performing products and new
production capability, build up stable relationships with customers, with our pursuit of
dual-focus strategy on EV and ESS batteries, our commitment to R&D and the offering of
high-quality products, we are well-positioned in competing against our peers and capture
growth opportunities in the industry.
We enjoy a unique advantage of resource integration and full industry chain synergies as
endowed by Tsingshan Group, our Controlling Shareholder, who built the world’s largest
stainless steel and nickel businesses from the ground up in less than 20 and 10 years,
respectively. Tsingshan Group has strategically expanded along the lithium-ion battery industry
value chain through direct control or equity investment, including the mining and refining of
nickel, lithium and cobalt, the production of cathode materials, anode materials, separators and
electrolytes. Being part of the Tsingshan Group ecosystems facilitates the process of building
trusts and business relationships with various raw material suppliers and secure supplies of
important raw materials. In addition, we will be able to capitalize on its various strategic
endeavors in the upstream of the industry value chain and may have opportunities to make
strategic investment in upstream raw material projects together with Tsingshan Group.
Our Market Opportunity
The rapid development of EV and ESS industries presents a significant opportunity.
Driven by China’s “dual carbon” goals and carbon neutrality initiatives worldwide, the
penetration rate of EVs continues to increase, which has led to the surging demand for
lithium-ion batteries that power the EVs. Against the same backdrop, the proliferation of
renewable energy such as wind and solar power also presents challenges to the scale and
stability of power grid connection. As such, ESS have emerged to resolve the challenge faced
by power generators, power grids and power users. According to the F&S Report, the global
annual installations for EV batteries is expected to increase at a CAGR of 38.8% from
504.5GWh in 2022 to 2,597.1GWh in 2027, and the global annual installations for lithium-ion
ESS batteries is expected to increase at a CAGR of 53.7% from 119.3GWh in 2022 to
1,023.1GWh in 2027.
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Our Products and Customers
Our EV battery products include LFP battery products and ternary lithium battery
products and our ESS battery products are LFP battery products.
Our EV battery products can be used in EVs including passenger vehicles, commercial
vehicles (such as buses and trucks) and special vehicles (such as forklifts and construction
machineries). We have a diverse and balanced EV battery customer base, covering established
automotive companies, such as SAIC-GM-Wuling ( ɪӛஷ͜ʞഷ), SAIC-Passenger
Automobile (͜ԓ), DFPV (Aeolus) (͜ԓ(ग़)), DNPV (Venucia) (˚ପ
(઼ԕ)) and FAW ( ɓӛֆᙜ), as well as emerging EV manufacturers, such as Leapmotor ( ཧ
ൺӛԓ), Hozon Auto ( Υ଺ӛԓ), Hycan ( Υ௴ӛԓ), and an emerging auto parts manufacturer
Vremt (ြཥਗ). Our EV battery customer base also covers an established vehicle company
headquartered in Netherlands, a luxury vehicle company headquartered in Germany and a U.S.
EV manufacturer. For commercial vehicles and special vehicles, we have established
partnerships with Yutong Bus (ԓ), Xiamen King Long (Ꮂ), CRRC ( ʕ਷ʕԓ),
SAIC MAXUS ( ɪӛɽஷ), Farizon Auto ( Λлਠ͜ԓ), Sany Group ( ɧɓණྠ), XCMG (ʈ
ӛԓ) and EP Equipment ( ʕɢዚ૛) to further expand our customer base and our product
range. Our products are also used in overseas market including Middle East, Africa, Southeast
Asia and India through direct export and export by OEMs.
Our ESS battery products can be used in different energy storage scenarios, including
household energy storage, large-scale industrial energy storage scenarios such as power
stations, power grids as well as commercial energy storage scenarios. Our ESS batteries meet
the various quality standards across different usage scenarios and countries, and the
performance of our products have been widely recognized. Our products are accredited with
more than 300 domestic and international certificates. We primarily sell our ESS battery
products to household ESS integrators, photovoltaic invertor manufacturers, system integrators
and EPC firms. Our household ESS battery customers primarily include SolaX Power ( एϪЎ
ᖯ), Sungrow Energy Storage ( ජΈᎷঐ), Growatt ( ̚๿͙त), and GoodWe (۾For
commercial and industrial ESS customers, we cooperate with customers including Sungrow
Energy Storage ( ජΈᎷঐ), CLOU Intelligent Energy (௔౽ᅆঐ๕), Ronghe BESS ( ፄձʩ
Ꮇ), two large-scale energy storage solutions providers in the United States and a leading
renewable energy company in the Asia-Pacific region headquartered in Singapore.
Our R&D Capabilities
Strong R&D capabilities are the key to our success. We have R&D centers in Shanghai
and Wenzhou, and an R&D center in Jiashan which is under construction and expected to be
put into operation in the second half of 2024, with 2,120 R&D personnel involved in R&D
functions as of June 30, 2023. The core members of our R&D team are highly experienced and
have extensive connections in the lithium-ion battery industry. Having witnessed the
development history of lithium-ion batteries, they possess rich experience and unique insights
in the material development, battery cell design technology and manufacturing process of
lithium-ion batteries. As such, we are able to analyze and stay abreast with the development
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trend of lithium-ion battery technologies to determine our R&D focus accordingly. As of the
Latest Practicable Date, we had 2,912 patent applications, including applications for 747
invention patents and 63 design patents, demonstrating our strong R&D capabilities. Among
such patents, 1,560 were granted as of the Latest Practicable Date, including 98 invention
patents and 46 design patents; 681 were granted in 2022, including 18 invention patents and
11 design patents. All such invention patents were related to lithium-ion battery manufacturing
and innovation, covering areas including lithium-ion battery materials and structures, system
integration, battery management system, production technologies and equipments and battery
recycling.
We have a series of technologies with advantages in terms of battery materials, battery
design and battery structure, production technique and equipment, which helped us build up a
product portfolio that is able to achieve safety, reliability, excellent driving range and strong
performance, while improving production efficiency. We have the following R&D highlights:
 WenDing (“
ਪ௟”) technology . In August 2022, we launched prismatic batteries that
utilized our WenDing (“ ਪ௟”) technology. Such technology can be applied to LFP
battery products as well as ternary lithium battery products to achieve strong
performance.
 Easy-for-Tera cells (“ET
ڃ)”Our Easy-for-Tera cells (“ETڃare flat
batteries adopting high-speed winding, cutting or stacking integration technology,
which improves the efficiency of the production process and battery performance.
 V ersatile power station . Our versatile power station can be used in various use cases
such as electrical energy storage, vehicle charging and utility power backup.
 Semi-solid prismatic batteries . We have delivered prototypes of semi-solid prismatic
batteries to a luxury vehicle company in Europe, with whom we are conducting
battery performance tests.
 Sodium-ion battery. We are in the process of developing sodium-ion batteries. Such
batteries are likely to reduce the cost of ESS batteries and lower the dependence on
lithium.
Our Financial Performance
During the Track Record Period, we achieved rapid growth in revenue as we expanded our
production capacity to meet the strong market demand. Our revenue in 2020, 2021 and 2022
were RMB907.0 million, RMB2,109.1 million and RMB14,647.8 million, respectively,
representing a CAGR of 301.9%. Our revenue increased by 64.2% from RMB4,016.6 million
in the six months ended June 30, 2022 to RMB6,594.8 million in the six months ended June 30,
2023.
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COMPETITIVE STRENGTHS
Emerging battery manufacturer in an expanding industry
We are a lithium-ion battery manufacturer in China. We have strong execution capability
in designing, constructing and operating large-scale production facilities. In particular, our
capability in comprehensive evaluation of our investment and operating costs in plant
construction and production line planning enabled us to achieve quick construction and
commissioning of new factories within a short period since our inception. Such capabilities,
combined with our commitment to product quality and improving production efficiency,
enabled us to cater the increasing demand from downstream customers. We pursue a dual-focus
strategy on EV and ESS batteries. In 2020, as some of our EV battery products passed the
verification processes required by our EV manufacturer customers, we allocated our increased
production capacity to seize the opportunities and satisfy the increasing demand from such EV
manufacturers. In 2021, 2022 and the six months ended June 30, 2023, we strategically
increased our sales to ESS manufacturer customers to pursue the growth potential, and thus the
revenue contribution from sales of ESS battery products increased gradually. Our strong R&D
capabilities also enabled us to design and develop lithium-ion battery products with
high-quality and features catered to the specific needs of customers. Being part of the
Tsingshan Group ecosystems also facilitates the process of building trusts and business
relationships with various raw material suppliers and secure supplies of important raw
materials. These, combined with the favorable supply-and-demand dynamics during the Track
Record Period, enabled us to grow exponentially and quickly gained a prominent position in
the lithium-ion battery industry within a short period since our inception. Our designed annual
production capacity increased by more than ten folds from 2.3GWh in January 2020 to
35.2GWh in June 30, 2023. Our sales volume of battery products increased significantly from
1.55GWh in 2020 to 3.30GWh in 2021, and further to 16.61GWh in 2022. Our sales volume
of battery products increased by 65.3% from 4.70GWh in the six months ended June 30, 2022
to 7.77GWh in the six months ended June 30, 2023. According to the F&S Report, in the six
months ended June 30, 2023, we were the tenth largest lithium-ion battery manufacturer
globally in terms of annual installations for new energy applications, the sixth largest in China
in terms of global annual installations for new energy applications, the tenth largest globally
in terms of China EV battery installations, and the fourth largest globally in terms of global
ESS battery installations.
Amid the global energy transition, the downstream EV industry and ESS industry are
expanding, which present significant growth opportunities for us. Driven by downstream
demands, we expect to maintain our high growth in the foreseeable future. According to the
F&S Report:
 EV sales volume in China is expected to reach 18.1 million units, growing at a
CAGR of 21.3% from 2022 to 2027, with penetration rates being 65.3% and 19.1%
for passenger EV and commercial EV in 2027, respectively;
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 global penetration rate of passenger EV and commercial EV is expected to reach
44.6% and 3.1% respectively, and the global sales volume of EV is expected to
increase at a CAGR of 26.1% from 11.0 million units in 2022 to 35.2 million units
in 2027;
 EV battery annual installations in China is expected to increase at a CAGR of 41.1%
from 294.6GWh in 2022 to 1,648.6GWh in 2027; and
 global EV battery annual installation is expected to increase at a CAGR of 38.8%
from 504.5GWh in 2022 to 2,597.1GWh in 2027.
Renewable energy such as wind and solar power has proliferated as part of the global
energy transits and carbon neutrality efforts, which presents challenges to the scale and
efficiency of power grid. ESS have emerged to resolve the challenges faced by power
generators, power grids and power users, and the development of ESS industry has been
supported by favorable policies in many countries.
 According to the F&S Report, the global annual ESS battery installations is
expected to increase at a CAGR of 53.7% from 119.3GWh in 2022 to 1,023.1GWh
in 2027.
 China’s ESS market, especially grid energy storage and commercial and industrial
energy storage, is also expected to achieve massive growth in the coming years
benefiting from various favorable policies.
We believe that we are well-positioned to seize the tremendous growth opportunities in
these downstream markets. In addition to our 35.2GWh designed annual production capacity
as of June 30, 2023, we have several production facilities under planning or construction, and
we expect that our total annual production capacity will reach 62GWh by the end of 2023. Our
existing and planned production facilities are located in Wenzhou and Jiashan in Zhejiang,
Foshan in Guangdong, Liuzhou in Guangxi and Chongqing, bringing us closer to our
customers.
Strong R&D capabilities
Our strong R&D capabilities enable us to continuously improve and optimize product
performance while reducing costs. We are able to provide cost-efficient products at massive
scale, while achieving strong performance with our products under development or at prototype
stage. According to the F&S Report, we were the first in the industry to introduce the 50Ah
ESS battery products. In addition, we continue to commercialize our next-generation products
through comprehensive development in materials, battery design and battery structure,
production technique and equipment. Our products feature high volumetric energy density,
high mass energy density, fast-charging technology compatibility, long battery cycle life, high
safety and reliability, comprehensive battery management system technology and outstanding
system utilization. Such features are realized through our key technologies including SCL
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technology, green and detachable CTP technology and minimalism cover, among others, and
are supported by our equipment such as the ultrahigh-pressure high speed liquid injection
machine. We are also able to customize our products to suit the specific needs of our customers
in return for higher prices.
 Our SCL technology improves the safety performance of batteries, increases the
volumetric energy density and improve the utilization of battery space.
 Our green and detachable CTP technology enables the dismantling of large battery
packs, which reduces the maintenance requirements for batteries and allow for
convenient recycling.
 Our minimalism battery top cover technology can increase the effective usable
capacity and space of battery cells and reduce battery weight and production cost.
 Our ultra-high pressure high speed liquid injection machine ensures higher
efficiency of electrolyte injection inside the battery cell and is effective in
improving the stability of the battery’s long cycle performance.
As of the Latest Practicable Date, we had 2,912 patent applications, including
applications for 747 invention patents and 63 design patents, demonstrating our strong R&D
capabilities. Among such patents, 1,560 were granted as of the Latest Practicable Date,
including 98 invention patents and 46 design patents; 681 were granted in 2022, including 18
invention patents and 11 design patents.
We are also devoted to developing innovative technology in the industry through the
application of advanced material and structure technologies. We have developed various
battery prototypes that we expect to put into commercial production, including:
 prismatic LFP and ternary batteries that utilized our WenDing (“ ਪ௟”) technology.
The volumetric energy density, mass energy density and driving range of such
batteries exceeded industry average, according to the F&S Report.
 Easy-for-Tera cell (“ETڃare flat batteries adopting high-speed winding,
cutting or stacking integration technology in our flat batteries, which improves the
efficiency of the production process and battery performance.
 Twin Star (“݋battery combines the advantages of LFP and ternary batteries,
and can be applied in various use cases. It improves user experience through
fast-charging and high safety performance.
 Our versatile power station can be used in various use cases such as electrical energy
storage, vehicle charging and utility power backup. It is equipped with automatic
fire prevention system, including high-sensitivity detectors of temperature, smoke
and gas, to improve the safety of the energy storage system.
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High-quality and diverse customer base
We pursue a dual-focus strategy and have rapidly built up a high-quality and diverse
customer base with our capability to deliver high-quality and cost-effective battery products
with distinctive product features and performance focuses to satisfy the needs of different
customers in both EV and ESS sectors.
For EV batteries, we have long-term cooperative relationships with automotive
manufacturers, including well-known domestic and international brands, as well as emerging
EV manufacturers. Our customers include 10 of the top 20 EV manufacturers in China and four
of top five emerging EV manufacturers in China, both in terms of sales volume for the year
ended December 31, 2022 according to the F&S Report. Our EV battery customer base also
covers an established vehicle company headquartered in Netherlands, a luxury vehicle
company headquartered in Germany and a U.S. EV manufacturer. With our high-quality
products, we continue to obtain new customers. In 2020, 2021 and 2022, our established EV
manufacturer customers increased by five, seven and 15, respectively. We are also expanding
the depth and breadth of our products to existing customers. For example, we established our
cooperation with SAIC Motor and have gained trust and recognition from the customer through
our satisfactory proposal from technical, commercial and other perspectives, good interaction
with the customer, sufficient allocation of R&D resources to enable the development of
customized battery products that meet the customer’s requirements within a relatively short
period of time, and sufficient allocation of production resources to minimize the time needed
to achieve mass production for the relevant products. We have become a major battery supplier
to SAIC-GM-Wuling ( ɪӛஷ͜ʞഷ), and our battery products are used in their Wuling
Hongguang Mini EV , the top-selling new energy vehicle model in China in 2021 according to
the F&S Report. The amount of products we offered to SAIC-GM-Wuling ( ɪӛஷ͜ʞഷ)
increased each year during the Track Record Period. We have been able to collaborate more
closely with SAIC Motor ( ɪӛණྠ). The number of SAIC Motor vehicle models that uses our
products has been increased from one in the first half of 2020 to over 10 as of June 30, 2023.
We were able to expand the application of our products to cover BEV and PHEV , as well as
passenger vehicles and commercial vehicles as a part of our expanded collaboration with SAIC
Motor. In April 2022, we established two joint ventures at Guangxi, Liuzhou with a
wholly-owned sub-subsidiary of SAIC Motor ( ɪӛණྠ) to build two production facilities for
EV battery cell and battery pack with designed annual production capacity of 20GWh each. We
are also a major battery supplier to Leapmotor ( ཧൺӛԓ), which is among the top five
emerging EV manufacturers in China for the year ended December 31, 2022, according to the
F&S Report. We are able to supply battery products to all LFP vehicle models for this
customer. In addition, we are an EV battery cell supplier to Vremt (ြཥਗ), which assembles
our battery cells into battery packs that can be installed in multiple top-selling EVs. We are
able to supply battery products to four brands and five vehicle models for this customer. The
selection by customers signifies that, after a comprehensive evaluation, we have proven to be
the most satisfactory EV battery manufacturer for such customers. The fact that a large number
of customers has chosen us is a solid proof of our recognition in the industry.
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ESS battery has also been one of our focuses since our inception, and we have obtained
a number of high-quality key customers household ESS integrators, photovoltaic inverter
manufacturers, system integrators and EPC firms. In 2021 and 2022, we ranked fourth and third
in terms of ESS battery installations, according to the F&S Report. Our customers include
seven of the top 10 ESS power conversion system manufacturers in China and six of the top
10 ESS integrators in China in terms of annual shipments in 2022. According to F&S, we were
the only one among the top ten lithium-ion battery manufacturers globally in terms of annual
installation for new energy applications who established such dual-focus strategy since
establishment. Leveraging the advantages brought about by the dual-focus strategy and the
advantages enjoyed as an early mover, we have launched many well-recognized ESS battery
products such as 50Ah ESS battery products and 280Ah ESS battery products and been able
to penetrate into many well-known ESS customers. Benefiting from our WenDing (“ ਪ௟”)
technology, we launched 320Ah and 340Ah ESS battery products in May 2023 to meet the
market demands of large capacity ESS battery products. In particular, our 320Ah ESS battery
products had already obtained many international certifications, such as EU TÜV certification
IEC62619, North America UL certification (UL1973, UL9540A), and became the first ESS
battery product with energy capacity of more than 300Ah to obtain the UL9540A certification
in the industry. To capture overseas demands, we have been in the process of establishing
after-sales service centers in Europe. Our ESS battery was mainly adopted in the following
scenarios:
 Household ESS sector . We have received extensive recognition in the performance
and safety of our battery products for household ESS, and have established stable
and long-term cooperation with leading inverter manufacturers, which helped us
achieve strong customer recognition and loyalty. Our customers, such as Sungrow
Energy Storage ( ජΈᎷঐ) and Growatt ( ̚๿͙त), integrate our battery cells and
their inverters into household ESS systems through smart hardware and software,
which are sold to end-users in Europe, Australia and the United States, which
reflects our contributions to the application of green energy for household
worldwide.
 Domestic and overseas commercial and industrial ESS sector . We actively expand
our domestic and overseas presence by undertaking energy storage projects with
industrial and commercial customers. In China, we have carried out a number of
large-scale energy storage projects such as the “State Grid Shandong Xintai
5MW/10MWh Photovoltaic Power Station” and “Gansu Guazhou 130 MWh
Project.” For overseas projects, we have developed integrated ESSs for power
stations for large industrial parks and cities in Indonesia, which has significantly
enhanced the operation stability of micro-grids through our technology.
Long-term, stable and cost-effective supply chain
Stable and cost-effective supply chain is crucial to our success. According to the F&S
Report, for both LFP and ternary batteries, raw materials costs account for approximately 80%
of total production costs. Leveraging our Controlling Shareholder Tsingshan Group’s
reputation, strong presence throughout the entire new energy industry value chain and
extensive cooperation network, we are able to secure stable and reliable raw material supplies,
a critical factor to the competitiveness of battery manufacturers. In addition, we have
established joint ventures with business partners to secure supplies of battery components.
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We have entered into a framework agreement with Yongqing Technology, a subsidiary of
Tsingshan Group, to ensure a long-term, stable and predictable supply of raw materials
(including lithium compounds, ternary precursors, separators and graphite). Under our
framework agreement, Tsingshan Group will supply lithium compounds, ternary precursors,
separators and graphite on favorable terms within the three-year agreement period to support
our future expansion and enhance our competitiveness in the supply chain against our peers.
See “Connected Transactions – Non-exempt Continuing Connected Transactions – Materials
Purchasing Framework Agreement.” We have also entered into long-term agreements with a
number of raw material suppliers to secure cathode materials (including LFP and NCM), anode
materials and separators, among others, to ensure stable supply and manage price fluctuation.
Tsingshan Group’s industrial chain footprint and development strategies in the new
energy industry will also strengthen our competitive edge in supply chain management.
Tsingshan Group is striving to develop a comprehensive industrial chain in the new energy
materials sector through direct control or equity investment, covering upstream resources such
as the mining and refining of nickel, lithium and cobalt, midstream resources such as cathode
materials, cathode precursors, anode materials, separators and electrolytes. The broad coverage
of Tsingshan Group’s business will offer us extensive cooperation opportunities in the future.
Strong mass production capability
The extensive experience and advantages accumulated by Tsingshan Group in mass
production of nickel and stainless steel facilitate us in comprehensive evaluation of our
investment and operating costs in plant construction and production line planning, as well as
various innovations on individual equipment efficiency and equipment integration to reduce
our overall costs for equipment. We have developed and acquired production technology and
equipment that will enable us to rapidly achieve stable mass production while incurring
minimum production cost, thereby seizing the opportunity in the coming “TWh era.”
Specifically, we believe the following are critical to our success in terms of achieving
production efficiency and cost reduction:
 Outstanding manufacturing capabilities . We operate a standardized manufacturing
platform for EV and ESS battery products and exercise standardized control on
various aspects in the mass production process, such as plant environment, raw
materials, equipment, production process and subcomponents of products. These
enable us to quickly set up new production lines, while maintaining high product
consistency. Unlike some of the peers focusing on EV batteries production who need
to convert the production lines for the production of ESS batteries, which is
time-consuming and costly, all of our production lines were designed and
constructed to be compatible for both EV and ESS battery products, which only
require some quick set-up before switch to manufacturing another products.
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 Intelligent manufacturing and digitalized production process control . We automate
our production process and digitalize our production management through the use of
ERP, MES, WMS, WCS and other intelligent control systems and automatic
collection of data relating to materials, equipment, personnel, logistics and
production environment throughout the entire production process. In particular, we
apply intelligent production control such as automatic process route selection,
product compliance verification and automatic removal of defective products at all
of our factories. In addition, in combination with big data analysis, visual
intelligence and other technologies, we have realized intelligent diagnosis and
real-time warning on production line operation status. All process data are uploaded
to the MES, and can be combined with delivery and after-sale information, enabling
us to achieve full information traceability.
Through the optimization of production equipment, production process and production
line planning, we are able to reduce our production costs while ensuring high precision.
Specifically, through the improvement of our production efficiency, we have been able to lower
the per Wh labor costs from RMB0.05 in 2020 to RMB0.03 in 2022, and per Wh manufacturing
costs from RMB0.09 in 2020 to RMB0.05 in 2022 for our battery products. In addition, we are
able to carry out the construction of our new factories in high speed. We commenced trial
production in our Wenzhou Facility I in November 2018 after approximately ten months of
construction.
Experienced and dedicated leadership team
Our senior management possesses rich industry experience and solid execution skills with
the entrepreneurial spirit of strong determination and pioneering exploration. Our senior
management team possesses over 20 years of experience on average in R&D and production.
Some of the management members also have extensive experience in the automotive industry.
These enable us to achieve an outstanding track record.
Our senior management team is led by Dr. Cao Hui, the chairman of the board and
president of the Company, is an expert in the field of lithium-ion battery industry. He
previously worked at Shanghai Aerospace Power Technology Co., Ltd, and has been committed
to the research and industrialization of EV batteries, ESS batteries and the relevant systems for
over 20 years. In 2009, he led the effort in setting up an early batch of GWh production line
of EV batteries in Shanghai, and initiated various technological innovations for the EV battery
industry. Dr. Cao also led and completed a number of major projects under the 863 Program
of the Ministry of Science and Technology and those initiated by Shanghai Science and
Technology Commission. In particular, the 863 Program or the State High-Tech Development
Plan (ྌ) was a program funded and administrated by the government
of the PRC, which intended to stimulate the development of advanced technologies in a wide
range of fields. As the team leader of an 863 Program’s project, Dr. Cao spearheaded the
development of the new technology for the battery and module with high-energy density. As
of the Latest Practicable Date, he is the inventor of more than 1,000 patents, including 85 PCT
patents. Over 600 of the applications for such patents have been granted, including 75
invention patents and one was granted the PCT status both in the U.S. and Japan. In addition,
a number of patents have been successfully applied and commercialized.
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Our management has implemented a flat management structure and established a set of
top-down management practice covering a full range of production and R&D matters to ensure
that our operation is conducted in a highly efficient and orderly manner. Our employees are
encouraged to “be a pioneer with integrity and efficiency,” which is the corporate culture that
we have been promoting. In addition, we also have competitive incentive plans to encourage
the motivation of our employees.
Commitment to green and sustainable development with high ESG standard
We have a well-established ESG framework and have set up a dedicated team and
formulated relevant rules. We implement an effective environmental and occupational health
and safety management system, saving energy and protecting the environment. Our products
have passed relevant environment inspections, and strictly comply with relevant environmental
protection standards. More specifically, we have implemented the following measures and
systems:
 Supply chain traceability and management . We have included ESG related
performance into our supplier evaluation criteria. We pay close attention to carbon
emissions caused by the suppliers, and are committed to working with suppliers to
address pollution during raw materials production. For instance, we purchase raw
materials from Tsingshan Group, while Tsingshan Group is in the process of
installing a 25MW solar farm in its joint-venture lithium salt lake project
Centenario-Ratones in Argentina, which will significantly lower the carbon
footprint.
 Energy Utilization . We have established a photovoltaic green energy system in our
Wenzhou facility. The photovoltaic green energy system is able to save standard coal
and reduce the emission of carbon dioxide. We also have set up a special heat
recovery system to reduce the consumption of natural gas, which allowed us to save
approximately 700,000 m
3 of natural gas per annum.
 Discharge and recycle of waste . We use special boilers that reduce the concentration
of carbon dioxide and other pollutants in our emissions. We have been able to meet
emission standards and comply with the Emission Standard of Air Pollutants for
Boiler since our inception. In terms of solid waste recycling, we cooperate with
professional resource recycling operators, leverage their expertise and technology
and recycle general solid waste through detailed classification, which has increased
the recycle value of the solid waste.
 Occupational health and safety . We are committed to occupational health and safety
of our employees. Since our inception and up to the Latest Practicable Date, we did
not experience any material accidents involving personal injury or property damage,
and we were not subject to any material claims, lawsuits, penalties or disciplinary
actions as a result of any material accidents.
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 Corporate social responsibility framework . We have set up a social responsibility
management team in which the chairman of the board serves as the responsible
person and the chief executive as the management representative. We have been
recognized by the ISO 45001:2018 – Occupational Health and Safety Management
System, and have received the bronze medal for corporate social responsibility
awarded by EcoVadis, an international business sustainability ratings platform, in
March 2021. Our social responsibility management was widely recognized by our
customers in China and abroad during the Track Record Period as they would
generally refer to the rates provided by EcoVadis which awarded us the bronze
medal as mentioned above, which helped our exports to Europe. As of the Latest
Practicable Date, the bronze medal for corporate social responsibility awarded by
EcoVadis was expired and we were in the process of reapplying for it.
 Battery recycling. We are also committed to establishing and developing
technologies to recycle lithium-ion batteries. In November 2021 and July 2022, we
entered into strategic cooperation agreements with GEM (ߕ؍ࣸto jointly promote
the safe recycling for EV batteries for the safe recycling, storage and green disposal
of lithium-ion batteries, and to provide quality solutions in relation to resources.
We have obtained multiple awards and recognitions in relation to our ESG achievements
during the Track Record Period, such as the 2021 Zhejiang Provincial Green Low Carbon
Factory award, the 2021 “waste-free factories” of Zhejiang Province, the 2022 Zhejiang
Provincial Green Factory and 2022 nation-level green and low-carbon factory.
DEVELOPMENT STRATEGIES
We aspire to become the most competitive EV and ESS battery manufacturer offering
innovative, eco-friendly, reliable and safe products with competitive prices, and we plan to
achieve such goal by implementing the following development strategies:
Further our dual-focus on EV and ESS batteries
We believe that both the EV and ESS battery markets have significant growth potential.
We intend to actively seize the opportunities in both markets through the following initiatives:
 EV batteries . We plan to focus on expanding passenger vehicle customer base, in
particular mid- to high- end passenger vehicle manufacturers in China and overseas.
In addition, we plan to expand the application of our products to more scenarios,
including mining equipment, construction machineries and vessels. We also plan to
consolidate and deepen the cooperative relationship with our recognized business
partners through various initiatives such as establishing joint ventures, in order to
increase our customer penetration rate and strengthen our product offering, thereby
increasing our market share.
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 ESS batteries . We plan to consolidate and deepen our cooperative relationship with
our existing domestic customers and increase penetration rate. In addition, we are
contemplating to expand our customer base to include more overseas ESS
integrators, thereby increasing our export sales. We also intend to increase the
portion of our ESS battery packs in our sales.
Devote to R&D
We intend to further our commitment on R&D to strengthen our market position and roll
out competitive products. We plan to focus our R&D efforts to improve energy density, cycle
life, safety, fast-charging and cost-effectiveness of our products. In particular, we intend to
advance our R&D in the following areas:
 Composite material system . We aim to improve the safety performance and power
performance of battery products employing the ternary composite phosphate system
to meet various application scenarios.
 Lithium manganese-iron phosphate battery system . We have started the development
and production of lithium manganese-iron phosphate batteries. Due to the
characteristics of high voltage and abundant supply of manganese, lithium
manganese-iron phosphate batteries can achieve higher energy density, lower cost
per Wh and better performance in low temperature environment compared to LFP
batteries, and have better safety performance compared to ternary batteries.
 Solid-state battery . We are currently conducting research in on the all-solid-state
battery electrolyte materials, solid-state electrolyte reaction interface performance
and solid-state battery production process. The purpose of developing all-solid-state
battery is to achieve a balance of safety and energy density.
 Sodium-ion battery . To reduce the cost of ESS batteries and lower the dependence
on metals such as lithium, nickel, and cobalt, we have conducted research on anode
and cathode material system, electrolyte system and process of the sodium-ion
battery production.
 Recycling technologies. We plan to focus on recycling technologies such as EV
battery residual energy testing and secondary use solutions and processes to
maximize the cost-effectiveness of EV batteries and focus on improving the safety,
stability and cycle life of recycled products. We also aim to reduce the costs of
battery regrouping application, qualification testing and production through
recycling technologies.
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Expand our production capacity steadily and orderly according to market demand while
pursuing cost leadership
To capture the rapidly growing downstream demands, we plan to further expand our
production capacity. Our goal is to have a production capacity of over 150GWh by the end of
2025. As of June 30, 2023, our designed annual production capacity reached 35.2GWh. We
plan to increase our production capacity to 62GWh by the end of 2023. We plan to implement
the following plans:
 Expansion of existing facilities. We plan to expand our production capacity at our
Jiashan facilities to 77GWh by the end of 2025. We also plan to expand our
production capacity at our Wenzhou facilities to 50GWh by the end of 2025.
 New production facilities. We plan to establish new production facilities at Foshan,
Liuzhou and Chongqing, with planned production capacity of 32GWh, 20GWh and
30GWh, respectively. We plan to complete the construction and commence
commercial production at Liuzhou production facility in late December 2023, at
Phase I of Foshan production facility in the first half of 2024 and at Phase II of
Foshan production facility and Chongqing production facility by the end of 2025.
See “– Production – Planned Production Facilities” for details of our planned
production facilities.
We also believe that having production facilities and capacity globally is crucial to the
long-term sustainable growth of our business. We plan to establish production facilities in
regions such as Europe, Southeast Asia and South America. Such initiatives will allow us to
enhance our presence worldwide, have closer access to local natural resources and raw material
and diversify our geopolitical risk exposure. In Europe, we intend to establish production
facilities for battery modules and battery packs in the near term and battery cells in the longer
term. Establishing assembly facilities for battery modules and packs involves less capital
investment, and the fact that the facilities are specifically established for certain customers
further secures the return from such investment. In Southeast Asia, we intend to establish
production facilities for battery cells. This will enable us to capitalize on the various strategic
endeavors of Tsingshan Group in Indonesia in the upstream of the industry chain, and to grasp
the rapid growth in demand in the Southeast Asia. In South America, we intend to establish
production facilities for battery packs and obtain access to the American markets, also
leveraging Tsingshan’s existing footprints.
In addition, we intend to reduce our operational cost through developing new production
technologies, installing advanced equipment and machinery, and optimizing the production
processes and techniques. We have taken several initiatives in recent years to improve our
production efficiency, see “– Production – Battery Cells” and “– Equipment and Machinery.”
Further, we aspire to reduce the consumption of raw materials per Wh through improvement
of production efficiency. As we accumulate experience in EV and ESS battery manufacturing,
our workforce would become more familiar with the operation and management of production
lines, which will also contribute to production efficiency improvement and cost reduction.
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Ensure stable and cost-effective supply of raw materials
We plan to capitalize on the unique strategic resources of Tsingshan Group, our
Controlling Shareholder, in the upstream of the industry value chain, which covers the mining
and refining of nickel, lithium and cobalt, the production of cathode materials, anode materials,
separators and electrolytes, to build up a stable supply chain system and actively increase our
profit margins. On the one hand, we intend to secure a stable supply of raw materials on a
long-term basis in view of the rapid growth in demand for certain key raw materials in recent
years. In particular, we plan to continue to enter into long-term agreements with our key
suppliers while maintaining a pool of alternative qualified suppliers to avoid temporary
shortage. Moreover, going forward, we may enter into new off-take agreements based on our
prudent estimate of production needs and prices of relevant raw materials in consideration of
their benefits in ensuring the sufficient and stable supply of raw materials historically. On the
other hand, we will continue to pay close attention to the market trends of raw material prices
especially after experiencing the significant fluctuation in recent years. In anticipation of
material increase or decrease in raw material prices, we may choose different measures to
mitigate the potential impact. For example, we may stock up key raw materials in anticipation
of price increases or when the prices drop to an appropriate level, timely adjust our inventory
level as well as utilize our price adjustment mechanism in our sales agreement to pass down
the increased prices to our customers. We will continue to refine our inventory management
and set safe inventory level to minimize the impact from fluctuation in raw material prices.
However, there is no assurance that our estimation or anticipation of the market trends of raw
material prices will always be accurate and we could always take the right measures in
response to the fluctuation in raw material prices. See “Risk Factors – We are Exposed to Risks
Relating to Price Fluctuations of Raw Materials.”
In addition, we plan to invest in upstream raw material suppliers to further strengthen our
position in the industry value chain. Such investments will allow us to gain a better
understanding in the market trend of our raw materials. We will also obtain more control in the
cost, quantity and timeliness of our raw material supplies. As of the Latest Practicable Date,
we have made an investment of RMB10 million for 5% shareholdings in an upstream
electrolytes suppliers, namely Liuzhou Fansaike. As of the same date, Hunan Farnlet New
Energy Technology Co., Ltd. (ʮ̡)( “ Hunan Farnlet ”), an
upstream supplier of raw materials for lithium-ion batteries, held a majority of 50.1%
shareholding in Liuzhou Fansaike, which mainly produces and sells electrolytes. As of the
Latest Practicable Date, according to the publicly available information, Hunan Farnlet was
controlled by a third party individual independent from us. As of the Latest Practicable Date,
according to the publicly available information, the remaining shareholders of Liuzhou
Fansaike include a subsidiary of SAIC-GM-Wuling Automobile Co., Ltd. Trade Union ( ɪӛ
ʮ̡ʈึ), a subsidiary of SAIC-Motor, and other independent third
party shareholders. We have not identified more definitive investment targets so far. When
considering investment plans, we will take into account the following criteria:
 Supply of raw material : whether the target will allow us to secure high-quality and
stable raw material supplies with low cost;
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 Location : whether the geographic location is in the vicinity of our production
facilities/customers; and
 Form of investment : we may consider, among others, direct equity investment and
other forms such as debt or royalty investment that would allow us to gain economic
exposure to upstream business.
Promote green and sustainable development with high ESG Standards
We are committed to fulfilling our social responsibilities and promoting green and
sustainable development with high ESG standards. In particular, we plan to undertake
initiatives in the following aspects:
 Green supply chain. We plan to keep monitoring at our environmental impact across
our supply chain, and carrying out comprehensive green supply chain assessment to
ensure that our supply chain partners meet all the applicable environmental
standards.
 Green production. We plan to implement the eco-design concept at product design
phase and integrate the environmental management system into all aspects of
production activities. We will pay close attention to the energy-saving and
environmental protection technologies of our factories and equipment, including
waste heat recovery, solid waste treatment and gas emissions, and recycle all waste
materials generated in the manufacturing process to the extent practicable.
 Energy use . We plan to reduce the use of fossil fuel energy in our operations with
green energy sources such as solar power, wind power and hydropower to further
increase green energy ratio. We plan to install rooftop photovoltaic power generation
and intelligent micro-grid ESS projects at our Liuzhou facility. In addition, we plan
to utilize facility management and control system to closely monitor various energy
consumption data such as electricity, gas and water, and conduct optimal scheduling,
balanced forecasting and energy saving management of energy resources.
 Battery recycling . We plan to reduce the environmental impact in the recycling
process with our technologies. We also plan to cooperate with the end-users of our
ESS battery products for echelon utilization of retired batteries. Furthermore, we
plan to extract lithium, nickel, cobalt and other metals from end-of-life lithium-ion
batteries, thereby achieving raw materials recycling and costs reduction.
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OUR BUSINESS MODEL
We are mainly engaged in the design, R&D, manufacturing and sales of lithium-ion EV
battery products and ESS battery products. We have built a high degree of mutual trust, synergy
and win-win relationship with partners in the upstream and downstream of the industry chain.
Benefitted from the extensive experience and advantages accumulated by Tsingshan Group, our
Controlling Shareholder and the world’s largest nickel and stainless steel producer by
production volume in 2022 according to the F&S Report, we have strong execution capability
in designing, constructing and operating large-scale production facilities. We enjoy a unique
advantage of resource integration and full industry chain synergies as endowed by Tsingshan
Group. Being part of the Tsingshan Group ecosystems facilitate the process of building trusts
and business relationships with various raw material suppliers and secure supplies of important
raw materials.
We have a broad and diversified EV battery customer base, covering both domestic and
international established automakers that manufacture EVs and emerging EV manufacturers.
We sell substantially all of our EV battery products in the PRC. Our EV battery products are
also used in overseas markets including Europe, Middle East, Africa, Southeast Asia and India.
In household energy storage scenarios, we sell our ESS battery products to household ESS
integrators in China, who then install them in their products and may sell to overseas end users
in the United States, Europe, Japan, Australia, India, Southeast Asia and Africa. Apart from
household energy storage scenarios, our ESS battery products are used in large-scale industrial
energy storage scenarios such as power stations and power grids in China and overseas. In
addition, our ESS products can be used in commercial energy storage scenarios such as the
energy storage of shopping malls or factories.
OUR PRODUCTS
Overview
We primarily sell lithium-ion EV battery products and ESS battery products to our
customers.
Our EV battery products include LFP battery products and ternary lithium battery
products used in various types of passenger vehicles, commercial vehicles and special vehicles.
We were among the top 10 EV battery manufacturers in China in 2020, 2021 and 2022 in terms
of annual installations, according to the F&S Report.
Our ESS battery products are LFP battery products for a broad range of household and
industrial and commercial energy storage use cases. We have achieved significant growth in the
lithium-ion ESS sector since our inception and have accumulated a vast customer base,
including many industry-leading ESS manufacturers and integrators, for our ESS battery
products. Our ESS battery products also won good reputation in the overseas markets. See
“– Research and Development – Our Key Technologies.” According to the F&S Report, we
were among the top three manufacturers for ESS batteries among China-based manufacturers
in 2022 in terms of global annual installations.
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Our lithium-ion battery products are able to achieve performance metrics which are
comparable to the leading players, such as CATL, CALB, Gotion and EVE, in the industry, in
terms of mass and volumetric energy densities, charging speed, battery life cycle and driving
range, as applicable in each case.
Our other businesses mainly include sales of wastes, sales of battery components and
R&D services. We sold wastes such as low concentration crude NMP which was produced
during the production of our lithium-ion battery products during the Track Record Period.
However, as we ceased to sell the crude NMP and consigned third-party companies to process
it under the new arrangement since July 2022, we expect the revenue from sales of wastes to
decrease significantly going forward. We provided battery components to certain EV
manufacturers, who would then integrate such battery components into EV battery products.
We provide R&D services to our customers for product development, the scope of which
primarily entails customizing our battery products to meet the specification requirement for
relevant EV models.
The table below sets forth a breakdown of our revenue by product type for the periods
indicated:
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
EV battery products .... 673,192 74.2% 981,507 46.5% 4,642,801 31.7% 1,662,547 41.4% 1,247,794 18.9%
LFP EV battery
products ............... 527,739 58.2% 879,564 41.7% 4,222,740 28.8% 1,378,006 34.3% 946,475 14.4%
Ternary lithium EV
battery products ... 145,453 16.0% 101,943 4.8% 420,061 2.9% 284,541 7.1% 301,319 4.5%
ESS battery products... 182,105 20.1% 859,459 40.7% 8,400,597 57.4% 1,881,473 46.8% 4,320,526 65.5%
LFP ESS battery
products .............. 177,408 19.6% 859,459 40.7% 8,398,738 57.3% 1,879,811 46.8% 4,317,794 65.5%
Ternary lithium ESS
battery products .. 4,697 0.5% – – 1,859 0.0% 1,662 0.0% 2,732 0.0%
Other businesses
Sales of wastes (1) .... 43,744 4.8% 251,167 11.9% 796,789 5.4% 456,113 11.4% 165,218 2.5%
R&D services (2) ....... 6,299 0.7% 7,188 0.4% 22,308 0.2% 11,347 0.3% 12,316 0.2%
Others (3) ................. 1,646 0.2% 9,823 0.5% 785,283 5.3% 5,095 0.1% 848,940 12.9%
Subtotal ...................... 51,689 5.7% 268,178 12.8% 1,604,380 10.9% 472,555 11.8% 1,026,474 15.6%
Total ........................... 906,986 100.0% 2,109,144 100.0% 14,647,778 100.0% 4,016,575 100.0% 6,594,794 100.0%
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Notes:
(1) The sales of wastes mainly include revenue from sales of used raw materials such as low concentration crude
NMP, and other wastes, such as wasted aluminum foil, wasted copper foil and wasted cells.
(2) The revenue from provision of R&D services refers to charges on the customers for the upfront R&D services
for the purpose of developing customized battery products.
(3) Others mainly include revenue from sales of battery components.
EV Battery Products
Our EV battery products are produced and sold in the form of battery cells, battery
modules and battery packs depending on the needs of our customers. EV batteries that are
installed in EVs are typically battery packs.
 A battery cell is the basic unit that converts chemical energy into electrical energy
and is the core and smallest function unit in the product. It consists mainly of
cathode, anode, separators, electrolytes and housing components.
 A battery module combines more than one battery cell, and is resistant to external
shock, heat and vibration.
 A battery pack consists of multiple battery cells or battery modules, battery
management system, temperature management system and other control and
protection systems. A battery pack can be installed in EVs as a power source, obtains
electrical energy from outside and outputs energy externally.
The table below sets forth a summary of our main EV battery products by battery
technology.
Product Type Product Picture
LFP Battery Product
Features
Ternary Lithium
Battery Product
Features
EV Battery Cells
mass energy density:
170~200Wh/kg; cycle
life: /H113504000 times;
capacity: 104~230Ah
mass energy density:
230~280Wh/kg; cycle
life: /H113502500 times;
capacity: 155~243Ah
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Product Type Product Picture
LFP Battery Product
Features
Ternary Lithium
Battery Product
Features
EV Battery
Modules
mass energy density:
160~180Wh/kg;
easy for green echelon
use; thermal runaway
diffusion prevention;
explosion suppression
and fireproof
mass energy density:
200~220Wh/kg;
thermal runaway
diffusion prevention;
explosion suppression
and fireproof
EV Battery Packs
mass energy density:
/H11350140Wh/kg;
high volumetric
utilization rate; green,
removable CTP;
thermal runaway
diffusion prevention;
explosion suppression
and fireproof; super
stable structure
N/A
ESS Battery Products
Our ESS battery products are LFP battery products and are mainly produced and sold in
battery cells, battery modules and battery packs which include battery boxes, battery racks and
energy storage containers. Battery racks and energy storage containers can be directly applied
in various energy storage use cases.
 A battery cell, similar to our EV battery cell, is the basic unit that converts chemical
energy into electrical energy, and is the core and smallest function unit in the
product. A battery cell consists mainly of anode, cathode, electrolytes, separators
and housing components.
 A battery module, similar to our EV battery module, stacks the battery cells into a
frame to protect them from external shock, heat or vibration.
 A battery pack consists of several battery modules and may be produced in the form
of battery boxes, battery racks and energy storage containers.
(i) A battery box is the smallest installation and maintenance unit and building
block for an ESS, consisting of several battery modules, connectors, high and
low voltage interfaces, thermal management devices and BMS control
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modules. Our battery boxes can be used in scenarios that have large scale
energy storage requirements such as power stations and power grids, as well as
smaller industrial and household energy storage use cases.
(ii) A battery rack consists of several battery boxes connected together inside a
frame and has components including BMS master control module, short-circuit
protection elements and high-voltage switching elements. Similar to our
battery boxes, our battery racks can be used in scenarios that have large scale
energy storage requirements such as power stations and power grids, as well as
smaller industrial and household energy storage use cases.
(iii) An energy storage container contains several battery racks, BMS master
control systems, direct current sink cabinet and fire suppression device
integrated into a prefabricated cabin. The prefabricated cabin has its own
independent power supply system, environment control system, thermal
insulation system, safety escape system and emergency system. It is an
industrial-level energy storage product designed for scenarios that have large
scale energy storage requirements such as power stations and power grids.
The table below sets forth a summary of our main ESS battery products.
Product Type Product Picture Product Features
ESS Battery
Cells
mass energy density:
145~190Wh/kg; cycle life: 4,000
times~10,000 times; capacity:
50~340Ah
ESS Battery
Modules
cycle life: 4,000~8,000 times; in
accordance with GB, UL, IEC, JIS
and other domestic and
international standards
 ESS battery
boxes
air-cooled and liquid-cooled
standard ESS battery boxes; in
compliance with GB, UL, IEC and
other domestic and international
standards
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Product Type Product Picture Product Features
ESS Battery
Packs
 ESS battery
racks
voltage level compatible with
850V~1500V; in compliance with
GB, UL, IEC and other domestic
and international standards
 Energy storage
containers
highly integrated; equipped with
air-cooled and liquid-cooled heat
management systems; voltage of
850V and 1500V; multiple joint
high safety fire fighting system; in
compliance with GB, UL, IEC and
other domestic and international
standards
RESEARCH AND DEVELOPMENT
Our Research and Development
As of June 30, 2023, we had 2,120 employees involved in R&D functions, approximately
17.3% of whom hold a master’s degree or above. The core members of our R&D team have
over 10 years of experience on average in the R&D of lithium-ion battery technologies with
extensive connections in the industry. In addition, our system development personnel have
extensive experience in full vehicle development, enabling us to understand and capture the
demands of our customers more accurately.
We have R&D centers located in Shanghai and Wenzhou, and an R&D center in Jiashan
which is under construction and is expected to be put into operation in the second half of 2024.
Our R&D centers focus on the R&D of battery technologies such as electrochemical
technology and structural innovation. Our R&D center in Shanghai focuses on the research,
development and initial testing of our battery products and systems. Our R&D center in
Wenzhou focuses on the design and development of our products and development of our
technology and equipment. Our R&D center in Jiashan will focus on the artificial intelligence
manufacturing, equipment and structure innovation and the testing and certification of systems.
We also have a performance test center that is fully equipped to meet the requirements for
performance research of cell, module, system and BMS.
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Certain details of our Shanghai R&D center, Wenzhou R&D center and Jiashan R&D
center are set out as follows:
R&D center Departments and major responsibilities
Shanghai R&D center  The Battery Technology Department is composed of
product team, materials team and pioneer technology
team, which are responsible for the development of
battery products, raw materials and new technologies,
respectively.
 The Systems Technology Department mainly focus on
the research and development of passenger vehicles,
commercial vehicles and ESS.
 The Test Department conducts initial tests of batteries
and module systems.
Wenzhou R&D center  The Battery Technology Department, consisting of
product team and material team, develops new
products and provides technical support.
 The Systems Technology Department is responsible
for the industrialization of module system products.
 Test and Trial Production Department conducts pilot
tests of our products and systems, focuses on product
certification, standardization and other related work.
 The Process and Equipment Department is responsible
for conducting research on new technology and
equipment.
Jiashan R&D center  The Artificial Intelligence Manufacturing Department
is responsible for the intelligent manufacturing of
products to ensure the high quality and reliability of
mass-produced products.
 The Process and Equipment Innovation Department is
responsible for the development of new production
process and new equipment, improving production
efficiency and reducing energy consumption.
 The System Structure Innovation Department is
responsible for the innovation and optimization of the
full vehicle and industrial and commercial ESS
structure.
 The Testing and Certification Department is
responsible for the testing of materials, batteries and
module systems, covering physical, electrical,
mechanical, thermal and safety tests.
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Research and Development Resources
We have received accreditations including Wenzhou Enterprise R&D Center, Zhejiang
High-tech Enterprise R&D Center, CNAS National Accredited Laboratory and TUV Rheinland
Eyewitness Laboratory Accreditation. With advanced pilot line equipment and multiple test
channels, we have sufficient resources needed for the R&D process and meet our customers’
testing needs in a timely manner.
In addition to our in-house R&D capabilities, we engage in R&D collaboration with third
parties to jointly develop new technologies and products to meet evolving market demands. We
believe that these collaborations will deepen our insight into industry trends and emerging
technologies, allowing us to focus on our continuous R&D efforts in a more efficient manner.
We have formed in-depth collaboration with universities and research institutions. We have
undertaken a number of projects to carry out research in new technologies, providing important
technical support for our subsequent product development.
For example, during the Track Record Period, we have entered into a joint development
agreement with an automotive manufacturing company to develop multi-system hybrid battery
packs. As of the Latest Practicable Date, we have completed the production of sample battery
packs and the products are under testing. We have also entered into a tri-party joint
development agreement with a university and an automotive company specializing in the
manufacturing of BEVs to develop lithium-ion batteries. As of the Latest Practicable Date, the
project has been completed.
Although every joint technology agreement varies, for joint technology development
agreements with third parties such as our customers and universities with industry expertise,
we generally specify in the agreement as to the specific types and the specifications of the
products. We will also take the initiative in preparing the design and work plan and work
seamlessly with third parties to deliver products that are best suited for their newly developed
models, while third parties are generally responsible for the testing and inspection of the
product.
The major terms of our joint technology development agreement typically include the
following:
Major terms Content
Ownership of intellectual property
rights
The new intellectual property rights and related
rights and interests developed independently by
each of the two parties belong to themselves
respectively, and the new intellectual property
rights and related rights and interests jointly
developed by both parties shall be shared by both
parties.
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Major terms Content
Confidentiality Any information obtained during joint
development shall not be disclosed to any other
third party. The confidentiality obligation under
the agreement shall not be affected by
termination or lapse of the agreement.
Term and termination The term of the agreements varies from six
months to one year.
Development progress Each party shall inform the other one in writing
of any delay or any anticipatory delay in
development of the relevant products.
Allocation of costs Each party shall bear its own costs.
In 2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023, our R&D
expenses were RMB72.7 million, RMB245.6 million, RMB767.7 million, RMB257.1 million
and RMB505.2 million, respectively. See “Financial Information – Period to Period
Comparison of Results of Operations – Research and Development Expenses” for details of the
rising trend in our R&D expenses during the Track Record Period. During the Track Record
Period, all of our R&D expenditures were recognized as expenses in the period when such
expenses were incurred.
Our Key Technologies
As a result of our long-term dedication in R&D, we have developed a broad portfolio of
key technologies that are used in our products. Leveraging these advanced technologies and
our R&D capabilities, together with our manufacturing expertise, supply chain management
capabilities and experienced and dedicated leadership team, we are able to develop and produce
products that meet our customers’ requirements. We are committed to continuously improving
R&D capabilities for our technologies, so as to ensure the competitive advantages of our
products in various application fields. Set forth below are our key technologies:
 SCL technology . This technology effectively increases the volumetric energy density
of the battery cell and improves the utilization of battery space by avoiding burrs on
the top of pole pieces caused by double cutter step at the die-cutting stage.
 Minimalism battery top cover . This technology simplifies battery structure, increases
the effective usable capacity and space of battery cells and reduces battery weight
and production cost.
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 Green and detachable CTP . This technology further improves the space utilization
of the battery pack by optimizing the individual and module structural design,
realizing the de-structuring of the battery pack and effectively improving the pack
integration rate. This technology enables the dismantling of large battery packs
through the use of structural fixing points between module cells, and do not require
traditional structural bottom adhesives, thus reducing the maintenance requirements
for batteries and allow for convenient recycling. This system also enables the cells
to be adapted to different chassis space sizes, allowing for increased battery volume
utilization.
 Internal circulation and auto-equalization technology . This technology enables
flexible adjustments in electricity level among different battery cells in the charging
process by using special additives in the battery, which improves the consistency of
electricity level in batteries and the quality of our products.
 High safety battery technology . This technology allows battery to maintain
performance in high temperature by optimizing the selection of positive and
negative electrode materials and adopting high safety separator and electrolyte
material. It ensures high cathode and anode density, and utilizes semi-solid-state
technology to improve battery safety. In addition, it has fireproof characteristics.
The relevant product has passed the Japan JET certification and has been enrolled
in the Japan SII list. Furthermore, the product has passed nail penetrating test
(1).
 Battery management system technology . Our BMS technology covers passenger
vehicles, commercial vehicles and ESSs. It improves the reliability and safety of the
battery system through a cross-border cloud-based remote debugging technology,
which includes remote real-time monitoring and big data analytics. It also improves
the effectiveness of liquid cooling systems for energy storage systems through a
high-performance temperature management. In addition, through our research on
self-heating and auto-equalization technology, we have reached a high heating
speed, according to the F&S Report.
Our key technologies and R&D achievements improve our products’ structure and
manufacturing process. Our key technologies and R&D achievements also improve the
performance of our products. Specifically:
 Mass energy density . We develop and produce products with high energy density. As
of the Latest Practicable Date, we achieved mass energy density of 180-200Wh/kg
for our mass-produced LFP battery cells and 200-230Wh/kg for our prototype
Note:
(1) Nail penetration test is one of the most rigorous EV battery safety performance tests in the industry.
Such test requires that the EV battery pack to not explode or catch fire due to thermal runaway when
it is entirely penetrated by a steel nail under required conditions.
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composite battery cells, both of which are at the top level in the industry, according
to the F&S Report. As of the Latest Practicable Date, we achieved mass energy
density of 245-255Wh/kg for our mass-produced ternary lithium battery cells and
more than 300Wh/kg for our prototype high nickel lithium battery cells.
 V olumetric energy density . (i) Our proprietary SCL and minimalism battery top
cover technologies can effectively improve the space utilization of the cell, increase
the height of the cathode pole piece by optimizing the internal space of the cell,
simplify the coating process, and reduce the production cost. (ii) Our green and
detachable CTP technology further improves the space utilization of the battery pack
by optimizing the design of the cell and module structures, realizing the de-
structuring of the battery pack, thereby effectively improves the integration rate of
the battery pack. Our products can reach a volumetric energy density of up to
450Wh/L for LFP battery products, and up to 650Wh/L for ternary battery products.
This is considered market-leading, as the industry average volumetric energy
density is 300Wh/L to 400Wh/L for LFP battery products and 500Wh/L to 600Wh/L
for ternary battery products, according to the F&S Report.
 Fast charging . Through double-layer coating technology and ultra-fast conducting
ionic material surface coating technology, our fast charging technology
comprehensively improves the low-temperature charging performance
(-10°C~-12°C) and fast-charging performance of the battery cell. Mass produced
products can realize 15-18 minute fast charging and products on development can
realize 9-12 minute fast charging. Our products that have been put into mass
production are able to meet the fast charging needs of EV customers.
 Battery cycle life . According to the F&S Report, we are the first in the industry to
have developed the internal circulation and auto-equalization technology, which has
substantially improved the consistency and cycle life of large-capacity vehicles and
ESSs, and further increase the battery life of large energy storage systems. The
highly reliable components can further help the products meet the demands for
8,000-12,000 cycles and 15-20 years of calender life. According to the F&S Report,
the industry average battery cycle life is approximately 5,000 to 8,000 cycle.
 Safety and reliability . We improve the stable temperature of the thermal box by
optimizing the selection of cathode and anode materials and using high safety
separators and electrolyte systems. In addition to material selection, we optimize the
manufacturing process with over 2,000 quality control points, which ensures product
quality. Such technology has obtained accreditation from JET and have been added
to the Japan SII list, and has passed the nail penetration test. In addition, a number
of our battery cell products have passed the UL9540A thermal runaway test.
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Set forth below are our key R&D achievements and prototypes that are or expected to
become designated supply products for some customers:
 WenDing (“ ਪ௟”) prismatic batteries . The WenDing (“ ਪ௟”) Technology is
applied in our prismatic LFP and ternary batteries. We have become a designated
supplier to our customer with our LFP WenDing (“ ਪ௟”) batteries. This is a new
technology integrated with improvements in lithium-ion battery structures and in
welding techniques for battery tabs and covers, internal electrochemical features and
stable solid-liquid interface. Such technology further improves the electrode areal
density and enhances the energy density of the battery, which enables longer driving
range for EV battery products. The innovation of lithium-ion battery structures was
one of the major technological trends in the industry other than material innovation.
Therefore, our WenDing (“ ਪ௟”) Technology, with proven applications in our LFP
and ternary batteries, was considered as advanced lithium-ion battery technology,
according to the F&S Report. The key benefits of our WenDing (“ ਪ௟”) Technology
is as follows:
(i) For LFP battery products. Up to 450Wh/L volumetric energy density and
190.5Wh/kg mass energy density, enabling a driving range of up to 700km, as
compared with 300Wh/L to 400Wh/L volumetric energy density, 160Wh/kg to
180Wh/kg mass energy density, and 300km to 500km driving range that is
typical for the current LFP battery products according to the F&S Report.
(ii) For ternary battery products. Up to 650Wh/L volumetric energy density and
300Wh/kg mass energy density, enabling a driving range of up to 1,000km, as
compared with 500Wh/L to 600Wh/L volumetric energy density, 230Wh/kg to
260Wh/kg mass energy density, and 400km to 700km driving range that is
typical for the current ternary battery products according to the F&S Report.
 Easy-for-Tera cells (“ET
ڃ)”Our Easy-for-Tera cells (“ETڃare flat
batteries that use stainless steel shell, which are thinner and thus improve the
volumetric energy utilization efficiency as compared to traditional aluminum shell.
It adopts high-speed winding, cutting or stacking integration technology in our flat
batteries, which improves the efficiency of the production process and battery
performance. Our Easy-for-Tera cells (“ETڃhas a mass energy density of
190~210Wh/kg and a volumetric energy density of 420~480Wh/L.
 Twin Star (“
݋battery . Our Twin Star (“݋battery applies dual
chemistry of cathode material. It is developed from new materials and combines the
advantage of LFP and ternary batteries. It has high energy density, safety
performance and low production costs. The energy density of Twin Star (“݋)”
batteries can exceed 215Wh/kg and 500Wh/L, and the system energy density can
reach approximately 175Wh/kg or higher. It can be applied in various use cases and
improves user experience through fast charging and high safety performance. The
Twin Star (“݋battery was under the sample testing stage as of the Latest
Practicable Date and will be ready for mass production before June 2025.
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 Semi-solid state battery . The semi-solid battery under development adopts high
nickel cathode and silicon carbon anode matched with semi-solid technology. Such
technology can further increase the mass-energy density and performance safety of
battery products. We have produced semi-solid electrolyte systems through different
gelation routes and have produced semi-solid soft pack battery samples. We are also
conducting battery performance tests and have launched samples of semi-solid
square batteries in mid-2022. We have sent prototype semi-solid state battery
products to a leading luxury vehicle company in Europe for verification.
 V ersatile power station . Our versatile power station can be used in various use cases
such as electrical energy storage, vehicle charging and utility power backup. It has
electrical control functions such as parallel and off-grid switching, alternate use of
multiple batteries, multi-level electrical protection and anti-reverse current. It is
equipped with automatic fire prevention system, including high-sensitivity detectors
of temperature, smoke and gas, to improve the safety of the energy storage system.
This system is equipped with a 280Ah long-life LFP battery, which can satisfy the
maximum discharge demand of 360kW, realizing fast charging of the vehicle, also
supporting continuous charging and discharging at large multiplier, while
maintaining a stable temperature. We have sent prototype versatile power station
sample to a leading luxury vehicle company in Europe for verification.
Our Research and Development Roadmap
We dedicate our R&D resources to improving the performance and production of our
existing products, as well as to the R&D of the next generation of products and materials. The
table below illustrates our key R&D programs, key features, and the respective (expected)
timelines.
Product Key features Timeline
Semi-solid state
battery
The semi-solid battery enhances the
reliability, cost-effectiveness and
marketability of battery products.
It can further increase the mass-
energy density with enhanced
safety performance.
Early 2022 – late 2023: complete
prismatic battery sample
prototyping, send prototypes to
factories.
Late 2023 – late 2025: complete
construction of production lines
and start mass production.
Solid state
battery
The solid state battery has the
advantage of achieving a balance
of safety and energy density.
Early – late 2027: complete sample
prototyping.
Early 2028 – late 2030: complete
mass production prototyping and
evaluation.
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Product Key features Timeline
Composite
material
system
The composite material system
improves the safety performance
and power performance of the
ternary composite phosphate
system to meet various application
scenarios.
Early 2023 – early 2024: complete
sample prototyping.
Mid 2024 – mid 2025: complete
construction of production lines
and start mass production.
Mid 2025 – late 2026: continue to
optimize and enrich composite
material system battery products.
New material
system
battery
The new material system battery can
comprehensively reduce the
substantial carbon emissions from
the processing of ore raw materials
and can meet the needs of
renewable applications.
Early 2026 – late 2027: complete
sample prototyping.
Early 2028 – late 2029: complete
mass production evaluation and
testing.
Early – late 2030: complete
construction of production lines
and start mass production.
Lithium
manganese
iron
phosphate
battery
Lithium manganese-iron phosphate
batteries can achieve higher energy
density, lower cost per Wh
and better performance in
low temperature environment
compared to LFP batteries, and
have better safety performance
compared to ternary batteries.
Early – late 2023: complete sample
prototyping.
Late 2023 – late 2024: complete
construction of production lines
and start mass production.
Early 2025 – late 2030: continue to
optimize and enrich lithium
manganese iron phosphate battery
product portfolio.
Sodium-ion
battery
Sodium-ion batteries can reduce the
cost of ESS batteries and lower the
dependence on lithium.
Early 2022 – late 2023: complete
sample prototyping. As of the
Latest Practicable Date, we have
completed the sample prototyping.
Early 2024 – late 2025: complete
construction of production lines
and start mass production, subject
to market condition.
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To achieve our R&D objectives, we adopt the following R&D principles and methods:
 We combine R&D of future-ready solutions with market-driven, present-focused
innovations. On the one hand, we undertake medium- to long-term R&D projects in
the direction of the next-generation of batteries based on our understanding of the
development in battery technologies; on the other hand, we closely track the
customers’ demands and engage in targeted short- to medium-term technology
innovations. Furthermore, we gain insights from downstream customers to facilitate
the choice of our R&D direction;
 We strive to improve R&D efficiency in a cost-effective way, and include cost
calculations throughout the R&D process, so that we make technological
innovations while keeping a focus on cost reduction;
 We hold technology innovation conferences from time to time, and inspire our R&D
personnel’s creativity and vitality through a scientific management system and
incentive means. At the same time, we aim to speed up the commercialization of our
technology reserves through collaboration with universities and research institutions
on relevant research projects and technology topics; and
 We have a dedicated department to carry out the R&D of next-generation
technologies. This will help us maintain a long-term technological advantages in the
industry competition.
To underpin future growth, we intend to continue our efforts on the R&D of our products
and systems. We plan to capitalize on the strength of our R&D team to further enhance our
technological edge in the battery production industry. In particular, we intend to advance our
R&D in the following areas:
 Composite material system . We aim to improve the safety performance and power
performance of the ternary composite phosphate system to meet various application
scenarios.
 Recycled material system battery . By recycling used batteries, separating cathode
materials, and applying decomposition and staged processing technologies as well
as blending applications, we are able to design and construct low-cost materials to
produce recyclable batteries. Such technology can comprehensively reduce the
substantial carbon emissions from the processing of ore raw materials. Combined
with the low cost of renewable materials and new process and equipment
technology, we are able to develop new material system batteries that meet the needs
of renewable applications. We intend to complete construction of production lines
and start mass production by December 2030.
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 Lithium manganese-iron phosphate battery system . We have started the development
and production of lithium manganese-iron phosphate batteries. Due to the
characteristics of high voltage and abundant supply of manganese, lithium
manganese-iron phosphate batteries can achieve higher energy density, lower cost
per Wh and better performance in low temperature environment compared to LFP
batteries, and have better safety performance compared to ternary batteries.
 Solid-state battery . We are currently conducting research in on the all-solid-state
battery electrolyte materials, solid-state electrolyte reaction interface performance
and solid-state battery production process. The purpose of developing all-solid-state
battery is to achieve a balance of safety and energy density. By improving the
interface characteristics of solid-state battery, we intend to scale up trial production
and ultimately achieve mass production of solid state battery.
 Sodium-ion battery . To reduce the cost of ESS batteries and lower the dependence
on lithium, we have conducted research on anode and cathode material system,
electrolyte system and process of the sodium-ion battery production. As of the Latest
Practicable Date, we had completed the sample prototyping of sodium-ion battery,
but had not started to construct the relevant production lines yet. We expected to
complete the construction of relevant production lines in late 2025. However, as a
result of the continuous decrease in prices of raw materials for lithium-ion batteries
since early 2023, the advantage of sodium-ion batteries in cost reduction has
declined and may be lost at all if the prices of raw materials for lithium-ion batteries
continue to decrease in future. In consideration of the above, we will pay close
attention to the market trends and prospect of sodium-ion batteries and be more
prudent in allocating our research and development resources and rolling out
sodium-ion battery products. In the foreseeable future, we plan to continue the
research and development of sodium-ion battery not only for its potential of cost
reduction, but also for its other features, for example, outstanding performance in
low-temperature environment. However, there is no assurance that our continuous
investment will yield the results as we expected. See “Risk Factors – We May not
be able to Derive the Desired Benefits From Our Research and Development Efforts,
Which May Negatively Affect Our Competitiveness and Profitability.”
INTELLECTUAL PROPERTY
We rely on a combination of trademark, trade secret and other intellectual property laws
as well as confidentiality agreements with our employees, suppliers, customers and others to
protect our intellectual property. As of the Latest Practicable Date, we had 141 registered
trademarks in China, which are material to our business. In addition, as of the Latest
Practicable Date, we had a total of 1,560 patents and 29 software copyrights, which are
material to our business. For details of our intellectual property portfolio, see “Statutory and
General Information – Intellectual Property.”
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We have various measures and tools to minimize our risk exposure to IP rights
infringement. We established a series of intellectual property management measures based on
the relevant PRC laws and regulations. We have a large patent database that allows for searches
on patents in relation to products to be designed and developed. In addition, we incorporate IP
search and review into the evaluation of new product design to prevent infringement of IP
rights by us. If the IP search results identify potential risks from the supplier side, we will ask
the supplier to provide a commitment of non-infringement to minimize our risk exposure to
infringement of intellectual property rights. If the IP search results indicate potential risks in
relation to a product design specified by customers, we would promptly inform the customers
such risks. We also have an in-house IP consultant that monitors our IP status.
Internal Control Measures Relating to Intellectual Property Rights
We adopt a full product-cycle risk tracking mechanism as our internal control mechanism
to prevent and control the risk of any intellectual property infringement throughout the process
of development of new products and/or technologies. Prior to the application of new products
design and the new technologies, we will conduct an infringement risk assessment on the entire
design plan, such that to ensure proper alert system and risk management mechanism is applied
throughout the process from project launch, design, trial production to mass production. For
each of our R&D projects, we are equipped with intellectual property engineers specifically
responsible for the project to follow up the R&D of each new product. The responsible
intellectual property engineers are required to monitor the relevant intellectual property
protection during the entire production process of new products, from the development stage
of project initiation, preliminary design, development and sample preparation up to the process
of mass production of the products. Through the technical decomposition of product design
solutions, we properly protect the inventions and innovations generated at each stage via
patents or professional technologies. Meanwhile, we conduct real-time risk investigation on the
design plans of each stage to implement full-cycle product control, reduce the risk of
infringement and properly protect our patents and technologies at the same time.
Employee Management and Internal Intellectual Property Protection Management
System
We require our employees to sign standard agreements stating that service inventions,
trade secrets, and R&D achievements obtained by our employees during their service with us
shall be our assets and that the titles of such achievements shall be transferred to us. We
safeguard our legal rights and interests by identifying and monitoring the potential risk of
third-party infringement on our intellectual property rights. We ensure effective protection of
our R&D achievements and prevent and control of IP risks through our comprehensive IP
protection management system.
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External Intellectual Property Management and Risk Control Measures
We regularly monitor the status of intellectual property rights of our products under
development to avoid infringement in order to minimize the risk of intellectual property right
infringement which may have an impact on the sustainable operation of our business. During
the supplier selection process, through a combination of supplier due diligence and
independent investigation, we strictly assess whether or not the suppliers have legal intellectual
property rights or licensed rights over the products they supply, in order to mitigate the risk of
exposing ourselves to any intellectual property infringement claims of components sourced
from external parties. We include clauses relating to the ownership and protection of
intellectual property rights in our R&D agreements with business partners. We require our
business partners to avoid infringement of intellectual property rights of other third parties. We
also include clauses relating to the ownership and protection of intellectual property rights in
our sales agreements to clarify the responsibility for intellectual property infringement,
requiring our business partners to protect our intellectual property rights and not to infringe on
our intellectual property. We sign confidentiality agreements with our business partners to
clarify the protection of trade secrets and technical information and specify the consequences
of breach of such agreements. In addition, we also appoint legal professionals to conduct patent
infringement risk investigations and analysis, and obtain legal opinions on our core products
so as to ensure that there are no potential patent infringement risks for our products.
Our Directors, as advised by our PRC Legal Advisor, confirmed that, during the Track
Record Period and up to the Latest Practicable Date, there have been no IP-related legal
proceedings and/or lawsuits or arbitrations involving the Group that have had a material
adverse effect on our business in the PRC. As of the Latest Practicable Date, our Directors were
not aware of any pending IP-related infringements, investigations or lawsuits.
PRODUCTION
Battery Cells
Our battery cells are produced under strictly controlled cleanliness and humidity
conditions in our manufacturing facilities. The production process of our battery cells consists
of three main stages: electrode manufacturing, cell assembly and cell chemical testing. There
are approximately 2,000 control points in the manufacturing process of battery cells, which can
be used to monitor the quality of the battery cells. All of these production processes are
performed in-house. The following diagram illustrates the key production steps for our battery
cells.
Hot pressing
Electrolyte injection
WindingMixing Calendering
and slittingCoating
Baking Loading in canCan-cap welding
PackingGrading sortingSealingFormation
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We apply the following technologies in our battery cell production process.
 ISO-6 cleanliness environmental standards for key processes: We have established
a comprehensive on-line workshop cleanliness detection system, and manage and
control the workshop environment in accordance with the sub-environmental control
standard, to meet the optimal cleanliness standard. Particularly, the implementation
of such standards enabled significant reduction in the number of dust particles per
unit volume of air in our production environment, allowing us to achieve a Class
10,000 cleanroom in a dynamic environment, and thus, improved the quality of our
battery products.
 Fully automatic high-speed double-roller rolling and roll contact: This technology
is used for pole pieces thickness measurement and closed-loop pressure adjustment,
which can improve consistency of pole pieces’ thickness. Multi-pole stretching is
applied to improve the consistency of stretching. This technology increased the
width that the relevant equipment can handle from one meter to 1.5 meters, thereby
improving our production efficiency.
 SCL die-cutting technology: This proprietary technology reduces quality issues at
cutting stage, where the sharp points may pierce through the diaphragm and cause
short circuit. It can also improve energy density of the battery cell. We have obtained
six patents in relation to this technology.
 High efficiency liquid injection process: This process uses bell type ultra-high
pressure isobaric liquid injection equipment, achieving high injection pressure of
maximum 1200KPa and increases injection speed and equipment efficiency.
 High efficiency pulping technology: This proprietary technology was developed to
match the performance of kneader with disperser, which increases the dispersion
uniformity of the pulp, reduces pulping time as well as the number of mixers
required per production line, which in turn improves our production efficiency.
 Adapter welding technology: This proprietary technology allows adapter plate to be
welded in the middle area, thereby changing the shape of lugs and reducing short
circuits caused by lug insertion. Such technology allowed us to shorten the lugs,
reduce the use of raw materials, improve energy density in vertical direction,
enhance electrode safety and improve our production efficiency. We have obtained
six patents in relation to the welding process, technique and equipment.
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Battery Modules
A battery module consists of a number of battery cells connected in series or parallel. The
number of battery cells varies according to energy demand and voltage demand of the battery.
The following diagram illustrates the key production steps for our battery modules.
Glue curing
Plasma treatModule stack
Busbar welding
Side plate welding Side plate coating
Laser etchingModule offline test
We configured a total of 82 error-proof items for module production and we apply the
following technologies in our battery module production process:
 The Statistical Process Control (SPC) tool analyses and continuously improves all
process variations to reduce the probability of defects, eliminates defect run-off and
ensures the quality of our products.
 Through continuous process optimization and the introduction of new equipment,
welding surface formation and stability have been significantly improved. Welding
spatter has been reduced to 50 parts per million and the overall defective welding
rate has been reduced to less than 3.4 parts per million, effectively ensuring our
product reliability.
Battery Packs
A battery pack typically contains battery modules, battery management systems,
connectors and cooling system. The following diagram illustrates the key production steps for
our battery packs.
Performance and
communication test
Installation
accessories
Apply box structure
adhesive
Liquid-cooled
panels
Sealed lidBattery Pack
offline test
Connect high
and low voltage
Loading moduleApply thermal
structural adhesive
We apply the following technologies in our battery pack production process:
 Automated equipment to monitor the entire battery pack production process.
 MES system that tracks and processes approximately 2,700 data points to accurate
monitoring of production process for better quality control.
 Data and intelligent calculations that further improve product safety and efficiency,
optimizing the value of the battery throughout its life cycle.
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Our ESS battery packs include ESS battery boxes, ESS battery racks and energy storage
containers. The diagrams below set forth the production flow of our battery boxes, battery
racks and energy storage containers:
Battery boxes:
Module assembly High-voltage
connection Pack offline testInstallation of liquid
cooling plate
Battery racks:
 Battery pack and high-voltage
box installation
Battery cluster
sub-assembly offline
Communication cable and
high-voltage connection
Energy storage containers:
Air conditioning
system installation Battery cluster assembly Communication cable and
high-voltage connection
BCU and control
cabinet installation
Existing Production Facilities
Our production lines are designed to be compatible with the production of different
battery products. Our designed annual production capacity reached 35.2GWh as of June 30,
2023. With some alterations, our EV battery production lines can be used for the manufacture
of ESS battery products with similar specifications and vice versa. We have also been able to
shorten the period we need to improve the production capacity utilization rate at a new
production line since our inception.
The table below sets forth our effective production capacity and our production capacity
utilization rates of our production lines (excluding production lines that are primarily used for
R&D and the manufacturing of prototypes) by production commencement time.
Y ear Ended December 31,
Six months
ended June 30,
2020 2021 2022 2023
Wenzhou Facilities
Production lines commenced in January 2019
Output (MWh) ............................................. 1,455 1,901 2,172 715
Effective production capacity (MWh)
(1) ....... 2,281 2,281 2,281 1,140
Utilization rate (%) ......................................... 63.8% 83.4% 95.2% 62.7%
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Y ear Ended December 31,
Six months
ended June 30,
2020 2021 2022 2023
Production lines commenced in July 2020
Output (MWh) ............................................. 186 1,762 1,926 827
Effective production capacity (MWh)
(1) ....... 979 1,958 1,958 979
Utilization rate (%) ......................................... 19.0% 90.0% 98.3% 84.5%
Production lines commenced in January 2022
Output (MWh) ............................................. – – 7,602 2,195
Effective production capacity (MWh)
(1) ....... – – 10,316 5,158
Utilization rate (%) ......................................... – – 73.7% 42.6%
Production lines commenced in July 2022
Output (MWh) ............................................. – – 3,582 2,514
Effective production capacity (MWh)
(1) ....... – – 4,700 4,700
Utilization rate (%) ......................................... – – 76.2% 53.5%
Production lines commenced in September 2022
Output (MWh) ............................................. – – 408 357
Effective production capacity (MWh)
(1) ....... – – 818 1,227
Utilization rate (%) ......................................... – – 49.9% 29.1%
Subtotal
Output (MWh) ............................................... 1,641 3,663 15,690 6,608
Effective production capacity (MWh) (1) ....... 3,260 4,239 20,073 13,205
Utilization rate (%) ......................................... 50.3% 86.4% 78.2% 50.0%
Jiashan Facilities
Production lines commenced in May 2022
Output (MWh) ............................................. – – 2,198 1,731
Effective production capacity (MWh)
(1) ....... – – 3,733 2,800
Utilization rate (%) ......................................... – – 58.9% 61.8%
Production lines commenced in August 2022
Output (MWh) ............................................. – – 157 109
Effective production capacity (MWh)
(1) ....... – – 294.6 354
Utilization rate (%) ......................................... – – 53.3% 31.0%
Production lines commenced in November
2022 ............................................................
Output (MWh) ............................................. – – 23 26
Effective production capacity (MWh)
(1) ....... – – 283 850
Utilization rate (%) ......................................... – – 8.2% 3.1%
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Y ear Ended December 31,
Six months
ended June 30,
2020 2021 2022 2023
Production lines commenced in December
2022 ............................................................
Output (MWh) ............................................. – – 7 228
Effective production capacity (MWh)
(1) ....... – – 67 400
Utilization rate (%) ......................................... – – 9.8% 57.0%
Subtotal
Output (MWh) ............................................... – – 2,385 2,095
Effective production capacity (MWh) (1) ....... – – 4,378 4,404
Utilization rate (%) ......................................... – – 54.5% 47.6%
Note:
(1) Effective production capacity is based on the production rate of machines operating 20 hours a day for
25 working days a month, considering time spent on production line upgrade or adjustment. Effective
production capacity reflects the time of commencement of production for each production line.
In the six months ended June 30, 2023, the overall utilization rate of our production lines
at our Wenzhou facilities and Jiashan facilities declined. This was primarily due to the decrease
in our sales volume, particularly for our EV battery products. The decrease in our sales volume
of EV battery products was primarily attributable to (i) the temporary slowdown in the EV
industry in China in early 2023, as a result of the decline in EV subsidies and the competition
from ICE vehicles, which directly affected the market demands for EVs, which in turn affected
the demand for our EV battery products, (ii) certain EV manufacturers did not place their
orders for EV batteries in early 2023 because they expected the price of EV batteries to further
decrease as the price of the key raw material, namely lithium carbonate, decreased in early
2023 and was expected to be in the downward trend in the first half of 2023 and (iii) we were
leaning our focus towards higher-end car models and the relevant products were still in the
process of being upgraded or developed.
Production Planning
We plan production based on customer demand. In general, our customers negotiate the
prices and confirm the product specifications with us after the provision of an order forecast,
showing the expected total volume of products they expect to order from us during the
specified period covered by the forecast. These forecasts are good indications of our customer
demands based on which we are able to secure and allocate our internal resources to plan for
our production and manage our inventory level in accordance with these forecasts and to
accommodate any downward or upward revisions that our customers may make.
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Planned Production Facilities
We plan to establish four production facilities for our EV and ESS battery products.
Among which, we plan to expand the production capacity for two of our production facilities.
According to the F&S Report, with the development of electric vehicles and energy storage
markets, it is expected that there will be an increase in the demand for lithium-ion battery
production capacity, although such demand may increase at a slower pace compared to recent
years. As a result, China’s leading EV and ESS battery manufacturers are expanding their
production capacity. Since our inception, our production capacity has increased, as downstream
customers are more inclined to place orders with lithium-ion battery manufacturers who have
adequate production capacity to produce high performing products with competitive prices. We
expect that our annual production capacity will reach 62GWh by the end of 2023.
The table below sets forth the details of our key planned production facilities as of June
30, 2023:
Location
Total
investment
made
Total
investment
to be made
Designed
annual
production
capacity
(GWh)
Construction
start time
(Estimated)
time of
production
commencement Status
Our
ownership
percentage
(RMB in
millions)
(RMB in
millions)
Foshan
(including
Phase I and
Phase II) ........
1,101.1 7,358.9 32 2022.06 Phase I: First
half of 2024
Phase II: By
the end of
2025
Infrastructure under
construction
100.0%
(1)
Liuzhou ............. 2,442.1 1,957.9 20 2022.10 Late December
2023(2)
Infrastructure under
construction
51.0% (3)
Jiashan
(including
Phase I,
Phase II and
Phase III).......
3,761.0 9,339.0 77 2021.05 Phase I: First
half of 2022
Phase II: First
half of 2024
Phase III: By
the end of
2025
Phase I: partially in
production
Phase II: Infrastructure
under construction
Phase III: Construction not
yet started
71.0%
(4)
Wenzhou
(Facility III)...
132.1 5,161.3 24 2023.07 By the end of
2025
Construction commenced 100.0%
Chongqing......... – 5,774.0 30 First half of
2024
By the end of
2025
Construction not yet
started
100.0%
Total ................. 7,436.3 29,591.1 183
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Note:
(1) There was 0.0005% registered capital held by an individual shareholder.
(2) Liuzhou production facility was put into trial production in July 2023.
(3) In April 2022, we established two joint ventures at Guangxi, Liuzhou namely REPT SAIC and SAIC REPT EV
Battery System Co., Ltd. (ʮ̡)( “SAIC REPT” ), with a wholly-owned sub-
subsidiary of SAIC Motor ( ɪӛණྠ) to build two production facilities for EV battery cell and battery pack
with designed annual production capacity of 20GWh each. As of the Latest Practical Date, the Company,
Liuzhou SAIC Technology Development Co., Ltd. (ʮ̡) which is a wholly owned
sub-subsidiary of SAIC Motor ( ɪӛණྠ) and Liuzhou Ruiyu Technology Partnership (Limited Partnership)
(ҦΥྫΆุ(Υྫ)) (“ Liuzhou Ruiyu ”) held 51.0%, 44.0% and 5.0% of shareholdings in
REPT SAIC which is our Liuzhou production facility, respectively. Liuzhou Ruiyu is an employee stock
ownership platform of REPT SAIC, the general partner of which is Liuzhou Qingyu Information Technology
Service Co., Ltd. (ʮ̡) and is controlled by Mr. Yu Zhaoyu, our vice president,
as of the Latest Practicable Date. As of the same date, the Company, Liuzhou SAIC Technology Development
Co., Ltd. (ʮ̡) which is a wholly owned sub-subsidiary of SAIC Motor ( ɪӛණྠ)
and Liuzhou Chuangling Technology Partnership (Limited Partnership) (ҦΥྫΆุ(Υྫ),
“Liuzhou Chuangling ”) held 34.0%, 56.0% and 10.0% of ownership interest in SAIC REPT, respectively.
According to the publicly available information, Liuzhou Chuanglin is an employee stock ownership platform
of SAIC REPT, the general partner of which is Liuzhou Lingpai Information Technology Service Co., Ltd. (ݣ
ʮ̡) and is controlled by a third party individual independent from us as of the
Latest Practicable Date.
(4) The Phase I and Phase II of Jiashan facility was managed by BatteroTech Jiashan which is a wholly owned
subsidiary of BatteroTech Shanghai. The Phase III of Jiashan facility was separated from and did not share land
with Phase I and Phase II of Jiashan facility, which was managed by BatteroTech Jiaxing, a wholly owned
subsidiary of BatteroTech Jiashan. We established BatteroTech Shanghai with other joint venture partners, with
71.0% of registered capital held by the Company. As of the Latest Practicable Date, Wenzhou Chenshan held
14.3% equity interests in BatteroTech Shanghai, the general partner of which was Mr. Zhang Wutang, a
director and the general manager of BatteroTech Shanghai; Shanghai Wanlu held 9.0% equity interests in
BatteroTech Shanghai, which is wholly owned by a third party individual independent from us; and Wenzhou
Futang held 5.7% equity interests in BatteroTech Shanghai, the general partner of which was Mr. Zhong Kaifu,
a member of the management team of BatteroTech Shanghai. Wenzhou Futang and Wenzhou Chenshan are
shareholding platforms of the employees of BatteroTech Shanghai, and Shanghai Wanlu is an independent third
party of the Company.
According to above production expansion plan, we expect to have designed annual
production capacity of 62GWh, 94GWh and over 150GWh by the end of 2023, 2024 and 2025,
respectively. We plan our capacity expansion based on demand for our products from our
customers. According to the F&S Report, the global annual installations for EV batteries is
expected to increase at a CAGR of 38.8% from 504.5GWh in 2022 to 2,597.1GWh in 2027, and
the global annual installations for lithium-ion ESS batteries is expected to increase at a CAGR
of 53.7% from 119.3GWh in 2022 to 1,023.1GWh in 2027. Against this backdrop, downstream
customers are more inclined to place orders with lithium-ion battery manufacturers who have
adequate production capacity to produce high performing products with competitive prices.
Benefiting from our strong R&D capabilities, we are able to offer high-performing products
that satisfy the requirements of our customers. For example, leveraging our WenDing (“ ਪ௟”)
technology, we launched 320Ah and 340Ah ESS battery products in May 2023 to meet the
market demands for large capacity ESS battery products. In addition, we have established
long-term strategic relationship with many of our customers, not only because of our
competitive price, but also the satisfying quality of our products. Those factors, among others,
have equipped us with the competitiveness and the advantages in capturing market demands.
However, there is no guarantee that there will be sufficient downstream demand for EV and
ESS battery products, and even if there is, there is no guarantee that we will always succeed
in competing with other market players for orders from downstream customers. See “Risk
Factors – We Face Competition in Our Business” and “– Our business is Exposed to the
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Supply-demand Dynamics in the Lithium-ion Battery Industry, and thus is affected by market
demand for the end products where our batteries are used.” However, we enjoy the flexibility
on our production expansion plan, which enables us to plan our production capacity expansion
based on demand for our products from our customers and adjust it in response to the
substantial fluctuation in the market demand.
We choose the location of our production facilities carefully. For example, Foshan’s
proximity to our clients in Southern China allows for efficient customer maintenance while
reducing logistics costs and improving delivery timeliness. The geographical advantage of the
Pearl River Delta, where Foshan is located, is conducive to domestic and overseas customer
acquisition. In addition, our planned production facility in Liuzhou is close to the production
base of SAIC-GM-Wuling ( ɪӛஷ͜ʞഷ) and have access to the Southeast Asian markets,
including Indonesia, Vietnam and Thailand.
We made large prepayments to independent third parties for machinery and equipment
procurement for our production facilities, in preparation for commercial production in the
second half of 2023, which resulted in the increase of prepayments for property, plant and
equipment from RMB547.1 million as of December 31, 2022 to RMB1,487.8 million as of 30
June 2023. We have budgeted RMB37.0 billion for our expansion plan, including RMB7.4
billion spent as of June 30, 2023. We also plan to fund the remaining of these expansions with
a mix of cash on hand, cash generated from operations, banking facilities and proceeds from
the Global Offering. See “Future Plans and Use of Proceeds.”
Equipment and Machinery
We invest significantly in our production equipment and machinery as we believe the
quality of our equipment and machinery is essential to increasing automation, ensure reliability
as well as cost efficiency. The key equipment and machinery used in our production process
include material feeding system, high-speed mixing system, automatic coating machine, roll
divider, die divider, automatic winder, heat press, X-ray inspection machine, ultrasonic welder,
transfer sheet welder, wrapping machine, shelling machine, sealing welder, front helium
inspection machine, drying line, liquid injection machine, chemical composition line and blue
film wrapping machine.
We were able to achieve development in production technique and equipment through our
high-speed coating equipment, high-speed assembly line, ultrahigh-pressure and high speed
liquid injection machine, fast-baking machine, ultrahigh-speed stacker and ultrahigh-speed
mixer, among others.
 We achieve a significant increase in coating heating efficiency through a new heat
transfer structure of heat-conducting oil. With the support of artificial intelligence
detection system, we achieve ultra-high precision detection and wet film coating
position prediction, while achieving high precision coating requirements under high
speed coating conditions through online closed-loop control, providing full
guarantee for single line larger scale capacity requirements and product consistency
requirements.
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 We have adopted a fully automatic core assembly line. Through design optimization
of key equipment and development of the automation mechanism of the entire line,
we achieved significant increase in the efficiency of the assembly line and
improvement in product quality. We also jointly developed equipment with the
leading equipment manufacturers in the industry, which provides more reliable
control for the stable operation of our high-speed line in mass production. We have
obtained six patents in relation to the welding process, technique and equipment
used in the assembly line.
 We have jointly developed a new ultrahigh-pressure high speed liquid injection
machine to meet the higher production capacity of single production lines. It has
now achieved mass production. The ultra-high pressure high speed liquid injection
machine ensures higher efficiency of electrolyte injection inside the battery cell and
is effective in improving the stability of the battery’s long cycle performance.
 We developed the fast-baking machine to solve the problems of high cost and high
power consumption of traditional baking machines. By replacing contact-less
heating with heating plates, it effectively reduces drying time and increases baking
efficiency. The temperature of baking machine’s heating plate can be automatically
detected and fed back, achieving precision in temperature control.
 The ultrahigh-speed stacker adopts an innovative stacking mechanism that greatly
improves the stacking speed, while ensuring the accuracy of the mass production
process. Particularly, such mechanism increased the operating speed of stackers
from approximately 30 meters per minute to over 60 meters per minute.
 The mixing efficiency of ultrahigh-speed mixer is much higher than that of the
traditional mixer. The floor space and height of the mixer are significantly reduced,
which reduces the size and height requirements of the mixing plant. The
ultrahigh-speed mixer significantly improves the quality of the battery cells, and
increases the efficiency and safety of battery modules.
Many of the machines we use only require limited human operation, allowing us to reduce
labor costs and focus our production facilities staffing on maintenance and supervisory
functions. We purchase the majority of the key production equipment and machinery used in
the production process domestically. We purchase and own all of our production equipment and
machinery. The estimated service life of our main production equipment are 120 months, and
the remaining service life of our main production equipment are 84~120 months.
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The following table describes our main production equipment as of June 30, 2023:
Name of the equipment
Usage and characteristics of
the equipment Country of origin
Material feeding system Feed the raw materials in
accordance with prescribed
proportions.
China
High-speed mixing system Mixing raw materials into slurry. China
Automatic coating machine Coating the slurry on the current
collector evenly.
China/Japan
Roll divider The coated coil is pressed to a
set thickness, and then divided
into different strips of the
coil.
China
Die divider Cut the edges of the coil into
pole lugs and slit the coil.
China/Germany
Automatic winder Winding positive and negative
coil and diaphragm into a
core.
China
Heat press Apply pressure and heat to the
core to hold it in place.
China
X-ray inspection machine Detection of structural alignment
within the core.
China
Ultrasonic welder Ultrasonic welding of pole lugs. China
Transfer sheet welder Solder adapter tabs. China/Germany
Wrapping machine Wrap the core with insulating
film and put it into the shell.
China
Sealing welder Welding of housing and top
cover.
China/Germany
Front helium inspection machine Testing for air tightness. China
Drying line Baking to remove water. China
Liquid injection machine Injection of electrolyte solutions
into the battery cell.
China
Chemical composition line Charging and discharging of
battery cells.
China
Blue film wrapping machine Insulating blue film for battery
wrapping.
China
Our major production equipment and machinery have an estimated average useful lives
of 10 years and are depreciated at an average annual rate of 9.5%. Depreciation is calculated
on a straight-line basis over its estimated useful life. The remaining useful life of such
equipment and machinery is approximately 9.0 years on average. We regularly inspect and
maintain our production equipment and machinery, as well as replace consumable parts and
components subject to their wear and tear conditions.
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QUALITY CONTROL
Our Quality Control Department
Our commitment to high quality and reliability helps strengthen the recognition and trust
among our customers. We have established a quality management system that complies with
relevant national and international standards, covering the raw material supply chain and
product manufacturing. We implement various assessment criteria on raw material suppliers
regarding their supplies quality, timeliness of delivery, responsiveness to our service requests
and ESG matters. We strictly implement product safety and quality control standards and take
corresponding control measures throughout our entire production process, in order to ensure
that all of our products meet the relevant national and international safety standards. As of June
30, 2023, we had 995 employees responsible for quality management. Dr. Jianyong Liu, our
quality control director, holds a Ph.D. degree in physics from the Chinese Academy of Sciences
and has 15 years of research and work experience.
During the Track Record Period and up to the Latest Practicable Date, we did not receive
(i) any fines, product recall orders or other penalties from the relevant competent authorities
regarding material product quality issues, (ii) any material product returns from our customers,
or (iii) any material complaints from consumers. As of the Latest Practicable Date, our
Directors and management were not aware of any pending product recalls or
investigations/actions by relevant authorities or consumer groups which may lead to a product
recall.
Our Quality Accreditations
We have obtained various certification including:
 The IATF16949 certification certified by Shanghai NQA Certification Co., Ltd.;
 ISO9001 certified by Shanghai NQA Certification Co., Ltd.;
 Audit certification (VDA standard, ASES standard, BIQS standard) designated by
various international vehicle customers; and
 ISO/IEC17025 accredited by the China National Accreditation Service for
Conformity Assessment CNAS,
Our products have also obtained:
 China’s mandatory inspection certification (GB 38031-2020, GB 38032-2020, GB/T
31484-2015, GB/T 31485-2015, GB/T 31486-2015), energy storage type inspection,
GB/T 36276-2018, classification society certification GD22-2019; and
 International certification: UN38.3 certification, ROHS certification, hazardous
characteristics classification certification, cargo transportation appraisal report (sea,
land, air); EU TÜV certification IEC62619, battery directive, REACH certification;
North America UL certification (UL1642, UL1973, UL2580, UL9540A); Japan JET
certification, Japan JIS C 8715-2:2019; India BIS certification BIS16046 20018.
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Our Quality Assurance Program
We are committed to providing customers with high-quality and reliable products, while
striving to continuously improving customer satisfaction, enhancing the core competitiveness
of the Company, creating and sharing quality value with high-quality products and services so
as to earn the respect from our employees, customers, suppliers and other stakeholders.
We have managed our suppliers and the procurement process on the basis of a series of
supplier management internal control systems formulated by us. Such supplier management
policies define the social responsibility requirements for our suppliers from the aspects of
business ethics, labor standards, occupational health and safety, environmental management,
trade safety, anti-corruption and anti-commercial bribery. We have promoted our corporate
social responsibility requirements and our high attention to corporate social responsibility to
all suppliers through various ways. See “Business – Raw Materials, Components and Suppliers
– Our Suppliers” for details on our processes and criteria for assessing our raw material
suppliers.
We have established our product safety and quality management system to implement the
safety review, precise monitoring and early warning in all aspects of our new product projects
commencing from design to mass production and user consumption. For example, we employ
the MES and ERP systems. Through intelligent processing of data, analysis and mining
technology for sales, production, procurement and finance, the MES system enables us to
achieve more efficient decision-making and more effective management. The ERP system is
applied during the production process to exchange data with equipment, record the
manufacturing process data of products in the database, trace data from production planning to
shipment, and control production quality. Through integration with the ERP system, the MES
system provides production data analysis for management decision-making. Our full life cycle
quality control system for our products from design to after-sales is in line with international
standards and customer requirements. The flow chart of specific quality system is as follows:
Planning
Organization and
its environment
Customers'
requirements
Demand and
expectations of
the related parties
Customers
are satisfied
Results for
quality control
management
Products and
services
Support
Operation
Quality control management
Leadership
Improvement
Planning Performance
evaluation
Implementing
ReviewingAddressing
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In addition, we strive to build a high-quality, efficient and environmentally friendly
customer service system. Our achievements in quality control include the following:
 We have obtained the IATF16949 certification certified by Shanghai NQA
Certification Co., Ltd. and have a sound quality management organization structure
and management process. We adopt the “customer-centered” concept to ensure that
relevant laws and regulations as well as customer requirements are met. We enhance
customer trust by making continuous improvements to the quality of our products,
thus enabling us to achieve long-term development.
 We employ MES and ERP systems in the quality control process. We monitor
product characteristics of key manufacturing processes through the linkage of the
systems and related visual inspections, double-frame X-ray surface density
measuring instruments and X-Ray inspection equipment. We also achieve SPC
statistical analysis and prediction of the quality of the production process by
utilizing the MES system together with the fault detection criteria of SPC.
 When the product is detected as abnormal, the MES system can achieve multi-
dimensional information traceability of people, machines, materials, methods and
measurements to quickly track the risk range of materials and provide accurate and
complete product information support so as to achieve rapid response.
RA W MATERIALS, COMPONENTS AND SUPPLIERS
Raw Materials, Components and Supply Agreements
The key raw materials for our battery products are:
 cathode materials, primarily including LFP, lithium NCM and aluminum foil;
 anode materials, primarily including graphite and copper foil;
 separators; and
 electrolyte solutions.
In 2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023, cost of raw
materials amounted to RMB537.1 million, RMB1,662.0 million, RMB10,835.8 million,
RMB3,088.8 million and RMB4,370.0 million, respectively, accounting for 67.5%, 68.3%,
79.9%, 74.3% and 69.1% of our cost of sales for the same period. We primarily source raw
materials from reputable domestic and international suppliers.
We have experienced fluctuations in the cost of our raw materials during the Track Record
Period. In particular, the cost of lithium carbonate, a key raw material for cathode materials for
LFP battery products have experienced considerable fluctuations during the Track Record
Period. According to the F&S Report, in 2020, 2021 and 2022, the average price for lithium
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carbonate was RMB47,100 per ton, RMB131,100 per ton, and RMB496,100 per ton,
respectively. Such price increase was primarily due to a shortage in the supplies of lithium
carbonate since the last quarter of 2020 resulting from the rising demand for lithium battery
products. Such fluctuation resulted in fluctuation in the cost of LFP cathodes from 2020 to
2022. In 2020, 2021 and 2022, the material cost of LFP cathode amounted to RMB191.4
million, RMB661.4 million, RMB6,498.9 million, accounting for 24.0%, 27.2% and 47.9% of
our cost of sales, respectively. However, due to the temporary slowdown in the EV industry in
early 2023, the average price for lithium carbonate decreased as compared to that in the first
half of 2022. According to the F&S Report, the average price for lithium carbonate decreased
significantly from RMB461,200 per ton in the six months ended June 30, 2022 to RMB333,100
per ton in the six months ended June 30, 2023. As a result, the average price of the cathode
material for LFP battery products decreased from RMB152,200 per ton in the six months ended
June 30, 2022 to RMB112,900 per ton in the six months ended June 30, 2023. Despite the
decrease in the average prices of raw materials, our total material cost of LFP cathodes
amounted to RMB1,638.4 million in the six months ended June 30, 2022 and RMB2,551.7
million in the six months ended June 30, 2023, accounting for 39.4% and 40.3% of our cost
of sales, respectively. The raw material cost of LFP cathodes as a percentage of the total cost
of sales increased in the six months ended June 30, 2023 as compared to that in the six months
ended June 30, 2022 primarily due that in the first half of 2023 we mainly used the raw
materials procured in the second half of 2022, the average purchase prices of which were
higher than those of the first half of 2022. According to the F&S Report, in the three months
ended September 30, 2023, the average price for lithium carbonate was RMB239,900 per ton,
and the average price for the cathode material for LFP battery products was RMB82,500 per
ton. The price of other raw materials such as copper foil and electrolyte solutions also
experienced price fluctuation, though to a lesser extent, during the Track Record Period,
primarily due to the rapid increase of demand and the short supply of raw materials. See
“Financial Information – Significant Factors Affecting Our Results of Operations – Fluctuation
in Prices of Raw Materials” for an analysis of the effect of price fluctuations in raw materials
on our gross profit/loss during the Track Record Period. During the same period, we did not
engage in hedging activities against the fluctuation in raw material prices.
To ensure the stable supplies of key raw materials, we may engage in strategic
cooperation with major suppliers of raw materials to primarily lock the quantity of our key raw
materials in advance. For example, we purchased LFP, one of our key raw materials, from our
suppliers pursuant to long-term framework agreements at a benchmark price by referring to the
then prevailing market prices. Going forward, we do not preclude the possibility that we may
enter into new agreements with our major suppliers that lock the prices of key raw materials,
for it may benefit us if we could prudently estimate the fluctuation in prices of raw materials
and lock the price that would be favorable to us. We have also entered into long-term
agreements with our suppliers to purchase other raw materials including electrolyte solutions,
graphite, lithium carbonate, copper foil and carbon-coated aluminum foil.
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The major terms of the long-term framework agreements we enter into with our suppliers
generally include the following:
Purchase order We shall notify the suppliers of the type,
specification, unit price, quantity and date of
delivery of the raw materials we need in writing.
Price Depending on the type of raw material and
supplier, prices are either fixed in the long-term
framework agreements, or determined/adjusted
taking into account the then prevailing market
price when placing orders.
Inspection and product returns Product inspection shall take place within a
specified period after delivery of the raw
materials to us. We shall be entitled to return to
the suppliers the defective raw materials that do
not meet the agreed quality standard, and the
suppliers shall remedy the same, including
product return and replacement.
Credit terms and payment method The credit period and payment method shall be in
accordance with the purchase order. We are
typically offered a credit term of 30-90 days.
Confidentiality We usually set confidentiality clauses in the
framework agreements, and the period of
confidentiality obligations may be extended to
after the expiration of the agreements.
We entered into long-term off-take agreements with our raw material suppliers. In
particular:
 In 2022, we secured LFP through off-take agreements with certain raw material
suppliers. The total minimum purchase commitment under these agreements was
approximately 22,800 tons, representing approximately 55.7% of our LFP
procurement in 2022. The purchase prices were subject to the periodic review and
adjustments based on prevailing market prices and/or the price mutually agreed of
certain feedstock materials involved. As of the Latest Practicable Date, we did not
have any outstanding minimum purchase commitment for LFP under off-take
agreements, and all off-take agreements for supplies of LFP were expired or
terminated.
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 We also entered into off-take agreements for PVDF. In 2021 and 2022, the purchase
amount of PVDF under the off-take agreement was approximately 10 tons and 31
tons, accounting for approximately 7.9% and 3.4% of the total PVDF purchased
during the year, respectively. The average purchase prices under the off-take
agreements were generally in line with the prevailing market price in 2021 and were
relatively lower than the prevailing market price in 2022 due to the Company’s
increased bargaining power and the strategic relationship with the supplier. The
purchase prices of PVDF under the off-take agreement are subject to monthly review
and adjustments, which will increase or decrease based on a fixed formula that links
to the prevailing market price of a key raw material. If we are unable to purchase
PVDF at the required amounts, we may be required to pay liquidated damages of 1%
of the total value of the order to suppliers, and if we are unable to do so for two
consecutive months, the liquidated damages will increase to 30% of the total value
of the order, and the suppliers will have the right to terminate the agreement
unilaterally; likewise, if the suppliers are unable to supply PVDF at the required
amounts to us, such supplier may be required to pay liquidated damages to us. As
of the Latest Practicable Date, we did not have any outstanding minimum purchase
commitment for PVDF under the off-take agreement, and the off-take agreement for
supplies of PVDF was terminated as mutually agreed. No dispute was raised by the
Company or the PVDF supplier under the off-take agreement during the Track
Record Period and up to the Latest Practicable Date.
 In addition, during the Track Record Period, we entered into three off-take
agreements for electrolyte solutions, the price of which was calculated based on the
prices of several raw materials used to produce electrolyte solutions. Among those
raw materials, the price of one key raw material, lithium hexafluorophosphate, under
each of those three off-take agreements was locked at a price mutually agreed by
both parties. The prevailing market price was one of the factors that the Company
and suppliers of electrolyte solutions considered when fixing the price for lithium
hexafluorophosphate, while other factors such as the amount of prepayment the
Company offered and the prospects of long-term cooperation also played important
roles. As a result of the strong pricing power of the Group, the prices for lithium
hexafluorophosphate were fixed at a level lower than the then prevailing market
price. The price of other raw materials were determined based on the prevailing
market price for each order placed under those agreements. In 2021 and 2022, the
purchase amount of electrolyte solutions under the off-take agreement was
approximately 2,067 tons and 10,257 tons, accounting for approximately 28.1% and
51.8% of the total electrolyte solutions purchased during the year, respectively.
Under such agreements, we may be subject to the adverse impact of purchasing raw
materials at prices that are higher than the market prices, which in return may
adversely affect our results of operations. As of the Latest Practicable Date, all three
off-take agreements have expired. During the Track Record Period and up to the
Latest Practicable Date, we did not have any dispute with suppliers in relation to the
execution of those off-take agreements.
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The off-take agreements ensure the sufficient and stable supply of raw materials for our
production needs. However, entering into long-term off-take agreements may lead to us having
to purchase raw materials that may exceed our actual production needs, and temporarily
restrain our liquidity if we are not able to fully utilize our production capacity. It may also
result in overstock of raw materials for certain periods and cause more impairment losses of
our inventories due to inventory obsolescence. See “Risk Factors – We may be required to
purchase certain amounts of raw materials under the long-term off-take agreements entered
into with some of our raw material suppliers, which may exceed our production needs.”
Entering into those off-take agreements did not have any material impact on the Group’s
impairment loss of inventories, cost structure or pricing strategy to customers during the Track
Record Period, as the procurement under those off-take agreements were still within our
procurement plan based on our prudent estimation of production needs and the prevailing
market trend of the raw material prices during the Track Record Period, and also most of the
off-take agreements only locked the quantities of key raw materials concerned and were subject
to price adjustment mechanism which gave us the flexibility to respond to the fluctuation in
raw material prices. As of the Latest Practicable Date, (i) we did not have any off-take
agreement in effect and (ii) we did not enter into any new off-take agreements. Going forward,
we may enter into new off-take agreements based on our prudent estimate of production needs
and prices of relevant raw materials in consideration of their benefits in ensuring the sufficient
and stable supply of raw materials historically.
In addition to satisfying our production needs, we purchase feedstock materials, primarily
lithium carbonate, and sell them to our suppliers as a way to help our suppliers source
feedstock materials for battery products including LFP and electrolyte solutions, which was an
industry norm, according to the F&S Report. Under the accounting policies adopted by us,
despite that the we sold feedstock raw materials to those suppliers, no revenue was recorded
in our results of operations. The income from our sales of feedstock raw materials to those
suppliers was offset by the relevant costs of raw materials purchased by us from those suppliers
as those suppliers would use the feedstock raw materials we sold to them to produce the raw
materials and then sell those raw materials back to us. In 2020, 2021 and 2022 and the six
months ended June 30, 2023, the number of suppliers under the foregoing arrangement was nil,
two, three and two, respectively. There was no past or present relationship between those
suppliers and the Group, its Shareholders, Directors, senior management and/or their
respective associate. We increased the sales of feedstock materials in 2021 in view of the raw
materials shortage in the market. We plan to further source feedstock materials such as lithium
carbonate for our suppliers so that we could ensure the timely and sufficient supply of our raw
materials.
We entered into a materials purchasing framework agreement (“ Materials Purchasing
Framework Agreement ”) with Yongqing Technology, pursuant to which, Yongqing
Technology and its associates have agreed to sell, and we have agreed to purchase raw
materials (including lithium compounds, ternary precursors, separators and graphite). The
historical transaction amounts in respect of the raw materials purchased by us from Yongqing
Technology and its associates were RMB16.2 million, RMB212.2 million, RMB61.0 million
and RMB1.6 million for the years ended December 31, 2020, 2021 and 2022 and the six months
ended June 30, 2023, respectively. See “Connected Transactions – Non-exempt Continuing
Connected Transactions – II. Materials Purchasing Framework Agreement” for details of our
purchase of raw materials from Yongqing Technology during the Track Record Period.
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Save as disclosed above, as of the Latest Practicable Date, we mainly relied on (i) our
pricing strategy for individual orders and the price adjustment mechanism in our sales
framework agreements, which allowed us to reflect the price fluctuation in raw materials on
our selling prices of battery products, and (ii) the management of our inventory levels based
on the prudent estimation of the market trends and our production needs, to mitigate the impact
of raw material cost fluctuations on the supply side. However, we may not have strong
bargaining power with customers and suppliers, and may not be able to effectively mitigate the
impact of raw material price fluctuations despite all the measures being put in place.
During the Track Record Period and up to the Latest Practicable Date, we did not
experience any breach of agreements by suppliers that resulted in suspension or interruption of
our production operations.
During the Track Record Period and up to the Latest Practicable Date, we did not
experience any significant shortage of raw material supplies, and the raw materials provided
by our suppliers did not have any significant quality issues.
Our Suppliers
Our suppliers are primarily raw material providers. We carefully select our suppliers and
require them to satisfy various assessment criteria. We only procure raw materials from the
suppliers listed on our qualified supplier catalog. All potential suppliers must pass our internal
supplier admission standard before entering into our qualified supplier catalog. We consider
several factors in the selection of suppliers, including but not limited to the potential supplier’s
material performance, supplies quality, prices offered, years of operation and quality control
accreditations. Potential key raw materials suppliers are subject to onsite inspection conducted
by us in order to evaluate their production processes, quality-control, and ESG related
performance indicator including carbon emission and pollution management. We also carry out
regular on-site audits and audits of qualified suppliers each year.
In each of 2020, 2021 and 2022 and the six months ended June 30, 2023, purchases from
our largest supplier for the respective period accounted for 9.7%, 8.4%, 13.3% and 14.5% of
our total amount of purchase during the respective period, while our five largest suppliers for
the respective period accounted for 36.8%, 33.2%, 44.3% and 52.0% of our total amount of
purchase during the respective period. We believe that we have a good cooperation relationship
with our key suppliers.
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The tables below set forth the details for each our five largest suppliers during the Track
Record Period.
For the Y ear Ended December 31, 2020
Supplier
Amount of
Purchase
Percentage
to Total
Purchase Business Profile
Registered
Capital
Place of
Registration
Products
S o l dt oU s
Y ears of
Business
Relationship Credit Terms
Payment
Method
(RMB’000) (%)
Qinghai Taifeng
Pulead
Lithium-
Energy
Technology
Co., Ltd.
68,836 9.7 Manufacturing and
sales of cathode
materials and other
lithium battery raw
materials
RMB742.22
million
Qinghai Cathode
materials
5 100% prepaid/
30 days
against
monthly
clearing
Bank
acceptance
BTR New
Material
Group
Co., Ltd.
(1)
61,710 8.7 Manufacturing and
sales of cathode
materials, anode
materials and other
lithium battery raw
materials
RMB485.39
million
Guangdong Graphite 4 60 days against
monthly
clearing
Bank
acceptance
Shenzhen
Londian
Wason
Technologies
Co., Ltd.
47,590 6.7 Manufacturing and
sales of lithium
battery precision
structural parts and
automobile
structural parts
RMB200.00
million
Guangdong Copper foil 4 30 days against
monthly
clearing
Bank
acceptance
Hunan Zhongke
Shinzoom
Co., Ltd.
(2)
41,507 5.9 Manufacturing and
sales of anode
materials and other
lithium battery raw
materials
RMB155.39
million
Hunan Graphite 3 60 days against
monthly
clearing
Bank
acceptance
Shenzhen
Kedali
Industry
Co., Ltd.
(3)
40,903 5.8 Manufacturing and
sales of lithium
battery precision
structural
components and
automobile
structural
components
RMB232.92
million
Guangdong Structural
components
4 90 days against
monthly
clearing
Bank
acceptance
Total 260,546 36.8
Notes:
(1) BTR New Material Group Co., Ltd. is a manufacturer of Li-ion electrode materials and a manufacturer of
graphite anodes in China, which is a company listed on the Beijing Stock Exchange (stock code: 835185).
(2) Hunan Zhongke Shinzoom Co., Ltd. is a subsidiary of Hunan Zhongke Electric Co., Ltd. which is a provider
of comprehensive electromagnetic metallurgical solution in China. Hunan Zhongke Electric Co., Ltd. is a
company listed on the Shenzhen Stock Exchange (stock code: 300035).
(3) Shenzhen Kedali Industry Co., Ltd. is a company in China engaged in research and development and
manufacturing of lithium battery precision structural parts and automotive structural parts, which is a company
listed on the Shenzhen Stock Exchange (stock code: 002850).
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For the Y ear Ended December 31, 2021
Supplier
Amount of
Purchase
Percentage
to Total
Purchase Business Profile
Registered
Capital
Place of
Registration
Products
S o l dt oU s
Y ears of
Business
Relationship Credit Terms
Payment
Method
(RMB’000) (%)
Tsingshan
Group
212,234 8.4 World’s leading
nickel and stainless
steel producer who
has strategically
expanded along the
lithium-ion battery
value chain
RMB2,800.00
million
Zhejiang Graphite,
PVDF,
copper
foil
among
others
4 30 days against
monthly
clearing
Bank transfer
Jiujiang Tinci
Materials
Technology
Co., Ltd.
(1)
166,805 6.6 Manufacturing and
sales of electrolyte
and other lithium
battery raw
materials
RMB418.00
million
Jiangxi Electrolytes 5 30 days against
monthly
clearing
Bank
acceptance
Changzhou
Liyuan New
Energy
Technology
Co., Ltd.
(2)
157,819 6.2 Manufacturing and
sales of cathode
materials and other
lithium battery raw
materials
RMB720.74
million
Jiangsu Cathode
materials
2 30 days against
monthly
clearing
Bank
acceptance
Qinghai Taifeng
Pulead
Lithium-
Energy
Technology
Co., Ltd.
155,257 6.1 Manufacturing and
sales of cathode
materials and other
lithium battery raw
materials
RMB742.22
million
Qinghai Cathode
materials
5 100% prepaid/
30 days
against
monthly
clearing
Bank
acceptance
Shenyang East
Chemical
Science-tech
Co., Ltd.
149,700 5.9 Manufacturing and
sales of lithium
battery raw
materials
RMB10.00
million
Liaoning NMP, CNT 5 60 days against
monthly
clearing
Bank
acceptance
Total 841,815 33.2
Notes:
(1) Jiujiang Tinci Materials Technology Co., Ltd. is a subsidiary of Guangzhou Tinci Materials Technology Co.,
Ltd., which is a company specialized in lithium-ion battery materials, daily chemical materials and specialty
chemicals in China. Guangzhou Tinci Materials Technology Co., Ltd. is a company listed on the Shenzhen
Stock Exchange (stock code: 002709).
(2) Changzhou Liyuan New Energy Technology Co., Ltd. is a subsidiary of Jiangsu Lopal Tech. Co., Ltd., which
is a LFP cathode material and sustainable automotive specialty chemical manufacturer in China. Jiangsu Lopal
Tech. Co., Ltd. is a company listed on the Shanghai Stock Exchange (stock code: 603906).
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For the Y ear Ended December 31, 2022
Supplier
Amount of
Purchase
Percentage
to Total
Purchase Business Profile
Registered
Capital
Place of
Registration
Products
Sold to Us
Y ears of
Business
Relationship Credit Terms
Payment
Method
(RMB’000) (%)
Changzhou
Liyuan New
Energy
Technology
Co., Ltd.
1,965,075 13.3 Manufacturing and
sales of cathode
materials and other
lithium battery raw
materials
RMB720.74
million
Jiangsu Cathode
materials
2 30 days against
monthly
clearing
Bank
acceptance
Supplier A
(1) 1,747,649 11.8 Manufacturing and
sales of cathode
materials and other
lithium battery raw
materials
RMB89.23
million
Guangdong Cathode
materials
5 30 days against
monthly
clearing
Bank
acceptance
Qinghai Taifeng
Pulead
Lithium-
Energy
Technology
Co., Ltd.
1,180,802 8.0 Manufacturing and
sales of cathode
materials and other
lithium battery raw
materials
RMB742.22
million
Qinghai Cathode
materials
5 30 days against
monthly
clearing
Bank
acceptance
Jiujiang Tinci
Materials
Technology
Co., Ltd.
829,570 5.6 Manufacturing and
sales of electrolyte
and other lithium
battery raw
materials
RMB418.00
million
Jiangxi Electrolytes 5 30 days against
monthly
clearing
Bank
acceptance
Chengxin
Lithium
Group
Co., Ltd.
(2)
827,066 5.6 Mining and
processing of
lithium compounds
RMB865.34
million
Sichuan Lithium
carbonate
2 Payable by 10th
of the
following
month
Bank
acceptance
Total 6,550,162 44.3
Notes:
(1) Supplier A is a company engaged in the research and development, production, import, sale, and export of
nano-lithium iron phosphate and lithium-ion battery core materials in China and is listed on the Shenzhen
Stock Exchange.
(2) Chengxin Lithium Group Co., Ltd. is a company principally engaged in production and sales of new energy
lithium battery materials and is listed on the Shenzhen Stock Exchange (stock code: 002240).
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For the Six Months Ended June 30, 2023
Supplier
Amount of
Purchase
Percentage
to Total
Purchase Business Profile
Registered
Capital
Place of
Registration
Products
Sold to Us
Y ears of
Business
Relationship Credit Terms
Payment
Method
(RMB’000) (%)
Beijing
Easpring
Material
Technology
Co., Ltd.
(1)
801,706 14.5 Manufacturing and
sales of cathode
materials for
lithium-ion
batteries
RMB506.50
million
Beijing Ternary
materials
1 45 days against
monthly
clearing
Bank
acceptance
Changzhou
Liyuan New
Energy
Technology
Co., Ltd.
795,887 14.4 Manufacturing and
sales of cathode
materials and other
lithium battery raw
materials
RMB720.74
million
Jiangsu Cathode
materials
2 30 days against
monthly
clearing
Bank
acceptance
Supplier A 685,456 12.4 Manufacturing and
sales of cathode
materials and other
lithium battery raw
materials
RMB89.23
million
Guangdong Cathode
materials
5 30 days against
monthly
clearing
Bank
acceptance
Qinghai Taifeng
Pulead
Lithium-
Energy
Technology
Co., Ltd.
390,877 7.1 Manufacturing and
sales of cathode
materials and other
lithium battery raw
materials
RMB742.22
million
Qinghai Cathode
materials
5 30 days against
monthly
clearing
Bank
acceptance
Shanghai
Putailai New
Energy
Technology
Co., Ltd
(2)
200,078 3.6 Manufacturing and
sales of separators
and other lithium
battery raw
materials
RMB2,016.2
million
Shanghai Separators 4 30 days against
monthly
clearing
Bank
acceptance
Total 2,874,004 52.0
Notes:
(1) Beijing Easpring Material Technology Co., Ltd. is a China-based company principally engaged in the research
and development, manufacturing and sales of lithium-ion battery materials and is listed on the Shenzhen Stock
Exchange (stock code: 300073).
(2) Shanghai Putailai New Energy Technology Co., Ltd is a China-based company principally engaged in the
research, development, production and sales of new energy lithium-ion battery materials and processing
equipment and is listed on the Shanghai Stock Exchange (stock code: 603659).
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Save as disclosed above, none of our Directors or their respective associates or any
Shareholder holding more than 5% of our issued share capital held any interest in any of our
five largest suppliers during the Track Record Period.
MARKETING, SALES AND CUSTOMERS
Our Customers
The customers of our EV battery products are primarily EV manufacturers and EV battery
pack manufacturers designated by EV manufacturers, and our EV battery products are used in
passenger vehicles, commercial vehicles, specialized vehicles and construction machinery such
as forklift trucks, unmanned sweepers, low speed vehicles and construction vehicles. The EV
battery products we sold to EV battery pack manufacturers were mainly EV battery cells and
modules. EV manufacturers may designate EV battery pack manufacturers to assemble battery
packs. Under such arrangement, we generally enter into the contract with the designated EV
battery pack manufacturers. EV manufacturers that cooperated with us under such arrangement
would typically communicate with us as to their requirement of battery cells or modules and
we would sell the battery cells or modules to the designated EV battery pack manufacturers.
The EV battery pack manufacturers would further assemble those EV battery cells and modules
together with other components, such as the BMS and the EMS, into EV battery packs and sell
the battery packs to EV manufacturers. Customers of our ESS battery products are primarily
household ESS integrators, photovoltaic inverter manufacturers and system integrators, who
assemble their products and sell to domestic and overseas end users. Customers for our ESS
battery products also include EPC firms. For further information on our major ESS customers,
see “Business – Overview – Our Products and Customers.” The duration of the framework sales
agreements with our major ESS customers is generally one year. We also have individual
purchase orders from other ESS customers. As of the Latest Practicable Date, we have total
confirmed and indicative orders from our customers of 56.4GWh for our ESS battery products
and 81.0GWh for our EV battery products, the majority of which were expected to be delivered
gradually within next two to three years, subject to further confirmation from our customers.
The indicative orders for our ESS battery products and EV battery products are subject to
confirmation from customers, and depending on the prevailing market conditions, the
corresponding confirmed orders then may depart from the amount set out in the indicative
orders.
In each of 2020, 2021 and 2022 and the six months ended June 30, 2023, sales to our
largest customer for the respective period accounted for 38.6%, 24.5%, 11.7% and 12.7% of
our revenue during the respective period, while our five largest customers for the respective
periods accounted for 69.7%, 51.0%, 38.2% and 37.6% of our revenue during the respective
period.
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The tables below set forth the details for each our five largest customers during the Track
Record Period.
For the Y ear Ended December 31, 2020
Customer
Revenue
Contribution
Percentage
to Total
Revenue Business Profile
Registered
Capital
Place of
Registration
Products
Purchased
from Us
Y ears of
Business
Relationship Credit Terms
Payment
Method
(RMB’000) (%)
Suzhou
KeyPower
Technologies
Co., Ltd.
(1)
350,396 38.6 Manufacturing and
sales of EV battery
packs
RMB50.00
million
Jiangsu EV battery
products
4 90 days against
monthly
clearing
Bank
acceptance
Customer A 75,458 8.3 R&D, manufacturing
and sales of EVs
RMB6,000.00
million
Shanghai EV battery
products
3 45 days against
monthly
clearing
Bank
acceptance,
Bank
transfer
Zhejiang E-P
Equipment
Co., Ltd.
73,060 8.1 Electric storage
equipment,
intelligent handling
robots and forklift
development,
manufacturing and
services
RMB340.00
million
Zhejiang Battery
products
for
special
vehicles
4 Installment
payment
according to
the contract
Bank
acceptance,
Bank
transfer
Customer B 71,204 7.9 Manufacturing and
sales of auto parts
USD25.00
million
Anhui EV battery
products
4 Installment
payment
according to
the contract
Bank transfer
Customer C 61,720 6.8 Manufacturing and
sales of ESS and
energy storage
solutions
RMB330.00
million
Jiangsu ESS and
EV
battery
products
4 Installment
payment
according to
the contract
Bank transfer
Total 631,838 69.7
Note:
(1) Suzhou KeyPower Technologies Co., Ltd., as the EV battery pack manufacturer designated by SAIC-GM-
Wuling ( ɪӛஷ͜ʞഷ), purchased EV battery cells from us, which assembled those EV battery cells together
with other components, such as the BMS and EMS, into EV battery packs, and then sold those EV battery
packs to SAIC-GM-Wuling ( ɪӛஷ͜ʞഷ).
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For the Y ear Ended December 31, 2021
Customer
Revenue
Contribution
Percentage
to Total
Revenue Business Profile
Registered
Capital
Place of
Registration
Products
Purchased
from Us
Y ears of
Business
Relationship Credit Terms
Payment
Method
(RMB’000) (%)
Suzhou
KeyPower
Technologies
Co., Ltd.
516,354 24.5 Manufacturing and
sales of EV battery
packs
RMB50.00
million
Jiangsu EV battery
products
4 90 days against
monthly
clearing
Bank
acceptance
Customer D 154,794 7.3 Manufacturing and
sales of lithium
battery raw
materials
RMB10.00
million
Liaoning Waste sales 6 60 days against
monthly
clearing
Bank
acceptance
SolaX Power
Network
Technology
(Zhejiang)
Co., Ltd.
142,926 6.8 Manufacturing and
sales of ESS and
energy storage
solutions
RMB120.00
million
Zhejiang ESS battery
cells and
ESS
battery
modules
4 60 days against
monthly
clearing
Bank transfer
Foxess
Co., Ltd.
(1)
136,413 6.5 Manufacturing and
sales of ESS and
providing energy
storage solutions
RMB50.00
million
Zhejiang ESS battery
cells and
ESS
battery
modules
3 30 days against
monthly
clearing
Bank
acceptance
Zhejiang E-P
Equipment
Co., Ltd.
125,414 5.9 Electric storage
equipment,
intelligent handling
robots and forklift
development,
manufacturing and
services
RMB340.00
million
Zhejiang Battery
products
for
special
vehicles
4 Installment
payment
according to
the contract
Bank
acceptance,
Bank
transfer
Total 1,075,901 51.0
Note:
(1) Foxess Co., Ltd. is an associate of Yongqing Technology under the definition of IAS 24 “Related Party
Disclosures”, and Yongqing Technology is a Controlling Shareholder of the Company. We sell ESS battery
cells and ESS battery modules to Foxess Co., Ltd.. In 2020, 2021 and 2022 and the six months ended June 30,
2023, revenue from Foxess Co., Ltd. were RMB11.4 million, RMB136.4 million, RMB656.5 million, and
RMB182.6 million, accounting for 1.3%, 6.5%, 4.5% and 2.8% of our total revenue, respectively.
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For the Y ear Ended December 31, 2022
Customer
Revenue
Contribution
Percentage
to Total
Revenue Business Profile
Registered
Capital
Place of
Registration
Products
Purchased
from Us
Y ears of
Business
Relationship Credit Terms
Payment
Method
(RMB’000) (%)
Customer E
(1) 1,708,342 11.7 Manufacturing and
sales of ESS and
providing energy
storage solutions
RMB1,485.19
million
Anhui ESS battery
products
3 Installment
payment
according to
the contract
Bank
acceptance
Suzhou
KeyPower
Technologies
Co., Ltd.
1,204,656 8.2 Manufacturing and
sales of EV battery
packs
RMB50.00
million
Jiangsu EV battery
products
4 90 days against
monthly
clearing
Bank
acceptance
Customer F
(2) 1,161,621 7.9 R&D, manufacturing
and sales of EVs
RMB2,908.00
million
Zhejiang EV battery
products
2 45 days against
monthly
clearing
Bank
acceptance
Tsingshan
Group
861,478
(3) 5.9 World’s leading
nickel and stainless
steel producer who
has strategically
expanded along the
lithium-ion battery
value chain
RMB2,800.00
million
Zhejiang Battery
components
6 Installment
payment
according to
the contract
Bank transfer
Foxess
Co., Ltd.
656,481 4.5 Manufacturing and
sales of ESS and
providing energy
storage solutions
RMB57.62
million
Zhejiang ESS battery
cells and
ESS
battery
modules
3 30 days against
monthly
clearing
Bank
acceptance
Total 5,592,578 38.2
Notes:
(1) Customer E is a subsidiary of a company listed on the Shenzhen Stock Exchange that develops, produces, sells
and provides services for solar PV inverters, wind power converters and other power supply.
(2) Customer F is a smart EV company based in China primarily focusing on the mid to high-end segment of
China’s NEV market and is listed on the Hong Kong Stock Exchange.
(3) Including rental revenue from Tsingshan Stainless Steel Co., Ltd. (ʮ̡)( “ Tsingshan
Stainless Steel ”), a subsidiary of Tsingshan Group, of RMB1.5 million in 2022.
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For the Six Months Ended June 30, 2023
Customer
Revenue
Contribution
Percentage
to Total
Revenue Business Profile
Registered
Capital
Place of
Registration
Products
Purchased
from Us
Y ears of
Business
Relationship Credit Terms
Payment
Method
(RMB’000) (%)
Tsingshan
Group
835,301
(1) 12.7 World-leading nickel
and stainless steel
producer who has
strategic expanded
along the lithium-
ion battery value
chain
RMB2,800.00
million
Zhejiang Battery
components
6 Installment
payment
according to
the contract
Bank transfer
Customer E 567,925 8.6 Manufacturing and
sales of ESS and
providing energy
storage solutions
RMB511.54
million
Anhui ESS battery
products
3 30 days/60 days
against
monthly
clearing
Bank
acceptance
SolaX Power
Network
Technology
(Zhejiang)
Co., Ltd.
442,634 6.7 Manufacturing and
sales of energy
storage systems
and solutions
RMB120.00
million
Zhejiang ESS battery
cells and
ESS
battery
modules
4 60 days against
monthly
clearing
Bank transfer
and bank
acceptance
Shenzhen Clou
Electronics
Co., Ltd.
(2)
331,892 5.0 Manufacture and sale
of electrical
installations and
distribution
systems
RMB1,408.35
million
Guangdong ESS battery
products
2 Installment
payment
according to
the contract
Bank transfer
and bank
acceptance
CRRC
Corporation
Limited
(3)
305,901 4.6 Rail transit
equipment supplier,
with business unit
for energy storage
batteries and
accessories
RMB23,000.00
million
Hunan ESS battery
products
Less than
one year
Installment
payment
according to
the contract
Bank transfer
and bank
acceptance
Total 2,483,653 37.6
Notes:
(1) Including rental revenue from Tsingshan Stainless Steel of RMB2.6 million in 2022.
(2) Shenzhen Clou Electronics Co., Ltd. is a high-tech enterprise with a number of national and provincial
technical centers and laboratories in China and is listed on the Shenzhen Stock Exchange (stock code: 002121).
(3) CRRC Corporation Limited is a Chinese state-owned rolling stock manufacturer and is listed on both the Hong
Kong Stock Exchange (stock code: 1766) and the Shanghai Stock Exchange (stock code: 601766).
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Save as disclosed above, none of our Directors or their respective associates or any
Shareholder holding more than 5% of our issued share capital held any interest in any of our
five largest customers during the Track Record Period.
Sales and Marketing
Our products are sold under the brands of REPT and BatteroTech. As of June 30, 2023,
we had 187 employees in sales and marketing, focusing on business development, customer
service, brand promotion and sales contract management. We have designated sales teams
covering passenger vehicle customers, commercial vehicle customers and ESS battery products
customers. For leading market players, we have specific sales force working on their profile
and requests. Our sales and marketing teams also seek to expand our customer base through
presenting our strength and showcasing our products at industry conventions and forums.
The flowchart below illustrates our typical customer acquisition and sales process:
Customer and market analysis
and initial customer approach
Review of customer
specification Price bidding
Trial production and
commencement of
mass production
Sample delivery and
product verification
Designated supply(1)Customer relationship
managementAfter-sales service
Note:
(1) Designated supply is where the customer shall be bound to purchase the agreed amount of products specified
in the procurement agreements.
Pricing
We price our products based on various factors including raw material costs, production
overheads, order volumes, delivery requirements, warranty offered, competitors’ pricings,
prevailing market conditions, payment methods and specification of products requested by
customers. According to the F&S Report, our pricing for battery products are generally in line
with the prevailing market trend. In certain circumstances, including for attracting new
customers, entering new markets or strategic projects, we may match down on the pricing of
leading enterprises in the industry and the pricing of our direct competitors.
In general, we align our pricing with the fluctuations in the pricing and the actual supply
of raw materials to mitigate the impact of raw material price fluctuations. We have primarily
two ways to achieve this.
(a) Price adjustment mechanism for framework sales agreements . In response to the
rapid raw material price increase, in November 2021, with major customers that
entered into fixed price framework sales agreement with us, we started to adjust our
pricing by entering into supplemental agreements with them. As the increasing trend
of raw material prices persisted, in the second quarter of 2022, we started to
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introduce price adjustment mechanism into our contracts with customers in response
to fluctuations in raw material prices. Such practice was also an industry norm in
2022, according to the F&S Report. In particular, we actively adjust the sales price
of our products after taking into consideration of the fluctuation of certain raw
material prices (typically lithium carbonate, sometimes may also include others such
as LFP, graphite, copper foil, separator and electrolyte). For example, the selling
prices of our battery products will change by a pre-determined amount in response
to the per unit increase or decrease in the market prices of the relevant raw material
in the specified period. The exact pricing adjustment formulae and parameters used
vary across different customers, which are affected by the timing of the contracts,
the prevailing prices of the relevant raw material and is also subject to the
negotiation results with that specific customer. We typically review our pricing on
a monthly or quarterly basis for those framework sales agreements with price
adjustment mechanism. After reviewing and adjusting the pricing according to the
prescribed price adjustment mechanism therein, such price would apply to the orders
placed under such framework agreement for the following month or quarter as the
case may be. As of the Latest Practicable Date, all our previous fixed price
framework sales agreements have been completed, and we had not entered into any
new framework sales agreement without price adjustment mechanism since then.
(b) Individual orders . For customers who place individual orders with us from time to
time, the prices are negotiated each time when the order is placed, taking into
consideration of the prevailing market prices of the key raw materials.
During the Track Record Period, the pricing of our products fluctuated significantly due
to the change in the price of raw materials. We closely monitor the price fluctuations in our raw
material purchases and review the pricing of our products when necessary. We conduct review
on the pricing of our products on a regular basis to capture the fluctuation of prices in the
market. In particular, we inspect the price trend of key raw materials from time to time to grasp
the current and future purchase price, and to identify the potential discrepancies between
supply and demand in the industry. Our price adjustment mechanism in framework sales
agreements and the availability of individual orders give us some flexibility to adjust the
pricing of our products. However, there is no guarantee that we could manage to fully mitigate
the impact from raw material prices fluctuations. Particularly, our pricing strategies mentioned
above may not be able to fully cover the risks associated with the decrease in raw material
prices in 2023. See “Risk Factors – We are Exposed to Risks Relating to Price Fluctuations of
Raw Materials.”
The impact of the price fluctuations in raw materials is mainly reflected on our gross
profit margin. Cost of raw materials account for a substantial majority of our battery products
production costs, the remaining of which are manufacturing costs and direct labor costs. We
have adopted measures such as control of logistics expenses, package recycling and other
measures to reduce costs.
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Sales Agreements
We typically enter into framework sales agreements with our major customers, under
which our customers will enter into individual purchase orders with us. Our framework sales
agreements typically contain the following terms:
Specification Since our business involves the development of
products and technologies for customers, we usually
set relevant technical parameters in the sales contract.
Those parameters specify certain characteristics of the
products to be delivered.
Price We specify the price of each product and service
provided to customers in the framework sales
agreement, including unit price and total price. We
also have price adjustment mechanism that gives us
more flexibility in pricing.
Payment term We grant credit period to our customers according to
their credit profile and historical performance. We
typically grant credit terms of one to three months to
eligible customers.
Delivery term We bear the costs and risks in the delivery process.
Duration, termination and
renewal
The term of the agreement generally ranges from one
year to three years and may vary on a case-by-case
basis. The renewal of framework agreements are
negotiated on a case-by-case basis.
Minimum purchase
requirement
We may specify a minimum purchase requirement in
the framework sales agreements. To the extent that the
framework sales agreements do not specify a minimum
purchase requirement, the exact purchase amount may
be specified when each of the individual sales orders
under the framework sales agreements are placed.
Warranty period For EV battery products, we usually provide our
customers with a warranty of eight years or 120,000
kilometres for private passenger vehicles, and five
years or 200,000 kilometres for commercial passenger
vehicles; for ESS battery products, the warranty period
varies on clients’ needs. We usually provide our
customers with a warranty period of one to five years
for ESS battery cells, and the warranty period for ESS
battery module and systems are generally longer. The
warranty period is deemed to have expired if any of the
warranty conditions are met.
Confidentiality We usually set confidentiality clauses in the
framework sales contracts with customers, and the
period of confidentiality obligations may be extended
to after the expiration of the sales contract.
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Customer Service
We believe that timely and quality after-sale services are one of the important competitive
factors, as they are directly related to customer satisfaction and help in shaping the customer’s
purchase decisions. We have adopted a Disposing Customer Complaint and Return Procedure
to effectively handle customer complaints and returned products. Our achievements in
customer service include the following:
 Our high coverage ratio of customer service outlets enables us to respond to
customer complaints in a timely manner. In addition to leveraging our own customer
service outlets, we entered into strategic cooperation with an auto service provider
to provide customer services. We plan to leverage on their network resources to set
up as many as 50 after-sales service outlets, with 15 regional technical experts
serving our customers nationwide.
 We have a rapid response mechanism. We require after-sale customer requests to be
responded within two hours, eight hours, one business day and two business days for
local, same province, inter-province, and domestic long-distance customer requests,
respectively. In addition, we assign technical staff to provide guidance on-site so as
to provide accurate feedback to abnormal performances of our products.
The chart below sets forth our after-sales customer complaints handling procedure:
Whether internal
intervention is required
Defect analysis Corrective and preventive
measures
Verify the effectiveness
of measures
The output report and in the
client’s confirmation
Whether our responsibility
N
Y
Y
Y
N
N
Beginning Receive customer complaint Identify and collect customer
complaint information
Defective and risky products
containment
Business negotiation Business negotiation execution Problem shutdown tracking End
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Generally, we would accept sales return if there exist product defects for which we are
responsible and the relevant products in question are still within the warranty duration
prescribed in sales contracts or production specification. We may accept sales return negotiated
with our customers on a case by case basis under specific situations for commercial
consideration despite the fact that there is no product defect. For example, we had negotiated
and accepted an one-off sales return of our EV battery products of RMB157 million from an
EV battery pack manufacturer in consideration of the long-term strategic cooperation with it
and the relevant EV manufacturer, although there was no product defect. Such sales return
partially resulted in the decrease in revenue from sales of EV battery products in the six months
ended June 30, 2023 as compared to that in the six months ended June 30, 2022. See “Financial
Information – Period-to-period Comparison of Results of Operations.” Save for the above-
mentioned sales return, we did not experience other major sales return during the Track Record
period. During the Track Record Period and up to the Latest Practicable Date, save for
above-mentioned sales return, we did not encounter other major sales return, nor did we
encounter material sales return or cancel of orders due to product defects.
During the Track Record Period and as of the Latest Practicable Date, we have not
received any material customer complaints.
Overlapping Customer and Suppliers
During the Track Record Period, to the best knowledge and belief of our Directors, we
had three major suppliers who are also our customers.
 Tsingshan Group is a Controlling Shareholder and related party of the Company.
Tsingshan Group is our major supplier and also our major customer. We purchased
electrolytes, PVDF and copper foil from Tsingshan Group as it has an extensive
cooperation network and good relationships with upstream battery materials
producers. We mainly sold ESS battery products and battery components to
Tsingshan Group. In 2020, 2021 and 2022 and the six months ended June 30, 2023,
revenue from Tsingshan Group accounted for 0.1%, 0.7%, 5.9% and 12.7% of our
total revenue, respectively, and purchases from Tsingshan Group accounted for
2.3%, 8.4%, 0.4% and 0.6% of our total purchases, respectively. The terms and
conditions of the sales agreement with Tsingshan Group were generally in line with
the terms and conditions with other comparable customers. The prices for sales
made to Tsingshan Group were negotiated on an arm’s length basis and we believe
the gross profit margin for such sales would be similar had Tsingshan Group not also
been our supplier.
 Jiujiang Tinci Materials Technology Co., Ltd. is our major supplier and also our
customer. In addition to purchasing raw materials from Jiujiang Tinci Materials
Technology Co., Ltd., we also sold wastes to them. In each of 2020, 2021 and 2022
and the six months ended June 30, 2023, revenue from Jiujiang Tinci Materials
Technology Co., Ltd. accounted for less than 1% of our total revenue. In 2020, 2021
and 2022 and six months ended June 30, 2023, purchases from Jiujiang Tinci
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Materials Technology Co., Ltd. accounted for 4.9%, 6.6%, 5.6% and 3.5% of our
total purchases, respectively. The terms and conditions of the sales agreement with
Jiujiang Tinci Materials Technology Co., Ltd. were generally in line with the terms
and conditions with other comparable customers. The gross profit margin of the
sales to Jiujiang Tinci Materials Technology Co., Ltd. during the Track Record
Period was generally marginal.
 Shenyang East Chemical Science-tech Co., Ltd. is our major supplier and also our
customer. We purchased electronic grade high concentration NMP to use as solvent
in the production process from Shenyang East Chemical Science-tech Co., Ltd. and
sold back the low concentration crude NMP to Shenyang East Chemical Science-
tech Co., Ltd. after completing the production of our battery products to optimize
the utilization of NMP. In 2020, 2021 and 2022 and the six months ended June 30,
2023, revenue from Shenyang East Chemical Science-tech Co., Ltd. accounted for
3.2%, 7.3%, 0.8% and nil of our total revenue, respectively. The decrease of revenue
in both absolute terms and as percentages of our total revenue from Shenyang East
Chemical Science-tech Co., Ltd. from 2021 to 2022, was primarily due to our
adoption of new arrangement since July 2022 in relation to the disposal of crude
NMP. Under such new arrangement, instead of selling crude NMP, we consigned
third-party companies to process the crude NMP, and thus no revenue was
recognized from the sales of crude NMP from then on. In 2020, 2021 and 2022,
purchases from Shenyang East Chemical Science-tech Co., Ltd. accounted for 4.4%,
5.9% and 1.5% of our total purchases, respectively. In the six months ended June 30,
2023, we paid processing fees to Shenyang East Chemical Science-tech Co., Ltd.
under the new arrangement, which accounted for 0.1% of our total processing fees
in the same period. The terms and conditions of the sales agreement with Shenyang
East Chemical Science-tech Co., Ltd. were generally in line with the terms and
conditions with other comparable customers. The gross profit margin of the sales to
Shenyang East Chemical Science-tech Co., Ltd. during the Track Record Period was
generally marginal. See “Financial Information – Principal Components of
Statement of Profit or Loss and Other Comprehensive Income – Revenue – Revenue
by Product – Battery Type,” and “– Cost of Sales.”
According to the F&S Report, it is a common practice in the industry to have overlapping
customers and suppliers, for example, purchasing raw material from supplier and selling the
waste material to them.
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BUSINESS SUSTAINABILITY
Overview
We were established in 2017. Since our inception, we have achieved significant growth.
Our total revenue increased significantly from RMB907.0 million in 2020 to RMB2,109.1
million in 2021, and further to RMB14,647.8 million in 2022, representing a CAGR of 301.9%.
Our total revenue increased by 64.2% from RMB4,016.6 million in the six months ended June
30, 2022 to RMB6,594.8 million in the six months ended June 30, 2023. We sold 1.55GWh,
3.30GWh and 16.61GWh of our battery products in 2020, 2021 and 2022 respectively,
representing a CAGR of 227.4%. Our sales volume increased by 65.3% from 4.70GWh in the
six months ended June 30, 2022 to 7.77GWh in the six months ended June 30, 2023.
Despite our growth in revenue, we are not yet profitable. We have incurred gross losses
and net losses during the Track Record Period. In 2020, 2021 and 2022 and the six months
ended June 30, 2022 and 2023, we recorded gross profits of RMB111.1 million, gross losses
of RMB324.9 million, gross profits of RMB1,088.3 million, gross losses of RMB141.3 million
and gross profits of RMB267.2 million, respectively. During the same periods, we recorded net
losses of RMB53.3 million, RMB804.2 million, RMB450.8 million, RMB705.5 million and
RMB919.7 million, respectively. We recorded a net loss in 2022, primarily as our ESS battery
products were sold at a loss in the first half of 2022, which offset part of the gross profit from
the sale of both EV and ESS battery products in the second half of 2022, as well as the various
operating expenses we incurred. We recorded a net loss in the six months ended June 30, 2023,
primarily due to the temporary slowdown in the EV industry in early 2023, which resulted in
(i) the recognition of a gross loss from our EV battery products in the six months ended June
30, 2023, which was primarily attributable to (a) a decrease in average selling price of our EV
battery products due to the decrease in prices of key raw materials, and (b) an increase in the
unit manufacturing costs of our EV battery products due to the decrease in sales of our EV
battery products and (ii) the increase in net impairment losses on financial assets in the six
months ended June 30, 2023, mainly attributable to the provision for impairment losses of trade
receivables we prudently recorded for certain EV battery products customers on an individual
basis in consideration of their operating performance, liquidity position and our
communication with them on the payment schedules. The significant increase in our operating
expenses mainly attributable to the increase in R&D expenses as a percentage of our revenue
from 6.4% in the six months ended June 30, 2022 to 7.7% in the six months ended June 30,
2023 also contributed to the net loss for the six months ended June 30, 2023. More specifically,
our R&D expenses increased by 96.5% from RMB257.1 million in the six months ended
June 30, 2022 to RMB505.2 million in the six months ended June 30, 2023 as we increased our
R&D activities to meet the requirements of our customers and maintain our competitive
advantages in the markets, primarily due to (i) an increase in salaries and welfare of RMB73.7
million attributable to an increase in number of R&D personnel and an increase in per capita
salaries to attract more talents, and (ii) an increase in raw materials and consumables expenses
of RMB136.3 million for our increased R&D activities. We dedicate our R&D resources to
improving the performance and production of our existing products, as well as to the R&D of
the next generation of products and materials.
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We recorded net operating cash outflows in 2021 and 2022, which were primarily
attributable to our net losses for the respective periods as well as significant increases in
various working capital balances as our scale of operations grew, including trade and bills
receivables, inventory and restricted cash, partially offset by significant increases in trade and
bill payables.
Historical Losses
Our losses during the Track Record Period were primarily attributable to the following
reasons:
Low Utilization Rate Resulting from Production Capacity Expansion
Our growth depends to a large extent on our ability to expand our production capacity to
meet the growing demand. As such, we have significantly increased our production capacity
and output in the past few years. Our designed annual production capacity increased by more
than ten folds from 2.3GWh in January 2020 to 35.2GWh in June 30, 2023.
As we expand our production capacity, we typically experience a production ramp-up
period before we reach an optimal production utilization rate. During ramp-up period, we
would record higher per Wh manufacturing and labor cost. In particular, we experienced longer
ramp-up period for our earlier production lines. For example, for our production lines in
Wenzhou that commenced production in January 2019, the utilization rate remained below 70%
in 2020 and it only exceeded 80% in 2021. Such long ramp-up period compressed our margin
during the Track Record Period. We have been able to achieve an accelerated ramp-up period
nearly 80% of our newer production lines commissioned after January 2022. Such production
lines were able to achieve utilization rates of more than 80% within the first six months of
commission. In particular, for the production lines commissioned in Wenzhou in July 2022, it
only took approximately three months to reach an utilization rate of above 90% in October
2022. Such shorter ramp-up period was the result of improved production planning through our
effective review and analysis of production process.
We were also in the process of improving our production efficiency. We have taken
several initiatives in recent years to improve our production efficiency, including developing
new production technologies, installing advanced equipment and machinery, and optimizing
the production processes and techniques. We have obtained several patents and developed
proprietary production technologies such as SCL die-cutting technology, high efficiency
pulping technology and adapter welding technology, which allowed us to improve our product
quality and reduce the use of raw materials. In terms of equipment, machinery and production
processes, we utilized equipment and technique such as high-speed assembly line and
ultrahigh-pressure and high-speed liquid injection machine to achieve reduction in production
time and improvement in product quality. See “– Production – Battery Cells” and “– Equipment
and Machinery.” In addition, we have a database that helps us identify and document errors and
redundancy in our production process, which improved our production efficiency. As such, our
product yield had experienced an increase during the Track Record Period.
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The shortened ramp-up period and improved production efficiency has resulted in a
decrease in our per Wh manufacturing cost and per Wh direct labor cost. Our unit
manufacturing cost for our battery products decreased from RMB0.09 per Wh in 2020 to
RMB0.05 per Wh in 2022. However, our unit manufacturing cost increased from RMB0.07 per
Wh in the six months ended June 30, 2022 to RMB0.09 per Wh in the six months ended June
30, 2023 due to the increase in unit manufacturing cost of our EV battery products. Such
increase was mainly attributable to the decrease in the sales of our EV battery products in the
six months ended June 30, 2023, which reduced the economies of scale of manufacturing our
EV battery products as the fixed costs thereof did not decrease to the same extent. Our unit
direct labor cost decreased from RMB0.05 per Wh in 2020 to RMB0.03 per Wh in 2022, and
decreased from RMB0.05 per Wh in the six months ended June 30, 2022 to RMB0.04 per Wh
in the six months ended June 30, 2023.
Raw Material Prices Fluctuation
The prices of raw materials directly affect our cost of sales and our gross profit. In 2020,
2021 and 2022 and the six months ended June 30, 2022 and 2023, costs of raw materials
accounted for 67.5%, 68.3%, 79.9%, 74.3% and 69.1% of our cost of sales for the respective
periods and 59.2%, 78.8%, 74.0%, 76.9% and 66.3% of our revenue for the respective periods.
Historically, the price of raw materials experienced significant fluctuation. In particular, the
average prices of lithium carbonate increased significantly from RMB47,100 per ton in 2020
to RMB496,100 per ton in 2022, and decreased from RMB461,200 per ton in the six months
ended June 30, 2022 to RMB333,100 per ton in the six months ended June 30, 2023, according
to the F&S Report. As a result, the average price of the cathode material for LFP battery
products increased significantly from RMB37,300 per ton in 2020 to RMB157,800 per ton in
2022, and decreased from RMB152,200 per ton in the six months ended June 30, 2022 to
RMB112,900 per ton in the six months ended June 30, 2023. According to the F&S Report, in
the three months ended September 30, 2023, the average price for lithium carbonate was
RMB239,900 per ton, and the average price for the cathode material for LFP battery products
was RMB82,500 per ton. The fluctuations in the price of lithium carbonate had a significant
impact on our cost of sales. As a result of such fluctuations, our unit costs of raw materials
increased from RMB0.35 per Wh in 2020 to RMB0.65 per Wh in 2022, which decreased from
RMB0.66 per Wh in the six months ended June 30, 2022 to RMB0.56 per Wh in the six months
ended June 30, 2023.
In addition, prior to November 2021, our pricing policy lacked price adjustment
mechanism, partially due to our lack of bargaining power as a new entrant of the industry, as
well as the fact that the prices of key raw materials have not experienced significant increases
of similar scale. As a result, we were not able to adjust the selling price of our products in time
and in the same magnitude as the increase in raw material costs to pass down the increased raw
material costs. In November 2021, we started to adjust our pricing by entering into
supplemental agreements with our customers. In the second quarter of 2022, we started to
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introduce price adjustment mechanism into our contracts with customers in response to
fluctuations in raw material prices. In particular, we actively adjust the sales price of our
products after taking into consideration of the fluctuation of certain raw material prices
(typically lithium carbonate).
The increase in per Wh raw material costs, combined with the fixed-price arrangement in
our sales contracts prior to November 2021, more than offset the decrease in our per Wh
manufacturing and direct labor costs and led to gross losses in 2021.
The decrease in the price of lithium carbonate in the first half of 2023 had a negative
impact on our sales volume during the same period as certain EV manufacturers did not place
their orders for EV batteries in early 2023 because they expected the price of EV batteries to
further decrease as the price of lithium carbonate was in the downward trend in the first half
of 2023. In addition, the selling prices of our battery products decreased rapidly in the first half
of 2023. Meanwhile, the relevant costs of raw materials did not decrease to the same extent as
there was a lag of time before the decrease in market prices of raw materials leads to a decrease
in our own cost of sales. When raw material prices decrease, there is no assurance that we can
always maintain the selling prices of our products at a level that is favorable to us. We may not
have strong bargaining power with customers and suppliers, and may not be able to effectively
mitigate the impact of raw material price fluctuations despite all the measures being put in
place. As a result of the above, our results of operations was negatively affected and we
recorded a gross loss for our EV battery products in the first half of 2023. See “Risk Factors
– We are Exposed to Risks Relating to Price Fluctuations of Raw Materials.”
Product Mix and Pricing Strategy
We pursue a dual-focus strategy on both EV and ESS batteries. During the Track Record
Period, revenue from sales of both EV and ESS battery products increased rapidly. In 2020, as
some of our EV battery products passed the verification processes required by our EV
manufacturer customers, we allocated our increased production capacity to seize the
opportunities and satisfy the increasing demand from such EV manufacturers. In 2021 and
2022, we strategically increased our sales to ESS manufacturer customers to pursue the growth
potential, and thus the revenue contribution from sales of ESS battery products increased
gradually. Our dual-focus strategy contributed significantly to our sales increase in the six
months ended June 30, 2023. We further increase the revenue contribution from sales of ESS
battery products in the six months ended June 30, 2023, which enabled us to achieve a growth
in our overall revenue despite the decline in the sales of our EV battery products. Going
forward, we will continue to leverage on the flexibility of our dual-focus strategy to allocate
our resources to our EV and ESS battery products in response to the fluctuation in market
demands for our EV and ESS battery products, which may directly affect the revenue
contribution from sales of our EV and ESS battery products.
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Our ability to price our EV battery products is substantially affected by the prevailing
market trend. This, combined with the lack of price adjustment mechanism in response to raw
material price hike prior to November 2021, resulted in gross losses of RMB103.3 million from
the sales of EV battery products in 2021. As we started to adjust our pricing in November 2021
by entering into supplemental agreements with our customers and we started to introduce price
adjustment mechanism into our contracts with customers in the second quarter of 2022, we
recorded a gross profit of RMB146.2 million from the sales of EV battery products in 2022.
We have seen certain EV manufacturers cut the selling prices of EVs in early 2023,
considering the increasing competition due to weak demand expected in the first quarter of
2023 as the first quarter is typically low season for vehicle sales, as well as price cuts in ICE
vehicles as traditional automakers were selling off their older inventories before stricter
national emissions standards come into effect in July 2023. See “Industry Overview –
Lithium-ion Battery Market Demand – Overview of EV Battery Demand – Overview of EV
Battery.” The price cuts on the one hand boosted EV sales, but on the other hand added pressure
on the margin to the EV OEMs, which may also consequentially impact the EV battery selling
prices and the margin for the EV battery manufacturers. As a result, selling prices of certain
types of our EV battery products decreased in the first half of 2023. We believe that the price
cuts are not expected to be an ongoing trend across the industry, but rather were commercial
decisions made by these EV manufacturers at that point of time. In fact, we have seen some
EV manufacturers increased the selling prices of their models in the second quarter of 2023.
Therefore, the abovementioned price cuts by EV manufacturers for their products are not
expected to have any material adverse impact on our sales, business operations and prospects.
For ESS battery products, we choose to price our battery products competitively to
promote our brand awareness and obtain customer recognition in order to capture market
opportunities at early stages of ESS industry development. In particular, as discussed above,
before November 2021, our pricing policy lacked price adjustment mechanisms for us to pass
on the increase wholly or partially of the increased raw material prices. We also entered some
fixed-price contracts for our ESS battery products in 2021 that guarantee the delivery of a large
quantity of ESS battery products with extended delivery periods. After June 30, 2022, the
negative impact of above-mentioned fixed-price contracts has been mitigated by the
supplemental agreements with those ESS customers to adjust the selling price of the remaining
products under those contracts.
The gross losses of our ESS battery products in 2020 and 2021 were partially attributable
to the product mix. We sold a considerable amount of small capacity ESS battery products for
household use cases, which is expected to be the strongest growing segment in the market for
ESS batteries according to the F&S Report. Small capacity battery products tend to have higher
per Wh manufacturing cost as the various fixed costs such as depreciation and amortization of
equipment and utility costs to be borne by a unit of battery would be similar, regardless of the
actual capacity of the product. This, combined with our strategy to price our products
competitively, resulted in gross losses for our ESS battery products in 2020 and 2021.
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We have competitive edges in the ESS battery industry, including:
(i) Dual-focus strategy and early-mover advantage: we were the only one among the top
ten lithium-ion battery manufacturers globally in terms of annual installation for
new energy applications who established such dual-focus strategy since
establishment. Leveraging the advantages brought about by the dual-focus strategy
and the advantages enjoyed as an early mover, we have launched many well-
recognized ESS battery products such as 50Ah ESS battery products and 280Ah ESS
battery products and been able to penetrate into many well-known ESS customers.
Benefiting from our WenDing (“ ਪ௟”) technology, we launched 320Ah and 340Ah
ESS battery products in May 2023 to meet the market demands for large capacity
ESS battery products. In particular, our 320Ah ESS battery products had already
obtained many international certifications, such as EU TÜV certification IEC62619,
North America UL certification (UL1973, UL9540A), and became the first ESS
battery product with energy capacity of more than 300Ah to obtain the UL9540A
certification in the industry;
(ii) Technologies and high-quality products: we enjoyed technological advantages and
launched high-quality ESS battery products with industrial influence. For example,
according to the F&S Report, we were the first in the industry to introduce the 50Ah
ESS battery products, which then became one of the most popular products in the
household ESS batteries. We also managed to pass verification process and obtain
relevant certificates from overseas customers, especially for those in Europe. For
example, we have obtained many international certificates for our ESS battery
products, such as EU TÜV certification IEC62619; North America UL certification
(UL1642, UL1973, UL2580, UL9540A); Japan JET certification, Japan JIS C
8715-2:2019; India BIS certification BIS16046 20018;
(iii) Production capabilities: unlike some of the peers focusing on EV batteries
production who need to convert the production lines for the production of ESS
batteries, which is time-consuming and costly, all of our production lines were
designed and constructed to be compatible for both EV and ESS battery products,
which only require some quick set-up before switching to manufacturing another
products; and
(iv) Customer base: as a result of above, we have accumulated a very high-quality ESS
customer base with many well-known ESS manufacturers who recognized our
products, such as Sungrow Energy Storage ( ජΈᎷঐ), Growatt ( ̚๿͙त), two
large-scale energy storage solutions providers in the United States and a leading
renewable energy company in the Asia-Pacific region headquartered in Singapore.
See “Overview – Our Products and Customers.”
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In consideration of above, we continued to devote our resources in the ESS batteries
market despite the fact that historically we had recorded gross losses of our ESS battery
products in 2020, 2021 and the six months ended June 30, 2022 as we implement a dual-focus
strategy on EV and ESS batteries. As a result of (i) our adjustment of prices of our ESS battery
products in response to the fluctuation of raw material prices, which was also in line with the
prevailing market trends according to the F&S Report, (ii) our further improved production
efficiency, and (iii) our improved product offering, we managed to turn the gross losses of our
ESS battery products into gross profits in 2022 and the six months ended June 30, 2023. We
believe that the market of ESS batteries is an emerging one with vast growth potential.
According to the F&S Report, the global annual ESS battery installations is expected to
increase at a CAGR of 53.7% from 119.3GWh in 2022 to 1,023.1GWh in 2027, outpacing the
expected growth in the global EV battery annual installations during the same period. In
addition, China’s ESS market, especially grid energy storage and commercial and industrial
energy storage, is also expected to achieve massive growth in the coming years benefiting from
various favorable policies.
Operational Expenditure
The ability to develop battery technologies and introduce new products that meet the
demand and preference of our customers is crucial to our growth. As such, we have devoted
significant resources to R&D activities. During the Track Record Period, our R&D expenses
increased significantly. Factors such as salaries to our R&D personnel, the purchase of R&D
equipment and related increase in depreciation, and the raw materials and consumables
expenses have contributed to the increase in our R&D expenses. Our R&D achievements
include SCL technology, minimalism battery top cover, green and detachable CTP, internal
circulation and auto-equalization technology, high safety battery technology and battery
management system technology. These enabled us to develop products meet customers’
requirements which in turn has driven our growth. In 2020, 2021 and 2022 and six months
ended June 30, 2022 and 2023, our R&D expenses were RMB72.7 million, RMB245.6 million,
RMB767.7 million, RMB257.1 million and RMB505.2 million, respectively, accounting for
8.0%, 11.6%, 5.2%, 6.4% and 7.7% of our revenue, respectively.
Separately, as we continued to scale up our operation, our administrative expenses also
increased significantly during the Track Record Period. In 2020, 2021 and 2022 and the six
months ended June 30, 2022 and 2023, our administrative expenses were RMB34.0 million,
RMB160.6 million, RMB346.8 million, RMB151.8 million and RMB239.7 million,
respectively, accounting for 3.7%, 7.6%, 2.4%, 3.8% and 3.6% of our revenue, respectively. In
2021, we significantly increased the number of our administrative personnel and office
equipment to catch up with the administrative tasks resulting from our rapid growth and
support our future expansion, which resulted in a rebound of our administrative expenses as a
percentage of revenue from 2020 to 2021. Such percentage decreased from 7.6% in 2021 to
2.4% in 2022 and from 3.8% in the six months ended June 30, 2022 to 3.6% in the six months
ended June 30, 2023 as our operational scale grew further.
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The EV industry market conditions
The EV subsidy policy in China was first introduced in 2010 through the Notice of
Launching Pilot Subsidies for Private Purchases of New Energy V ehicles issued by the Ministry
of Finance, Ministry of Technology, Ministry of Industry and Information Technology, and
National Development and Reform Commission in May 2010. In 2013, the subsidy program
was expanded to more cities in China through the Notice of on Continuing on the Promotion
and Application of New Energy V ehicles issued by the four ministries mentioned above in
September 2013. Since 2018, the subsidy policies have been tightened with decreased subsidies
year over year. In April 2020, December 2020 and December 2021, a series of Notices
Government Subsidies for Promotion and Application of New Energy V ehicles were issued,
which reduced the subsidy standard by 10%, 20% and 30% for 2020, 2021 and 2022,
respectively, using subsidies in previous year as the baseline. In December 2021, the four
ministries issued Notice of Government Subsidies for Promotion and Application of New
Energy Vehicles in 2022 (the “ 2022 Notice ”), which informed that the subsidies for new energy
vehicles would terminate since January 1, 2023. In addition, there were price cuts in ICE
vehicles as traditional automakers were selling off their older inventories before stricter
national emissions standards come into effect in July 2023. The issuance of the 2022 Notice
and the competition from ICE vehicles, directly affected the market demands for EVs and
resulted in a temporary slowdown in China’s EV industry in early 2023. See “Industry
Overview – Lithium-ion Battery Market Demand – Overview of EV Battery Demand –
Overview of EV Demand.”
This decline in market conditions affected our results of operations, particularly for the
six months ended June 30, 2023. In particular, there was a decrease in sales volume of our EV
battery products by 17.3% from 2.20GWh in the six months ended June 30, 2022 to 1.82GWh
in the six months ended June 30, 2023. Also, we had a sales return of approximately RMB157
million of our EV battery products as the end-user of those EV battery products upgraded their
car models in response to the market competition and thus changed the demands for our EV
battery products.
Our gross profit was also affected by the EV market conditions. We recorded gross losses
of RMB32.1 million, with a negative gross profit margin of 2.6%, for our EV battery products
in the six months ended June 30, 2023, partially because (i) the average selling price of our EV
battery product decreased by 9.2% from RMB0.76 per Wh in the six months ended June 30,
2022 to RMB0.69 per Wh in the six months ended June 30, 2023, primarily due to the decrease
in prices of raw materials, (ii) there was an increase in the unit manufacturing costs of our EV
battery products by 50% from RMB0.06 per Wh in the six months ended June 30, 2022 to
RMB0.09 per Wh, primarily due to the decrease in sales of our EV battery products in the six
months ended June 30, 2023 which reduced the economies of scale of manufacturing our EV
battery products as the fixed costs thereof did not decrease to the same extent, and (iii) we
offered a one-off discount in the aggregate of approximately RMB28 million on the selling
price of our EV battery products sold to one of our major OEM customers, in consideration of
the temporary slowdown in the EV industry in China in early 2023 and the long-term strategic
cooperation with the customer.
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However, the impact from the termination of EV subsidy is not expected to be substantial
over the long term, considering (i) the high growth of EV market in China during the subsidy
decline period over the last two years with total sales volume of EVs of approximately 6.6
million in 2021 increasing to 11.0 million in 2022, (ii) the maturity of the overall EV markets
in China with more advanced manufacturing technology, expansion of production scale,
intensified competition among EV manufacturers which could lead to the overall decrease in
costs of EVs to mitigate the impact of termination of subsidy, (iii) the high consumer demand,
and (iv) the overall supportive policies in favor of the development of EVs in China, for
example the tax exemption for vehicle purchases which was extended to 2027. As a result, even
after the decline and termination of the EV subsidies, the China’s EV market still maintained
a relatively high growth rate, and our Directors are of the view that such positive trend is
expected to continue after China’s EV industry undergoes short term adjustment. Affected by
the temporary slowdown in market conditions in early 2023, our timeline to achieve
profitability will be affected. However, we plan to mitigate the negative impact of the market
conditions and achieve profitability through the strategies and measures described below.
Path to Profitability
We were able to record a gross profit in 2022 and the six months ended June 30, 2023.
In light of the continuous market competition in the lithium-ion battery industry in the second
half of 2023, we expect to record net losses in 2023. Against such backdrop, we will need to
set out our product prices more competitively in the short term in consideration of market share
growth. We believe that we will be able to become profitable and generate operating cash
inflow in 2025, and we plan to achieve that through the following in addition to our adjustment
of product prices:
Improving Production Efficiency
As discussed in “– Historical Losses – Low Utilization Rate Resulting from Production
Capacity Expansion” above, we have taken several initiatives in recent years to improve our
production efficiency. We will continue to utilize our production technologies, equipment and
machinery, and further optimize our production processes and techniques to improve our
production efficiency and aim to reduce the consumption of raw materials per Wh through
improvement of production efficiency. In addition, as we accumulate experience in EV and
ESS battery manufacturing, our workforce would become more familiar with the operation and
management of production lines, which will also contribute to production efficiency
improvement. In particular, we plan to undertake initiatives such as improving the cutting and
recycling techniques for various cathode materials to more effectively utilize raw materials in
our production process and improve our production efficiency in general. Improved production
efficiency and utilization rate will result in lower per Wh depreciation and amortization costs,
which contributes to our ability to become profitable.
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We plan to further expand our production capacity in the near future. Our goal is to have
a designed production capacity of 62GWh by the end of 2023 and over 150GWh by the end of
2025. As we further expand our production capacity, we will be able to designate production
lines for different products, which will allow us to reduce the time needed to coordinate the
production of different types of products across our production facilities and/or alter
production schedules in response to the changes in market demand, thereby improving our
production efficiency.
These new production facilities will also experience ramp-up periods, which in turn will
negatively affect our ability to profit. However, as we have been able to shorten the ramp up
period for our newly established production facilities during the Track Record Period, we do
not expect the new capacity to have similar scale of negative impact on our ability to profit as
compared with our production facilities established in the earlier years of our operating history.
Moreover, as our operational scale grows, such new capacity will account for a decreasing
proportion of our overall capacity, which further dilute the negative impact on our capability
to make a profit. In addition, we have witnessed a trend of lower per Wh manufacturing and
direct labor costs. We expect such trends to continue as we accumulate more experience in
production and improve our production efficiency.
Strengthening Resilience to Raw Material Cost Fluctuations
As we expand our business and production scale, we will need more raw materials. In
response to the rapid and sharp fluctuation in raw material prices, we have historically taken
and going forward will continue to take measures such as (i) strategic cooperation with major
suppliers of raw materials to primarily lock the quantity of our key raw materials in advance
based on our prudent estimation of market trend and according to our production plan and (ii)
leveraging on our advantages among the supply chain from Tsingshan Group’s network to help
our suppliers source feedstock materials, such as lithium carbonate. Being part of the
Tsingshan Group ecosystems facilitates the process of building trusts and business
relationships with various raw material suppliers. We will also be able to capitalize on
Tsingshan’s various strategic endeavors in the upstream of the industry value chain and have
opportunities to make strategic investment in upstream raw material suppliers and secure
supplies of important raw materials.
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We have entered into a framework agreement with a subsidiary of Tsingshan Group, to
ensure a long-term, stable and predictable supply of raw materials. Under our framework
agreement, Tsingshan Group will provide us with the supply of lithium compounds, ternary
precursors, separators and graphite on terms no less favorable than prevailing market prices
within the three-year agreement period. See “Connected Transactions – Non-exempt
Continuing Connected Transactions.” The expected maximum quantity and as a percentage of
the total expected procurement volume of raw material supplies are set out as below:
2023 2024 2025
Expected
maximum
quantity
As a
percentage of
the total
expected
procurement
volume (1)
Expected
maximum
quantity
As a
percentage of
the total
expected
procurement
volume (1)
Expected
maximum
quantity
As a
percentage of
the total
expected
procurement
volume (1)
Lithium
compounds
(in LCE tons) .... 3,000 less than 25% 20,000 less than 70% 40,000 less than 90%
Ternary precursor
(tons) ................. N/A N/A 5,000 less than 35% 8,000 less than 40%
Separator (m
2) .... N/A N/A 200 million less than 30% 500 million less than 45%
Graphite (tons) ..... N/A N/A 20,800 less than 40% 33,600 less than 40%
Note:
(1) The increasing trend of expected maximum quantity as a percentage of the total expected procurement volume
from 2023 to 2025 is mainly due to the increasing supply capability of Yongqing Technology and its associates
based on their estimated capacity, which will be gradually released from 2023 to 2025 based on their expansion
plan and production program. We may further adjust the total expected procurement volume of those raw
materials for the corresponding periods from time to time according to our production plans and based on the
dynamic market demands for our products. In addition, for the avoidance of doubt, there are sufficient
alternative raw material suppliers that are independent third parties of the Company to source relevant raw
materials.
The annual caps of the transactions under the Materials Purchasing Framework
Agreement are expected to account for less than 5% for the year ending December 31, 2023,
and less than 30% for the years ending December 31, 2024 and 2025, respectively, of the
Group’s total cost of sales. As the total expected procurement volume of raw materials above
exceeded the expected maximum quantity of raw materials under the Material Purchasing
Framework Agreement, we will also procure raw materials from independent third parties. In
consideration of the long-term strategic cooperation with our major suppliers and our pool of
alternative qualified suppliers, we believe that we are able to obtain sufficient and stable
supply of raw materials independent from our Controlling Shareholder.
In addition, we plan to invest in upstream raw material suppliers to further strengthen our
position in the industry value chain. Such investments will allow us to secure raw material
supplies at a more competitive pricing level. See “– Development Strategies – Ensure stable
and cost-effective supply of raw materials.”
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To further mitigate the impact of the rapid increase in prices of raw materials by the end
of 2021 and in 2022, we started to adjust our pricing in November 2021 by entering into
supplemental agreements with our customers. In the second quarter of 2022, we started to
introduce price adjustment mechanism into our contracts with customers in response to
fluctuations in raw material prices. The price adjustment mechanism allows us to adjust the
selling prices of our products when there is fluctuation in the market prices of key raw
materials such as lithium carbonate. Such price adjustment mechanism allows us to pass down
the increasing raw material prices to customers and maintain our profitability when raw
material prices increase.
However, when raw material prices are rapidly decreasing, the price adjustment
mechanism could lead to a decrease in the selling prices of our products as our customers may
request price decreases pursuant to the price adjustment mechanism. Meanwhile, there could
be a lag of time before the decrease in market prices of raw materials leads to a decrease in
battery manufacturers’ own cost of sales in consideration of the raw materials in stock. See “–
Business Sustainability – Historical Losses – Raw Material Prices Fluctuation.” To mitigate the
impact from the decrease in prices of raw materials in the first half of 2023, we took a more
prudent procurement strategy of raw materials and implemented a refined inventory
management including reducing the stock-up amount and maintaining a lower level of raw
material inventories in consideration of the expected continuous decrease in raw material
prices in the second half of 2023, as well as closely monitoring the market trend of raw material
prices. We also paid close attention to the market condition of raw materials and stay close
relationship with our suppliers to monitor the market trend of raw material prices. However,
there is no guarantee that we could manage to mitigate the impact from decrease in prices of
raw materials on the selling prices of our battery products despite all the measures being put
in place, which would directly affect our business and results of operations. See “Risk Factors
– We are Exposed to Risks Relating to Price Fluctuations of Raw Materials.”
Increasing Sales Revenue
The rapid development of EV and ESS industries presents a significant opportunity.
According to the F&S Report, the global annual installations for EV batteries is expected to
increase at a CAGR of 38.8% from 504.5GWh in 2022 to 2,597.1GWh in 2027, and the global
annual installations for lithium-ion ESS batteries is expected to increase at a CAGR of 53.7%
from 119.3GWh in 2022 to 1,023.1GWh in 2027. Going forward, we aim to continue our
dual-focus strategy and strategically allocate our production capacity for both EV and ESS
battery products to capitalize on the expected strong growths in both areas.
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In addition to the planned production capacity expansion to meet the expected strong
growth in market demand, we plan to further increase our sales through the following:
 Improved product offerings and increasing bargaining power . As there has been a
growing demand for EV and ESS products, we believe that with our expanded
production capacity, commitment to R&D, and increased brand awareness and
customer loyalty, we will continue to improve the product offerings and increase our
bargaining power for the sales of our products. We intend to further our commitment
on R&D to strengthen our market position and roll out competitive products. We
have developed various battery prototypes that we expect to put into commercial
production, including the WenDing (“ ਪ௟”) prismatic batteries, Easy-for-Tera cells,
Twin-star (“݋battery, semi-solid state battery and versatile power station.
We are also in the process of developing new products such as lithium manganese-
iron phosphate battery system, solid-state battery and sodium-ion battery. The R&D
initiatives are expected to increase our R&D expenses, but we believe that an
expanded product offering from our R&D activities will further improve our sales.
In addition, as we attain market recognition, establish trusted relationship with our
customers and become a more important part of our customers’ supply chain,
potential and existing customers are becoming more willing to accept pricing terms
that are more favorable to us. For example, starting in the second quarter of 2022,
we started to include price adjustment mechanism into sales contracts with
customers under which the sales price of our products are adjusted in accordance
with the fluctuation of raw material prices, and would only match down on the
pricing of leading enterprises in the industry and the pricing of our direct
competitors in certain circumstances, including for attracting new customers,
entering new markets or strategic projects.
 Optimizing customer base and improving product mix. To capture the rapidly
growing downstream demands, we plan to further expand our production capacity to
over 150GWh by the end of 2025. Going forward, we aim to continue our dual-focus
strategy and strategically allocate our production capacity for both EV and ESS
battery products to capitalize on the expected strong growths in both areas. For EV
batteries, we plan to focus on optimizing our customer base to cater to the needs of
more mid- to high- end passenger vehicle manufacturers, expanding our product
offerings to cover more commercial vehicles and special vehicles, as well as
increasing the sales of our EV battery modules and battery packs. We plan to achieve
this through more targeted sales and marketing activities and actively promote our
high-performance battery products to expand our customer base and increase our
sales amount, although we expect that there may potentially be periods of temporary
slowdown in the sales of EV battery products while we are developing and
upgrading our existing products. For ESS batteries, we plan to enhance our position
in household ESS batteries while expanding our presence in the industrial ESS
sectors by increasing the sales of our ESS battery boxes and racks. Such strategies
are likely to bring us more orders for large capacity batteries. Historically, our ESS
battery products were sold at a loss, which partially offset the gross profit from the
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sales of EV battery products in 2020. This is primarily the result of production
efficiency issue particularly during the production ramp-up stage and our
competitive pricing strategy. As we continuously improved our production
efficiency as discussed in “–Historical Losses–Low Utilization Rate Resulting from
Production Capacity Expansion” above and strengthen our bargaining power as
discussed above, we have been able to sell our ESS battery products at a profit and
achieve an overall gross profit since the third quarter of 2022.
Forming Economies of Scale
Higher margins are typically associated with the economies of scale. As we grow our
operational scale and achieve better economies of scale, we expect our operation expenses,
largely of relatively fix nature, to account for a decreasing proportion of our revenue.
We believe that we will be able to form better economies of scale from higher utilization
of our production capacity to meet growing customer demands. To capture the rapidly growing
downstream demands, we plan to further expand our production capacity. Our goal is to have
a production capacity of over 150GWh by the end of 2025. As of June 30, 2023, our designed
annual production capacity reached 35.2GWh. More specifically, we plan to (i) expand our
production capacity at our Jiashan facilities to 77GWh by the end of 2025, (ii) expand our
production capacity at our Wenzhou facilities to 50GWh by the end of 2025, (iii) establish new
production facilities at Foshan, Liuzhou and Chongqing, with planned production capacity of
32GWh, 20GWh and 30GWh, respectively, and to commence commercial production at
Liuzhou production facility in late December 2023, at Phase I of Foshan production facility in
the first half of 2024 and at Phase II of Foshan production facility and Chongqing production
facility by the end of 2025. As we build up more production capacity and improve the
performance of our EV and ESS battery products, which result in increased brand awareness,
we are able to expand our customer base and obtain more orders, and we expect such trend to
continue. Increased order volumes and improved production efficiency would drive up the
utilization rate of our production lines.
Although we may face overcapacity of production in China’s lithium-ion battery industry
in the future, we will be well-positioned to face potential future competition with strengths in
advantages in raw material supplies, production scale and cost competitiveness as a result of
our improvement in production efficiency, as well as our strategic long-term relationships with
our customers. Besides, our lithium-ion battery products are also welcomed by overseas
customers, which equips us with more flexibility in facing potential more fierce competition
in China’s lithium-ion battery industry in the future.
Selling and distribution expenses and administrative expenses are less variable in nature.
Our selling and distribution expenses accounted for a decreasing portion of our revenue. In
2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023, selling and distribution
expenses was 3.8%, 3.4%, 2.2%, 2.5% and 2.4% of our total revenue, respectively. Our revenue
also generally outgrew the increase in our administrative expenses. In 2020, 2021 and 2022 and
the six months ended June 30, 2022 and 2023, our administrative expenses were 3.7%, 7.6%,
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2.4%, 3.8% and 3.6% of our revenue, respectively. Our R&D expenses experienced increases
during the Track Record Period as we need from time to time to increase our investment in
R&D activities to meed the requirements of our customers and maintain our competitive
advantages in the markets. In particular, our R&D expenses was 8.0%, 11.6%, 5.2%, 6.4% and
7.7% of our revenue in 2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023,
respectively. We dedicate our R&D resources to improving the performance and production of
our existing products, as well as to the R&D of the next generation of products and materials.
Our key R&D programs include semi-solid state battery, solid-state battery, composite material
system, new material system battery, lithium manganese iron phosphate battery and sodium-ion
battery. We have also been devoting significant resources to the development and application
of our WenDing (“ ਪ௟”) technology. Leveraging on this technology, we launched 320Ah and
340Ah ESS battery products in May 2023 to meet the market demands for large capacity ESS
battery products. In particular, our 320Ah ESS battery product had already obtained many
international certifications, such as ETÜV certification IEC62619, North America UL
certification (UL1973, UL9540A), and became the first ESS battery product with energy
capacity of more than 300Ah to obtain the UL9540A certification in the industry.
Despite the net losses, cash outflow from operating activities, net current liabilities we
recorded during the Track Record Period, our Directors believe that our business is sustainable
and we will be able to generate sufficient working capital to operate our business in a
sustainable manner based on (i) the expected increase of sales revenue to be generated from our
confirmed orders and project pipelines in development; (ii) our price adjustment mechanism
with customers in response to fluctuations in raw material prices and therefore expected
improvement in gross margin; (iii) strengthened cost control; and (iv) the strong liquidity and
capital resources we maintained during the Track Record Period. In particular, as of October
31, 2023, we had unutilized banking facilities of RMB13,420.5 million. We also recorded net
current assets of RMB3,056.8 million as of June 30, 2023. After making reasonable enquiries
with the Company about the Company’s working capital requirements, nothing has come to the
Joint Sponsors’ attention that would lead them to cast doubt on our Directors’ view above.
W AREHOUSING, LOGISTICS AND INVENTORY MANAGEMENT
We have an operation and management system that is designed to cater to customer needs.
Our supply chain is coordinated to achieve synergy and allocation of resources amongst order
placement, procurement management, product manufacturing, shipping and other processes.
We have also adopted digitized management system that covers the entire supply and delivery
chain to ensure the efficient operation. We also employ highly efficient smart logistics system
and data system to improve operation efficiency, precise management, and achieve optimal
inventory turnover efficiency.
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Our warehousing and distribution system, as supported by a smart management system,
allows us to timely deliver our products while managing our rapidly growing operating scale.
Warehousing We employ an information platform that integrates
smart logistics systems and smart manufacturing
production lines. We integrate our logistics systems
with automated logistics equipment. Meanwhile, we
use a three-dimensional warehouse in the logistics
field for fire protection, effectively guaranteeing the
storage safety of our products. We have achieved:
 efficient coordination among warehousing,
delivery and production requirements;
 a high degree of automation in the entire logistics
process; and
 smart monitoring and controlling of the quality
status, storage environment, precise traceability
and operation process of materials and finished
products.
Inventory Control We implement a lean management and control model
for the entire delivery chain, and formulated optimal
work in progress inventory standards on rolling basis
based on production capabilities and customer needs.
At the same time, with the help of the ERP information
management system and data-based reporting
platform, we apply scientific value stream mapping
analysis method to find bottleneck points. We strive to
actively monitor and precisely manage the entire
process of raw material procurement, production and
work in process, finished product inventory and
product shipment.
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Transportation and
Packaging
We have an established product shipping management
system that covers the entire product delivery process.
Driven by customer order requirements, our
information system connects inventory information at
various check points, and uses the Transport
Management System to monitor the actual logistics
delivery process in real time to achieve reliable, safe
and timely delivery of products to customers. We also
independently developed recyclable packaging with
reliable quality and high operating efficiency, covering
all types of products to be delivered, and allowing
precise and efficient delivery.
INFORMATION TECHNOLOGY
We believe that information technology are essential to maintain our competitive
position. We utilize a number of information technology systems to manage all aspects of our
operations, including but not limited to sales management, material procurement, production,
quality control, inventory management, financial reporting and human resources. The
following information technology systems are the most critical to our business among our
collective integrated information systems:
ERP System ERP system is employed to integrate business information
and intelligence to facilitate management. Through
intelligent processing of data statistics, analysis and
technology for sales, production, procurement and finance,
we can achieve more efficient decision-making and more
effective management.
MES System MES system is employed during the production process to
exchange data with equipment, record the manufacturing
process data of products in the database, trace data from
production planning to shipment, and control production
quality through process logic. Through integration with the
ERP system, the MES system provides production data
analysis for management decision-making.
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PLM System PLM system provides a complete and unified R&D
collaborative management platform for project
management, R&D design, and technical documentation.
The life cycle of a product is controlled in the project from
project proposal to mass production. The system defines
each stage of the project, including project planning and
confirmation, product design and development (sample A),
process design and development (sample B), product and
process confirmation (sample C), feedback, assessment and
corrective actions, and performs the division and
management of tasks at each stage so as to manage each
product in a more rational way.
OA System OA system facilitates inter-departmental collaboration and
cross-system connection. In personnel affairs attendance
management, we use this system to handle employees’
employment and removal, unusual change, attendance
accounting and other work. This system can also be used for
conference booking, communications and contact,
knowledge management and visitor registration, to make
office operations easier and more efficient.
WMS System WMS system has functions including receipt, dispatch,
transfer and management, integrating batch management,
material management, inventory, instant inventory
management and other applications of the system. WMS
system can effectively control and track the logistics and
cost management of the entire process, achieving
comprehensive management of enterprise warehousing.
WCS System WCS system enables real-time monitoring of the operation
and working conditions of devices. WCS is the warehouse
control system. On the one hand, the WCS system interacts
with the WMS system for information, accepts the WMS
system commands and sends them to the PLC system to
drive the transmission line for corresponding operation. On
the other hand, it reflects the status and data of the PLC
system in real time and provides the interface debugging
and calling for the PLC system and transmission line.
The capabilities and the stability of our IT infrastructure are vital to our business
operations. The IT department performs system checks, data back-ups, system maintenance and
other activities to secure the continual operation of the critical IT systems and facilities. During
the Track Record Period and up to the Latest Practicable Date, we did not experience any
material failure or general breakdown of our IT systems which had resulted in a material
adverse impact on our overall business operations.
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PROPERTIES
We own and lease certain properties in China primarily to be used as production facilities
and offices. These properties are used for non-property activities as defined under Rule 5.01(2)
of the Listing Rules.
According to section 6(2) of the Companies (Exemption of Companies and Prospectuses
from Compliance with Provisions) Notice, this document is exempted from compliance with
the requirements of section 342(1)(b) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance in relation to paragraph 34(2) of the Third Schedule to the Companies
(Winding Up and Miscellaneous Provisions) Ordinance which require a valuation report with
respect to all our interests in land or buildings, for the reason that, as of June 30, 2023, none
of our properties has a carrying amount of 15% or more of our consolidated total assets.
The table below sets forth a summary of our properties related to production and
operation in the PRC as of the Latest Practicable Date:
Property right
Property
number Function
Approximate
Gross Floor area
(sq.m.)
Owned property 4 For offices, storage, production,
research and development
purposes
1,071,956.92
Land use rights 11 For offices, storage, production,
research and development
purposes
2,155,515.59
Leased property 15 For offices, storage, production,
research and development
purposes
39,636.02
Owned Land and Properties
As of the Latest Practicable Date, we had the right to use 11 parcels of land with a total
gross land area of approximately 2,155,515.59 sq.m. located in China. As of the Latest
Practicable Date, our PRC Legal Advisor confirmed that we had obtained all relevant land use
rights certificates of such 11 parcels of land in China.
As of the Latest Practicable Date, we owned three properties in Wenzhou, China, and one
property in Jiashan, China, with an aggregate area of 1,071,956.92 sq.m. primarily used for
storage, production, R&D and staff dormitory purposes. According to our PRC Legal Advisor,
we are legally entitled to have ownership of such properties and to occupy, use, transfer
mortgage or otherwise dispose of such properties in accordance with applicable PRC laws.
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Property title defect in relation to Jiashan Phase I
For 498,044.07 sq.m. of properties, we did not obtained the property ownership certificate
of Jiashan Phase I during the Track Record Period. However, we have obtained land use
permits, building permits, and construction permits from relevant competent government
authorities for the above-mentioned properties. For 496,647.68 sq.m. of such properties, we
completed construction inspection and acceptance but did not obtain the property ownership
certificates during the Track Record Period. There were three properties with a total size of
1,396.39 sq.m., including a warehouse, a storage tank and a garbage chamber, the construction
approval of which were not complete during the Track Record Period. As a result, those three
properties did not complete the construction inspection and acceptance and did not obtain the
property ownership certificate during the Track Record Period. For the garbage chamber,
BatteroTech Jiashan has dismantled it as a whole as of the Latest Practicable Date. The
Management Committee of Jiashan Economic and Technological Development Zone, the
relevant competent authority for construction completion inspection and acceptance matters,
have confirmed in an interview that it accepted the rectification measures of BatteroTech
Jiashan and confirmed that it will not impose any administrative penalty on BatteroTech
Jiashan due to the above non-compliance. In addition, Jiashan County Housing and Urban-
Rural Development Bureau confirmed in writing that BatteroTech Jiashan has not been subject
to any administrative penalties in relation to construction completion inspection and
acceptance matters from the relevant authorities during the Track Record Period. Based on
above, our PRC Legal Advisor is of the view that the title defect will not have a material
adverse impact on production and business operations. As of the Latest Practicable Date,
BatteroTech Jiashan had obtained the corresponding property ownership certificates.
Leased Properties
As of the Latest Practicable Date, we had 15 leased properties in the PRC that are related
to our production and operation with a total area of 39,636.02 sq.m,, which were used for
offices, production, R&D and storage purposes.
As of the Latest Practicable Date, all above-mentioned leases have not been registered
and filed with the relevant PRC authorities. We sought cooperation from the landlords of the
leased properties to register such executed lease agreements. Registration of lease agreements
requires the submission of certain documents of landlords, including their identity
documentation and property ownership certificates, to the relevant authorities and therefore the
registration is subject to cooperation of landlords of which we have limited control. Our PRC
Legal Advisor is of the view that the non-registration and filing of the relevant property lease
will not affect the validity of the lease contracts and the legal use of the leased properties, but
relevant local housing authorities may require us to complete the filing within the prescribed
period and we may be subject to penalties of RMB1,000 to RMB10,000 for each of such
properties if we fail to file within the prescribed period. In accordance with the relevant
provisions of the Civil Code of PRC, the lack of registration and recording of the property
leases did not affect the validity of such leases, therefore, we did not receive any rectification
order or been subject to any fines in respect of non-registration of any of our lease as of the
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Latest Practicable Date. Accordingly, our PRC Legal Advisor and we believe that the failure
to register these lease agreements will not have any material adverse effect on our operations
and financial position. In order to ensure on-going compliance with the PRC law and
regulations relating to the registration of executed lease agreements, we will continue to seek
cooperation from the landlords of the leased properties to register executed lease agreements
with the relevant PRC government authorities and will adopt a variety of measures to mitigate
such regulatory risk in the future.
As of the Latest Practicable Date, one leased property of the above-mentioned leases has
not provided title certificate of leased premise mainly because the landlord was not willing to
cooperate and provide us with the title certificate. The reasons that the landlord failed to
provide us with the relevant title certificate are beyond our control. We have maintained regular
and active communications with such landlord regarding the progress of their rectification of
the title defect and we have obtained confirmation from all the relevant lessor in which they
promised to guarantee our use under the lease agreements. In addition, we have established
internal guidelines and enhanced our internal control procedures to improve our evaluation of
the newly leased buildings from a compliance perspective, and we will make careful
inspections of the title of leased buildings before signing the lease in the future. We will also
consult our external legal advisor with regard to reviewing the title certificates and other
documents of our new leased buildings in order to ensure ongoing compliance with applicable
Chinese laws and regulation. These leased property is mainly used as a warehouse and is not
part of BatteroTech Shanghai’s main production and operation premises and is highly
alternative. As the aforesaid building is mainly used for non-production and non-operating
purposes, if the leased property cannot be continued to lease to us due to defect in the right of
the leased property, we can promptly find alternative premises. As such, our PRC Legal
Advisor and we are of the view that such title defect will not result in any material adverse
impact on our production and operation.
As of the Latest Practicable Date, we were not subject to any material claims arising from
or in respect of any defect in our leasehold interest in any of our leased properties.
COMPLIANCE AND LEGAL PROCEEDINGS
We may from time to time become a party to various legal, arbitration or administrative
proceedings arising in the ordinary course of our business. As of June 30, 2023, there were no
litigation, arbitration or administrative proceedings pending or threatened against us or any of
the Directors which could have a material and adverse effect on our financial condition or
results of operations.
Except for the non-compliance incidents disclosed below, as advised by our PRC Legal
Advisor, we had complied with the relevant PRC laws and regulations in all material respects
during the Track Record Period and up to the Latest Practicable Date.
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Social Insurance and Housing Provident Funds
According to the relevant PRC laws and regulations, we are required to make
contributions to the social insurance fund and housing provident fund for the benefit of our
employees in China. During the Track Record Period, certain of our PRC subsidiaries did not
register for and/or make full contributions to social insurance and housing provident fund in
accordance with the Regulations on Administration of Housing Provident Fundږ
၍ଣૢԷand the Social Insurance Law of the PRC. Such
non-compliance incidents occurred primarily due to (i) the implementation or interpretation of
the PRC laws and regulations by local authorities varies, and our lack of correct understanding
of certain administrative personnel handling the social security insurance and housing
provident fund contributions at the project companies of the relevant PRC laws and
regulations, and (ii) in some cases, certain employees voluntarily made the decision to not
make such contributions in lieu of receiving cash payments. We estimate that the aggregate
shortfall of social insurance and housing provident fund contributions in 2020, 2021 and 2022
and the six months ended June 30, 2023 amounted to approximately RMB0.9 million,
RMB22.1 million, RMB78.1 million and RMB45.8 million, respectively. We have made full
provision for such shortfall for each of the year or period during the Track Record Period.
Our PRC Legal Advisor advised us that, pursuant to relevant PRC laws and regulations,
if we fail to pay the full amount of social insurance contributions as required, we may be
ordered to pay the outstanding social insurance premiums within a prescribed time limit and
may be subject to an overdue fine of 0.05% of the delayed payment per day from the date on
which the payment is payable. If such payment is not made within the stipulated period, the
competent authority may further impose a fine from one to three times the amount of the
overdue payment. Our PRC Legal Advisor advised us that, pursuant to relevant PRC laws and
regulations, if we fail to pay the full amount of housing provident fund as required, the housing
provident fund management center may order us to make the outstanding payment within a
prescribed time limit. If the payment is not made within such time limit, an application may
be made to the PRC courts for compulsory enforcement. As advised by our PRC Legal Advisor,
if we fail to pay the outstanding amount of our social insurance and housing provident fund as
requested, the relevant competent government authority might impose penalties on us, the
potential amount of which is determined on a case by case basis. However, as advised by our
PRC Legal Advisor, as long as we pay the outstanding housing provident fund in full in a
timely manner upon receipt of the order of correction of non-compliance from the relevant
competent authorities, our risk of being charged overdue fines or penalties is remote.
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As advised by our PRC Legal Advisor, the non-compliance of the employee benefit
contribution would not have a material adverse impact on our business based on the following
grounds:
(a) We have obtained confirmation via interviews with relevant competent personnel
from competent social insurance and housing provident fund authorities including
Longwan District Human Resources and Social Security Bureau of Wenzhou City,
Longwan District Management Department of Wenzhou Housing Provident Fund
Management Centre, Huimin Street Human Resources and Social Security Office of
Jiashan County and Jiashan County Management Department of Jiaxing Housing
Provident Fund Management Centre, from October 18, 2022 to October 31, 2022,
confirming that such authorities will not penalize us;
(b) We have obtained written confirmations dated from July 10, 2023 to July 28, 2023
from competent social insurance and housing provident fund authorities including
Longwan District Human Resources and Social Security Bureau of Wenzhou City,
Longwan District Management Department of Wenzhou Housing Provident Fund
Management Centre, Huimin Street Human Resources and Social Security Office of
Jiashan County and Jiashan County Management Department of Jiaxing Housing
Provident Fund Management Centre. These confirmations state, in respect of the
relevant periods stated therein, no administrative penalties had been imposed and/or
the relevant subsidiary was in compliance with relevant laws and regulations;
(c) According to the Urgent Notice of the General Office of the Ministry of Human
Resources and Social Security on Effectively Implementing the Essence of the
Executive Meeting of the State Council and the Measures on the Stable Collection
of Social Insurance Contributions which was promulgated on September 21, 2018,
local governmental authorities are prohibited from centralized collecting of
historical unpaid social insurance premiums and housing provident funds in order
not to exert additional burden to the enterprises; and
(d) Following recent enforcement practice of relevant laws and regulations, no overdue
fines or penalties will be imposed on us unless we fail to make up the shortfall
relating to social insurance and/or housing provident fund within the prescribed time
limit when ordered by the competent authorities. According to the certificates issued
by the social insurance and housing provident fund department responsible for the
Group’s social insurance and housing provident fund, and verified by our PRC Legal
Advisor’s independent searches, we have not been subject to any social insurance
and/or housing fund arrears recovery, rectification orders or penalties by the
competent authorities.
We have proactively maintained communication with local government authorities in
relation to the implementation and interpretation of the relevant PRC laws and regulations. We
will continue to seek and follow their guidances in relation to matters regarding social
insurance and housing provident fund.
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We have taken the following rectification measures: (i) strengthen legal compliance
training to our management team; (ii) enhance our internal control policy to manage our social
insurance fund and housing provident fund contributions; and (iii) our human resources staff
will prepare monthly reports of salary and contribution amounts, which shall be reviewed by
our human resources department head and our finance department head to enforce our internal
control policy.
Labor Dispatch
According to the Labor Contract Law of the PRC and the Interim Provisions on Labor
Dispatch, the number of dispatched contract workers hired by an employer shall not exceed
10% of the total number of its employees (including both directly hired employees and
dispatched contract workers). The employers who fail to comply with the relevant requirements
on labor dispatch shall be ordered by the labor administrative authorities to make correction
within a stipulated period. Where correction is not made within the stipulated period, the
employers may be subject to a penalty ranging from RMB5,000 to RMB10,000 per dispatched
worker exceeding the 10% threshold.
During the Track Record Period, the total dispatched contract workers hired by the
Company have exceeded 10% of its total number of employees. Specifically, in April 2021, the
number of dispatched contract worker hired by the Company was 1,330, accounting for
approximately 67.7% of the then total number of its employees. In July 2021, we had
proactively and fully rectified such non-compliance incidents by reducing the number of
dispatched contract workers to below 10% in the absence of any notice of warning from
relevant PRC authorities that requires correction of labor dispatch non-compliance issues
within a stipulated period.
Our PRC Legal Advisor is of the opinion that the risk of the Company being penalized
for its labor dispatch non-compliance during the Track Record Period is remote, after
conducting independent searches and given that such non-compliance incidents during the
Track Record Period had been rectified proactively by the Company before receiving any
notice of warning that requires the correction within a stipulated period, and we have obtained
compliance letters dated from July 10, 2023 to July 21, 2023 from the competent authorities,
including Shanghai Public Credit Information Service Center, Longwan District Human
Resources and Social Security Bureau of Wenzhou City and Human Resources and Social
Security Bureau of Jiashan County, proving that none of us or our subsidiaries had been subject
to any labor related administrative order, penalties or other disciplinary actions from relevant
PRC authorities in relation to our labor dispatch non-compliance incidents during the Track
Record Period.
We have adopted the relevant policies to ensure our use and management of dispatched
workers are in compliance with the relevant PRC laws and regulation. For example, we require
our human resources department to calculate, on monthly basis, the ratio of dispatched contract
workers to ensure it does not exceed 10%. See “– Risk Management and Internal Control.”
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Certain Permits and Approvals
During the Track Record Period, we did not obtain certain permits or approvals for our
projects. The relevant properties are used or planned to be used as production facilities. Due
to insufficient understanding and knowledge on the PRC laws and regulations, we were not
able to timely complete certain inspections and filings or obtain the relevant permits. More
specifically, we did not fully appreciate the exact timing we were legally required to obtain
certain permission or complete certain process, particularly for projects with multiple phases.
With such lack of clear understanding of the applicable regulations, we commenced the
construction work or production activities before the permission is obtained or the verification
process is completed. As of the Latest Practicable Date, we had fully rectified all those
non-compliances.
BatteroTech Shanghai Project
We were not able to obtain energy-saving review approval in accordance with the
Measures for Energy-Saving Review of Fixed Asset Investment Projects (༟ପҳ༟ධͦ
) (the “ Energy Saving Measures ”) and other relevant regulations, nor the
acceptance check of the constructed supporting environmental protection facilities in
accordance with the Regulations on the Administration of Environmental Protection of
Construction Projects (ᚐ၍ଣૢԷ) (the “ Environmental Protection
Regulations ”) and other relevant regulations for BatteroTech Shanghai production facility (the
“BatteroTech Shanghai Project ”) before commencing production in July 2021.
In relation to the energy-saving review approval, according to the Energy Saving
Measures, for projects that commenced construction or operation before obtaining the energy
saving review approval, the relevant competent authority may require suspension of the
construction or operation and rectification within a specific period of time. For projects that
fail to rectify within the specific time period or are unable to rectify at all, the relevant
competent authority may require such projects to shut down.
The Development and Reform Commission of Shanghai Fengxian District, the competent
authority for such matter, confirmed in an interview that (i) there had been no administrative
penalties nor pending investigations for BatteroTech Shanghai in relation to energy saving
review matters by the authority and (ii) if the Battero Shanghai Project meets the energy-saving
review requirements, the authority would issue an energy-saving review approval for the
BatteroTech Shanghai Project, in which case it would not impose penalties on BatteroTech
Shanghai.
In relation to the acceptance check of the constructed supporting environmental
protection facilities, according to the Environmental Protection Regulations, where a project
owner, in violation of relevant provisions, puts the construction project into production or use
before completing the acceptance check of the constructed supporting environmental
protection facilities, the relevant competent authority may order the project owner to take
corrective actions within a specific period of time, and may also impose a fine of not less than
RMB200,000 but not more than RMB1,000,000.
The Fengxian Branch of Shanghai Ecological Environment Bureau, the competent
authority for such matter confirmed in an interview that BatteroTech Shanghai did not receive
any administrative penalty for the non-compliance.
Based on the above, our PRC Legal Advisor is of the view that the non-compliance in
relation to BatteroTech Shanghai Project’s acceptance check of the constructed supporting
environmental protection facilities will not have a material adverse impact on our production
and business operations.
As of the Latest Practicable Date, we had fully rectified those non-compliance.
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Foshan Phase I
We were not able to obtain energy-saving review approval and environmental impact
assessment review approval in accordance with the Energy Saving Measures and the
Regulations on the Administration of Environmental Protection of Construction Projects (ܔ
ᚐ၍ଣૢԷ) (the “ Environmental Protection Regulations ”) and other
relevant regulations for Foshan Phase I project (“ Foshan Phase I ”), a project of Guangdong
REPT BATTERO, before commencing construction in June 2022.
In relation to the energy saving review, as described above, according to the Energy
Saving Measures, for projects that commenced construction or operation before obtaining the
energy saving review approval, the relevant competent authority may require suspension of the
construction or operation and rectification within a specific period of time. For projects that
fail to rectify within the specific time period or are unable to rectify at all, the relevant
competent authority may require such project to close down.
The Development and Reform Bureau of Nanhai District of Foshan City, a competent
authority for such matter, confirmed in an interview that (i) there has been no administrative
penalties nor pending investigations for Guangdong REPT BATTERO in relation to energy
saving review matters by the authority, and (ii) the authority has not received any penalty
notice from higher authorities in relation to Foshan Phase I in terms of energy saving review
matters. In addition, the Development and Reform Bureau of Nanhai District of Foshan City
provided a written confirmation that Guangdong REPT BATTERO has not been subject to
administrative penalties from the authority for violations of relevant PRC laws and regulations
during the Track Record Period.
In relation to the environmental impact assessment review, according to the
Environmental Protection Regulations, for projects that commenced construction before
obtaining the environmental impact assessment approval, the relevant competent authority may
require suspension of the relevant construction or restoration within a specific period of time,
and may also impose a fine between 1% to 5% of the total investment amount of such project.
The Nanhai Branch of Foshan Ecological Environment Bureau, the competent authority
for such matter, confirmed in an interview that as Foshan Phase I is still in the initial
infrastructure stage, (i) the authority will not require environmental impact assessment
procedures at this stage, (ii) the authority will not impose any administrative penalties or
require suspension of operations on Guangdong REPT BATTERO, and (iii) there has been no
administrative penalties nor pending investigations for Guangdong REPT BATTERO in
relation to environmental protection matters by the authority.
Based on the above, our PRC Legal Advisor is of the view that the non-compliance in
relation to Foshan Phase I’s energy-saving review approval and environmental impact
assessment matters will not have a material adverse impact on our production and business
operations.
As of the Latest Practicable Date, we had fully rectified this non-compliance.
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Jiashan Phase I
We were not able to complete the environmental protection, fire safety and construction
completion inspection and acceptance process in accordance with the Environmental
Protection Regulations, Fire Protection Law of the People’s Republic of China ( ʕശɛ͏΍
) (the “ Fire Protection Law ”), Regulations on Quality Management of
Construction Works (ணʈ೻ሯඎ၍ଣૢԷ) (the “ Quality Management Regulations ”)
and other relevant regulations for phase I of Jiashan facility project (“ Jiashan Phase I ”), a
project of BatteroTech Jiashan, before commencing production in June 2022.
 In relation to environmental protection inspection and acceptance processes,
according to the Environmental Protection Regulations, production facilities are
required to complete relevant environmental protection inspection and acceptance
processes before commencing production. For projects that commenced production
before completing the environmental protection inspection and acceptance
processes, the relevant competent authority may require rectification within a period
of time and may impose a fine between RMB200,000 to RMB1 million. For projects
that fail to rectify within the specified time period, the relevant competent authority
may impose a fine between RMB1 million and RMB2 million. If the project results
in significant damage to the environment or ecosystem, the relevant competent
authority may suspend the operation or production of such project. As of the Latest
Practicable Date, we had completed the environmental protection inspection and
acceptance process in accordance with relevant laws and regulations and fully
rectified this non-compliance.
 In relation to fire protection inspection and acceptance processes, according to the
Fire Protection Law, projects that are subject to fire protection inspection and
acceptance processes according to PRC law are required to complete fire protection
inspection and acceptance processes before commencing operation. For projects that
commenced operations before passing the fire protection inspection and acceptance,
the relevant competent authorities may require suspension of construction, operation
or production and may impose a fine between RMB30,000 to RMB300,000. Before
commencement of construction, we had also taken relevant measures to ensure the
fire safety in Jiashan Phase I. We established a fire emergency response team with
the Jiashan Fire Department, which provides training to us on a regular basis. In
addition, we conduct fire inspection and patrol on a regular basis and we keep
inspection records, thus to eliminate potential fire hazards in a timely manner. We
have also established a factory-level fire department and a team-level emergency
response team to ensure the safe production of our Jiashan Phase I facility. As of the
Latest Practicable Date, this non-compliance has been fully rectified.
 In relation to construction completion inspection and acceptance processes,
according to the Quality Management Regulations, construction projects are
required to complete construction completion inspection and acceptance processes.
For projects put into operations before completing construction completion
inspection and acceptance processes, the relevant competent authorities may require
rectification and may impose a fine between 2% to 4% of the contract value of such
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construction project. The maximum potential penalties which may be imposed on us
for failing to complete construction completion inspection and acceptance processes
for Jiashan Phase I is RMB31 million.
 During the Track Record Period, BatteroTech Jiashan completed construction
inspection and acceptance for 496,647.68 sq.m. of Jiashan Phase I, but did not
obtain the property ownership certificates. There remained three property with a
total size of 1,396.39 sq.m., including a warehouse, a storage tank and a garbage
chamber, the construction approval of which were not obtained during the Track
Record Period. Such non-compliance was primarily due to the insufficient
understanding and knowledge on the relevant requirements under the PRC laws and
regulations. For the storage tank and garbage chamber, the Company inadvertently
believed that these two building did not constitute separate properties, and thus no
construction approval would be required before construction. For the warehouse, the
Company misunderstood that they could commence the construction in parallel with
the process of application for the approval due to internal miscommunication. As a
result, those three properties did not complete the construction inspection and
acceptance and did not obtained the property ownership certificate during the Track
Record Period. For the garbage chamber, BatteroTech Jiashan has dismantled it as
a whole as of the Latest Practicable Date. The Management Committee of Jiashan
Economic and Technological Development Zone, as the relevant competent
authority for construction completion inspection and acceptance matters, have
confirmed in an interview dated June 26, 2023 that it accepted the rectification
measures of BatteroTech Jiashan and confirmed that it will not impose any
administrative penalty on BatteroTech Jiashan due to the above non-compliance. In
addition, Jiashan County Housing and Urban-Rural Development Bureau, as the
competent authority, confirmed in writing that BatteroTech Jiashan has not been
subject to any administrative penalties in relation to construction completion
inspection and acceptance matters from the relevant authorities during the Track
Record Period. As of the Latest Practicable Date, BatteroTech Jiashan had obtained
the corresponding property ownership certificates, and fully rectified this non-
compliance.
The Jiashan facility project was initially divided into two phases as Phase I and Phase II
which shared the same land and were managed by BatteroTech Jiashan. The Phase III of
Jiashan facility was separated from and did not share land with Phase I and Phase II of Jiashan
facility, which was managed by BatteroTech Jiaxing, a wholly owned subsidiary of
BatteroTech Jiashan. The Jiashan Branch of Jiaxing Ecological and Environmental Bureau and
the Planning and Construction Bureau of the Management Committee of Jiashan Economic and
Technological Development Zone, the relevant competent authorities for environmental
protection, fire safety and construction completion inspection and acceptance matters, had
confirmed in interviews that (i) Jiashan Phase I was allowed to apply for environmental
protection, fire protection and construction completion inspection and acceptance after the
completion of construction of the both Jiashan Phase I and II, and (ii) the competent authorities
would not impose any administrative penalty on BatteroTech Jiashan or require BatteroTech
Jiashan to suspend production and operation. In addition, the Jiashan Branch of Jiaxing
Ecological Environmental Bureau and Jiashan County Housing and Urban-Rural Development
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Bureau confirmed in writing that BatteroTech Jiashan had not been subject to any
administrative penalties in relation to environmental protection, fire protection and
construction completion inspection and acceptance matters from the relevant authorities during
the Track Record Period.
Based on the above, our PRC Legal Advisor is of the view that, the historical
non-compliance in relation to Jiashan Phase I’s environmental protection, fire protection and
construction completion inspection and acceptance matter will not have a material adverse
impact on our production and business operations.
As of the Latest Practicable Date, we had fully rectified those non-compliance.
Jiashan 2GWh Project
We were not able to obtain the approval of environmental impact evaluation in accordance
with the Environmental Protection Regulations and other relevant regulations for a project of
BatteroTech Jiashan primarily for R&D purpose with a planned annual production capacity of
2GWh (“ Jiashan 2GWh Project ”) before commencing construction in May 2023.
In relation to the approval of environmental impact evaluation, according to the
Environmental Protection Regulations, where a project owner, in violation of relevant
provisions, commences the construction of a project without submitting for approval its
environmental impact report or report form in accordance with the law, the relevant competent
authority may order the project owner to cease construction, and according to the
circumstances of violation of law and damage, impose a fine of not less than 1% but not more
than 5% of the total investment of the construction project on the project owner, and order it
to restore to the original state.
The Jiashan Branch of Jiaxing Ecological Environment Bureau confirmed in writing that
BatteroTech Jiashan has not been subject to any administrative penalties in relation to
environment protection matters from the relevant authorities during the Track Record Period.
In addition, before commencing construction, BatteroTech Jiashan had obtained the
“construction after obtaining the land” approval from Management Committee of Jiashan
Economic and Technological Development Zone, under which the BatteroTech Jiashan
obtained other construction related approval and acceptance in a short period before
construction.
Based on the above, our PRC Legal Advisor is of the view that the non-compliance in
relation to Jiashan 2GWh Project’s environmental impact evaluation will not have a material
adverse impact on our production and business operations.
As of the Latest Practicable Date, we had fully rectified this non-compliance.
Based on the foregoing, our Directors are of the view that the non-compliance incidents
relating to BatteroTech Shanghai Project, Foshan Phase I, Jiashan Phase I and Jiashan 2GWh
Project will not have a material adverse effect on our production and business operations. Our
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Directors confirm that during the Track Record Period and up to the Latest Practicable Date,
we have not experienced any events or complaints that would have a material adverse effect
on our production and business operations.
Our Rectification Measures
In order to ensure strict compliance of PRC laws and regulation in the future and further
strengthen our internal control system regarding construction work, we have taken some
measures to ensure on-going compliance. We have established internal procedures which aims
to ensure that our subsidiaries will obtain all necessary permits, licenses and regulatory
approvals prior to commencing any construction work in the future. We have designated
personnel responsible for obtaining relevant permits, licenses and approvals for property
development and they are required to obtain internal approval before undertaking any
construction work for new projects. In order to avoid any unapproved commencement of
construction works, we will designate staff members to inspect our construction site on a
regular basis to prevent commencement of construction work before obtaining all necessary
permits. They will also conduct evaluation of any issue detected and implement appropriate
measures for rectification. We believe such measures are adequate and effective. In the future,
we will obtain all necessary permits, licenses and regulatory approvals prior to commencing
production and/or construction work for our projects. In particular, we have established
internal guidelines and enhanced our internal control procedures to improve our evaluation of
our new projects, and we will make careful inspections before commencing production and/or
construction work in the future. We have engaged four certified public accountants to work as
assistant to the CFO, head of accounting, head of internal audit, and expense accountant,
respectively. We have also hired an internal control counsel to assist with internal control
matters. We will also consult our external legal advisor with regard to reviewing the necessary
permits, licenses and regulatory approvals for our projects in order to ensure compliance with
applicable Chinese laws and regulation. In addition, we will conduct feasibility studies which
specifically give regards to local laws and regulations for any future overseas projects.
SUITABILITY
As of the Latest Practicable Date, our Directors confirm that we had not been subject to
any fine, request for suspension of production or confiscation of any income or products from
competent authorities with respect to such non-compliance incidents disclosed above.
Having considered the facts and circumstances leading to the non-compliance incidents
disclosed in this prospectus, the advice given by our PRC Legal Advisor, the relevant
precautionary measures we took, the relevant rectifications made and being made, and
on-going compliance measures mentioned above, our Directors are of the view that the
non-compliance incidents will not have a material adverse impact on our business operations
or financial condition as a whole.
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After considering the above precautionary and rectification measures already taken and
being taken by our Group, our business model and operation scale, our Directors are satisfied
that our internal control system is adequate and effective for our current operation and consider
that the non-compliance incidents do not have any material impact on the suitability of our
Directors under Rules 3.08 and 3.09 of the Listing Rules and our suitability for listing under
Rule 8.04 of the Listing Rules.
The Joint Sponsors have conducted due diligence on the enhanced internal control
measures in relation to its non-compliance incidents, including in particular discussing with the
management of the Company and the internal control consultant of the Company with a view
to understanding the implementation of such measures and specifically how each of such
non-compliance incidents is addressed on a control level and, reviewing the relevant internal
control policies. Based on the foregoing, and our Directors’ confirmation that we have not
identified recurrence of such non-compliance incidents since the implementation of the
relevant measures, nothing has come to the attention of the Joint Sponsors that would lead them
to cast doubts on the Directors’ views on the effectiveness and adequateness of the enhanced
internal measures.
Based on (i) as confirmed by our Directors and based on the Joint Sponsors’ reasonable
due diligence, the non-compliance incidents did not involve any fraudulent misconduct,
dishonesty or corrupt conduct on the part of our Directors that could impugn on their character,
integrity or competence; (ii) the willingness and commitment of our Directors in rectifying the
non-compliance incidents as noted by the Joint Sponsors since they started working with the
Company for the preparation of the proposed Listing in early 2022; (iii) the effective adoption
and implementation of enhanced internal control measures as discussed above and (iv) our
Directors having attended directors’ training in the course of preparing for the proposed Listing
and consulting professional advisers to become familiar with the applicable legal requirements
and taking an active interest in rectifying the non-compliances and ensuring on-going
compliance after the Listing, nothing has come to the attention of the Joint Sponsors that would
lead them to cast doubts on the suitability of our Directors in the context of Rules 3.08 and 3.09
of the Listing Rules.
SEASONALITY
According to the F&S Report, the sales of EVs in China exhibit noticeable seasonality,
and this phenomenon can be attributed to various factors, including seasonal demand
fluctuations, policy influences, holidays, and climate conditions, among others. The proportion
of EV sales in China tends to be higher in the second half of the year compared to the first half.
Specifically, from 2018 to 2022, the proportion of new energy vehicle sales in the first half of
the year averaged less than 40% of the annual total, while the second half, especially the fourth
quarter, is the peak season for EV sales, according to F&S Report. There are many reasons
behind the seasonality, including a higher number of holidays in the fourth quarter, with many
people choosing to purchase cars during this period to use them for holiday traveling.
Additionally, Chinese automotive dealers and manufacturers typically employ various
measures, including promotional activities, to achieve their annual sales targets before the
year-end, thereby boosting sales. As affected by seasonality, the sales volume of our EV battery
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products in the first half of the year were generally lower than that in the second half of the
year. See “Risk Factors - Our business is exposed to the supply-demand dynamics in the
lithium-ion battery industry, and thus is affected by market demand for the end products where
our batteries are used.”
COMPETITION
The lithium-ion battery market in China is highly competitive and concentrated,
particularly the EV battery market, and we expect that the competition will be even more
intense in the future. According to the F&S Report, the top five EV battery manufacturers
accounted for approximately 85.3% of total EV battery installation volume in China in 2022,
with the largest EV battery manufacturer accounted for 48.2% of the total EV battery annual
installations in China in 2022. ESS market is still at the initial stage of development.
Comparing to the annual installations of 294.6 GWh in EV battery market in 2022 in China,
ESS battery only achieved annual installations of 22.7 GWh in 2022. According to the F&S
Report, the top five China-based ESS battery manufacturers accounted for approximately
61.3% of the global total ESS battery installation volume in 2022. We generally compete with
other large scale lithium-ion battery manufacturers. According to the F&S Report, the primary
competitive factors in our markets are: product safety, technological innovation, product
performance and price, industrial chain resource integration capability, mass production
capabilities, customer service and support and corporate reputation. We believe that positive
factors pertaining to our competitive position include R&D capabilities, resource integration
capability along industrial chain, precise consumer targeting and product defining capabilities.
See “Industry Overview.”
To distinguish ourselves from our competitors, we are committed to the improvement of
product performance and technology development with strategies in cooperation with our
major customers. Such approach enriches our R&D capabilities and capabilities to tailor our
lithium-ion batteries to cater to the evolving needs of our major customers. With our leading
technology in product safety and quality as well as supply chain management, we continue to
bring innovations in lithium-ion battery manufacturing, and deliver differentiated and high
quality products, which position us favorably in the competitive environment and will continue
to play a crucial part in our future competition.
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A W ARDS AND ACHIEVEMENTS
The table below sets forth some of our recent major awards and achievements.
Awarded Project Award Name Awarding Institution Award year
– Nation-level Green
and Low-carbon
Factory 2022
Industry and
Information
Technology
Department of
Zhejiang Province
2023
– China Energy Storage
Industry Best
Energy Storage
Battery Supplier
Award 2022
China International
Energy Storage
Conference and
China Energy
Storage Website
2022
– China PV , ES and
Charging Industry
Energy Storage
Battery Brand 2022
China Wind Energy,
PV and Energy
Storage Website
2022
Zhejiang provincial
green low-carbon
industrial parks and
factories in 2021
Zhejiang Provincial
Green Low Carbon
Factory in 2021
Economy and
Information
Technology
Department of
Zhejiang
2021
Provincial-level high-
tech enterprise
R&D center
Zhejiang Rui Pu
energy lithium-ion
battery and system
high-tech enterprise
R&D center
Science Technology
Department of
Zhejiang Province
2021
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Awarded Project Award Name Awarding Institution Award year
The second batch of
“waste-free
factories” of
Zhejiang Province
in 2021
The second batch of
“waste-free
factories” of
Zhejiang Province
in 2021
Ecology and
Environment
Department of
Zhejiang Province
2021
– Bronze medal for
corporate social
responsibility
EcoVadis 2021
Digital workshop of
Zhejiang Province
in 2020
Digital workshop of
Zhejiang Province
in 2020
Economy and
Information
Technology
Department of
Zhejiang
2020
Leading Innovation
and
Entrepreneurship
Team of Zhejiang
Province in 2020
Leading Innovation
and
Entrepreneurship
Team of Zhejiang
Province in 2020
Science Technology
Department of
Zhejiang Province
2020
In June 2023, the Global Battery Alliance officially accepted the Company as one of its
members. The Global Battery Alliance was established by World Economic Forum in 2017 as
the first world-wide battery association, which consists of more than 140 enterprises,
government and non-government organizations and other entities, covering every aspect of the
battery industry and taking actions in area such as Environmental, Social and Governance and
cyclic economy. In July 2023, the Carbon Neutrality Committee of China Energy Conservation
Association accepted the Company as one of its members. The Carbon Neutrality Committee
of China Energy Conservation Association was established by China Energy Conservation
Association, which is a professional organization serving governments, enterprises and
research institutes to participate in the carbon market.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE MATTERS
Metrics and Targets on Environmental, Social and Climate-related Risks
In order to better assess and manage our environmental, social and climate risks, we have
set the following emission targets:
 Greenhouse gas emission reduction target: From 2023 until the end of 2025, we
strive to reduce greenhouse gas emissions per unit of products. Our greenhouse gas
emission level in 2020, 2021 and 2022 were 26.0 thousand tons per GWh, 25.3
thousand tons per GWh and 18.5 thousand tons per GWh, respectively. We aim to
reduce our greenhouse gas emission per unit of battery products by 5% by end of
each year of 2023, 2024 and 2025.
 Waste treatment target: We discharged waste per unit of our battery products of
834.3 ton per GWh in 2020, 731.8 ton per GWh in 2021 and 621.2 ton per GWh in
2022. We strive to maintain the waste recycling rate at over 99% rate going forward.
Our waste recycling rates in 2020, 2021 and 2022 were 99.7%, 97.6% and 99.0%,
respectively. We aim to reduce our waste per unit of battery products by 2% by end
of each year of 2023, 2024 and 2025.
 Wastewater and exhaust gas reduction emission targets: We are dedicated to
achieving the discharge of wastewater and exhaust gas in fully compliance with the
applicable standards. In 2022, we discharged 9,580.5 tons of wastewater, but we
recorded nil discharge of wastewater in 2020 and 2021. We emitted 51.9 million
cubic meters per GWh, 25.3 million cubic meters per GWh and 41.5 million cubic
meters per GWh of exhaust gas in 2020, 2021 and 2022, respectively. The exhaust
gas emitted decrease from 2020 to 2021, primarily due to the technical
improvement, such natural gas boiler reforming, which reduced the unit exhaust gas
emission. The increase in wastewater discharged and exhaust gas emitted per GWh
in 2022 was primarily due to the rapid increase in our production capacity in 2022,
which exceeded our then limited capacity to recycle the wastewater and exhaust gas.
We will strive to increase our capacity to recycle the wastewater discharged and
exhaust gas emitted from our production processes. We aim to reduce wastewater
and exhaust gas emission per unit of products, and we plan to further increase our
recycling rate on wastewater and exhaust gas going forward. We aim to reduce our
wastewater and exhaust gas emission per unit of battery products by 2% by end of
each year of 2023, 2024 and 2025.
According to Frost & Sullivan, our pollutant emissions are in line with EV and ESS
battery industry average, and such metrics and measurements are in line with the industry
norm. For example, based on the publicly available information, the greenhouse gas emission
level of CATL and CALB in 2022 was 10.5 thousand tons of CO
2 equivalents per GWh and
28.4 thousand tons of CO 2 equivalents per GWh, respectively. The CATL’s recycling rate of
general industrial solid waste was 99.9%.
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In 2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023, the costs we
incurred in complying with the requirements of the relevant environmental laws and
regulations and our expenditures related to environmental protection amounted to
approximately RMB19.2 million, RMB10.3 million, RMB27.1 million, RMB14.4 million and
RMB33.5 million, respectively. We expect that our cost of complying with relevant
environmental laws and regulations will increase as we expand our business.
Environmental Protection and Management Measures
We are dedicated to creating a long-lasting and positive environmental, social, and
governance impact on our customers, suppliers and the communities that our operations may
impact. Our efforts and achievements include the following:
Waste Management
To reduce waste emissions, we are committed to recycling of wastes and using
low-polluting raw materials wherever possible. We also conduct tests on wastewater and gas
emissions on a regular basis.
In 2020, we obtained the “Environmental Management System” certification from Beijing
Xinjiyuan Certification Co., Ltd. and we have been continuously holding such certification
since then. We have established and operated an environmental management system in
accordance with the requirements of the ISO14001 standard to identify and control
environmental management risks and to continuously improve our environmental management
performance.
We manage and control the process of collection, storage, and transfer of waste, in
accordance with the relevant PRC laws and regulations. Our management department will
collect, store and inspect hazardous waste material regularly until it is transferred to a qualified
waste disposal unit for further processing. We abide by the requirements for discharge as
adopted in laws and regulations. Our plants are equipped with different equipment or systems
for recycling and processing exhaust gas. The exhaust gas is recycled and reused, while those
which cannot be recycled, in strict compliance with the “Emission Standard for Pollutants for
Battery Industry” (ᅺ๟), are discharged when emission standards are
met after effective treatment.
We conduct regular training on environmental protection to enhance the environmental
awareness of our employees. We have developed contingency plans for environmental
emergencies and organize regular staff drills to ensure that waste will not escape into the
environment under special circumstances.
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Carbon emission management
We are committed to achieving the carbon peaking and carbon neutral goals. We are
committed to building a green and low-carbon factory to minimize the impact of our
manufacturing operations on the environment. We have established and operated an energy
management system in accordance with the GB/T23331-2020 standard, ISO 50001:2018
ISO5001 standard, and other related standards. We have adopted a series of measures such as
technology and management to continuously reduce energy consumption and carbon emissions
in the process of manufacturing operations. We have obtained the energy management system
certification in 2021 from BCC Inc. which was a certification company established in 1994 and
approved by Certification and Accreditation Administration of the People’s Republic of China,
and continue to hold the energy management system certification. We actively implement the
concept of eco-design in our production. In terms of product design, we have optimized the
selection of raw materials, the production process, the use of packaging materials, and the use
of energy resources, and have reduced the use of toxic and hazardous substances to meet the
requirements of eco-design evaluation.
In addition, we actively introduce green design concepts and design green products with
a low carbon footprint.
We purchase energy-efficient power equipment and actively encourage the recycling of
surplus energy and excess pressure to reduce the energy consumption in our production
systems. We continuously conduct energy-saving reviews, reducing the energy consumption in
the production system through management measures. We have built in the use of solar energy
to supplement/replace grid electricity use. For example, we have built photovoltaic power
plants, surplus heat recycling systems, battery charging and discharging performance testing
grid feedback system and other energy saving systems. In particular, we managed to generate
appropriately 2,610 MWh electricity in 2022 by our photovoltaic power plants, saving energy
equivalent to approximately 1,044 ton standard coal
(1).
We strictly abide by the emission permit system and is in compliance with the relevant
environmental assessment and industry standards. The relevant treatment facilities and
equipment are managed under the responsibility of dedicated personnel, who are professionally
trained and qualified to ensure the normal operation of environmental protection facilities and
equipment. We monitor the main pollutants of boiler flue gas on a monthly basis. General
organic emissions, noise, particulates, gas emissions and liquid waste emissions are monitored
according to the relevant monitoring frequency requirements as required under the Regulation
on the Administration of Permitting of Pollutant Discharges ( રϮ஢̙၍ଣૢԷ). The
monitoring data will be used as a basis for continuous improvement in environmental
protection, and the relevant data will be made public on the provincial website for social
supervision.
(1) calculating based on that 1 KWh electricity equals to 0.4 kg standard coal.
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Our manufacturing operations are subject to relevant environmental laws and regulations
in the PRC. The environmental protection inspection department of the local government
conducts regular inspections on the Company’s environmental protection. Our PRC Legal
Advisor advised us that, from during the Track Record Period and up to the Latest Practicable
Date, we have not been subject to significant penalties by the governmental authorities for
non-compliance with the applicable PRC environmental laws and regulations.
Sustainable Supply Chain Management Policy
We actively promote the construction of green supply chains. Taking advantage of
self-generated products, we establish green supply chains, and actively influence suppliers to
improve the environmental friendliness of products and reduce carbon emission. In response to
the national “dual carbon” goals, we set carbon reduction targets to increase the proportion of
renewable energy use.
Our ESG-Related Accreditations
We have obtained various ESG-related accreditations including:
 The ISO14001 Environmental Management System Certification certified by
Beijing Xinjiyuan Certification Co., Ltd.;
 The ISO45001 Occupational Health and Safety Management System Certification
certified by Beijing Xinjiyuan Certification Co., Ltd.;
 The IECQ QC 080000 Hazardous Substance Management System Certification
certified by Shanghai NQA Certification Co., Ltd.; and
 The ISO50001 energy management certification certified by BCC Inc.
Occupational Health and Safety
We have well-established quality management, environmental management, occupational
health and safety management and energy management systems, and have obtained
certifications from third-party certification institutions.
Our operations are subject to the relevant PRC laws and regulations relating to
employees’ health and safety. We are committed to complying with PRC regulatory
requirements, preventing and reducing hazards and risks that may cause damage to employees’
health or company’s property, and ensuring the health and safety of our employees and
surrounding communities. During the Track Record Period and up to the Latest Practicable
Date, we have not had any significant accidents during our operations, and we are not aware
of any material personal or property damage claim related to health and occupational safety.
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In order to ensure that our operations comply with applicable laws and regulations, we
have established and improved a series of policies and procedures on health and work safety,
including safety production responsibility system, equipment safety management, high-risk
operations, management of hazardous chemicals, accident and emergency, hierarchical
management and control of safety risk, and hidden danger investigation and management, in
accordance with relevant national laws and regulations and GB/T45001 standards.
In order to improve our employees’ awareness of safe operations, we implement the
concept of occupational health and safety throughout the entire production process, which
effectively reduces non-compliant operation. We have passed the certification review
conducted by a third-party institution for our occupational health and safety management
system, and thus continue to hold the certificate of the occupational health and safety
management system granted by Beijing Xinjiyuan Certification Co., Ltd. in 2020. We have
carried out self-assessment and external review for safety production standardization of
enterprises as required, and have held a level III safety production standardization certificate.
LICENSES, PERMITS AND APPROV ALS
Our Directors, as advised by our PRC Legal Advisor, confirmed that, we have obtained
all necessary licenses, permits and approvals for conducting operating activities are important
to our operations, and such licenses, permits and approvals are still valid as of the Latest
Practicable Date.
INSURANCE
As of the Latest Practicable Date, we believe that our insurance coverage is in line with
the industry practice and adequate to cover our key assets, facilities and liabilities, including
but not limited to all property related risks insurance, cargo transportation appointment
insurance, employer liability insurance and product liability insurance. We procured insurance
policies by type and amount that we consider sufficient, and evaluated such insurance policies
from time to time based on our past experience, changes in production and industry
developments.
We are committed to minimizing the risks of product liability claims, warranty claims and
product recalls through stringent quality control. In addition, in the event that one or more of
our suppliers is determined to be liable (in whole or in part), we will assess the compensation
or contributions sought from the relevant suppliers (if applicable) in accordance with the terms
and conditions of the supply contracts entered into with the relevant suppliers, taking into
account various commercial considerations, including but not limited to the amount sought, the
financial ability of the relevant supplier and the risk of interruption in the supply of our
products to our customers as a result of claims for compensation or contributions that may be
made by us. See “Risk Factors – We may be involved in product liability claims, and our
product liability insurance may not be sufficient to cover potential liability from product
liability claims.”
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EMPLOYEES
We believe that our long-term growth depends on the expertise, experience and
development of our employees. Our human resources department is responsible for recruiting,
managing and training our employees. We recruit employees primarily through referrals,
headhunters, recruitment websites and on-campus recruitment. We provide training programs
to our employees, including new hire training for new employees and continuing technical
training for our production and R&D personnel to enhance their skill and knowledge. We take
measures to promote equal opportunities, anti-discrimination, and diversity among employees.
As of June 30, 2023, we had 12,096 full-time employees. Generally, we enter into labor
contracts with our employees. Substantially all of our employees were in China. The table
below sets forth the number of our employees by function as of June 30, 2023.
Number of
employees
Percent of
total
Sales and marketing................................................ 153 1.3%
Production .............................................................. 7,893 65.3%
Quality control........................................................ 995 8.2%
Administrative ........................................................ 98 0.8%
Finance ................................................................... 58 0.5%
R&D ....................................................................... 2,120 17.5%
Management............................................................ 153 1.3%
Procurement............................................................ 67 0.6%
Warehousing and logistics ...................................... 559 4.6%
Total ....................................................................... 12,096 100.0%
Our Directors consider that our Group has maintained a good relationship with our
employees and is expected to remain amicable in the future. During the Track Record Period
and up to the Latest Practicable Date, there was no incident of disruption of work which had
an adverse impact on our operation, or no material dispute between our Group and our
employees. During the Track Record Period and up to the Latest Practicable Date, we did not
experience any material labor disputes or strikes which may have a material and adverse effect
on our business, financial condition or results of operations.
RISK MANAGEMENT AND INTERNAL CONTROL
We are exposed to various risks during our business operations. We have established risk
management systems consisting of appropriate policies and procedures, and we continue to
improve these systems. We have adopted, among other things, the following risk management
measures: (i) our Board of Directors is responsible for monitoring our internal control system,
reviewing its effectiveness, and maintaining our risk at an appropriate and effective level. A
review of our risk management and internal control system has been conducted and will be
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conducted at least annually, which will include a review of all material controls, including
financial, operational and compliance controls; (ii) our audit department is responsible for the
evaluation of the risks faced by us on an annual basis, and prepares a risk assessment report
based on the evaluation results and submits it to the audit committee and the Board of Directors
for approval; (iii) we require all departments to proactively identify the risks they face and
various internal and external factors that affect the occurrence of the risks; (iv) we will monitor
sanctions related risks in our course of business and will use our best endeavors to ensure that
we do not sell our products to any entities subject to economic sanctions; and (v) we will
engage external professional advisors, where necessary, and work with our internal audit and
legal team to conduct regular review to ensure the effectiveness of all registrations, licences,
permits, filings and approvals.
We have engaged an independent internal control consultant to help identify and advise
on mitigating risks relating to our operation. During the review by our independent internal
control consultant, certain deficiencies were identified based on sample review and we have
adopted the appropriate internal control measures to improve such deficiencies. In particular,
the internal control consultant had identified that we did not have formal written policies and
procedures which provided clear guidance on the selection, management and compliance of
dispatched workers. To rectify such deficiencies, we have adopted the relevant policies to
ensure our use and management of dispatched workers are in compliance with the relevant PRC
law. For example, our human resources department keeps monthly record of the number of
dispatched contract workers to ensure that the number of dispatched contract workers do not
exceed 10% of the total number of our employees.
We had adopted additional internal control measures to comply with the Listing Rules.
Except as described in the above, we are not aware of any material internal control weaknesses
or incidents during the Track Record Period and up to the Latest Practicable Date.
We are committed to establishing and maintaining risk management and internal control
systems. We have adopted and implemented a comprehensive risk management policy
encompassing risks that may arise in R&D, procurement management, production
management, sales management, and the construction of new projects. Our risk management
and internal control systems also cover the general functional operations such as human
resources, financial management, asset management, warehousing and logistics management,
information system management and corporate governance as well as decision-making
processes. Meanwhile, we are committed to supervising and evaluating the effectiveness of risk
management and internal control system to ensure that the system is rectified and effectively
controlled as our business develops.
We have established a professional internal control team, which is responsible for
establishing risk management and internal control systems, conducting internal audit and
providing internal control consultation. As of June 30, 2023, the members of our internal
control management team have an average of more than five years of relevant work experience,
and hold relevant professional certificates.
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We pursue a zero-tolerance policy towards bribery, corruption, extortion and
embezzlement. We have adopted internal procedures that contain relevant requirements for
confidentiality, integrity, conflicts of interest and other guidelines on the code of behaviors. We
also provide our employees with education in respect of anti-bribery and anti-corruption
through various channels such as integrity training at the same time publicizing the integrity
regulations to our suppliers. We also designated responsible departments to monitor the
compliance of above internal procedures. For example, we have put in place a whistle-blowing
channel where external suppliers, employees and other relevant parties can file complaint or
report violation acts. When receiving whistle-blowing or internal report of relevant incidents,
we will initiate the investigation procedures and engage external professional parties if
necessary. Our Directors confirmed that during the Track Record Period and up to the Latest
Practicable Date, we did not encounter any incidents of breaches of our anti-corruption,
anti-bribery and anti-money laundering policies and procedures.
To ensure the quality, efficiency, compliance and transparency of bidding and
procurement of new projects, we have set up a team of bidding evaluation personnel covering
professional technology and economics to participate in the selection of suppliers in the
bidding and procurement process. At the same time, we have established a supervision
mechanism for the bidding and procurement process, supervised by internal control team to
impose control on compliance in the process of reviewing potential candidates’ qualifications
and bidding document and in the tender process, providing consulting services to business
activities on bidding and procurement risks.
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The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our financial statements and notes
included in “Appendix I – Accountants’ Report.” The financial information as set out in
the Accountants’ Report incorporates the financial statements of the Company during the
Track Record Period. You should read the whole Accountants’ Report and not rely merely
on the information in this section. For the purpose of this section, unless the context
otherwise requires, references to 2020, 2021 and 2022 refer to our financial years ended
December 31 of such years.
The following discussion and analysis contain forward-looking statements that
involve risks and uncertainties. These statements are based on assumptions and analyses
made by us in light of our experience and perception of historical trends, current
conditions and expected future developments, as well as other factors we believe are
appropriate under the circumstances. You should not place undue reliance on any such
statements. Our actual future results and timing of selected events could differ materially
from those anticipated in these forward-looking statements as a result of various factors,
including those set forth under “Risk Factors,” “Forward-Looking Statements” and
elsewhere in this prospectus.
OVERVIEW
We are a lithium-ion battery manufacturer in China. We focus on the R&D, production
and sales of EV and ESS lithium-ion battery products including battery cells, modules and
packs (including battery boxes, battery racks and energy storage containers for ESS packs).
Established in October 2017, we achieved bulk delivery for lithium-ion batteries in April 2019.
Our EV battery products include LFP battery products and ternary lithium battery products
used in various types of passenger vehicles, commercial vehicles and special vehicles. Our ESS
battery products are LFP battery products for a broad range of application in household,
commercial and industrial energy storage. According to the F&S Report, in the six months
ended June 30, 2023, we were the tenth largest lithium-ion battery manufacturer globally in
terms of annual installations for new energy application, the sixth largest in China in terms of
global annual installations for new energy application, the tenth largest globally in terms of
China EV battery installations, and the fourth largest globally in terms of global ESS battery
installations.
During the Track Record Period, we achieved significant growth. Our total revenue
increased significantly from RMB907.0 million in 2020 to RMB2,109.1 million in 2021, and
further to RMB14,647.8 million in 2022, representing a CAGR of 301.9%. Our total revenue
increased by 64.2% from RMB4,016.6 million for the six months ended June 30, 2022 to
RMB6,594.8 million for the six months ended June 30, 2023. We sold 1.55GWh, 3.30GWh and
16.61GWh of our battery products in 2020, 2021 and 2022, respectively, representing a CAGR
of 227.4%. For the six months ended June 30, 2022 and 2023, we sold 4.70GWh and 7.77GWh
of our battery products, respectively.
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SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS
End Markets that We Serve and Fluctuation in Customer Demand
We provide battery products that are used for EVs and ESSs. Accordingly, our results of
operations have been and are expected to continue to be affected by downstream demand for
EVs and ESSs. Strong growths in China’s EV market and EV battery annual installations, as
well as the global ESS market, were major drivers for our growth during the Track Record
Period, and are expected to continue to drive our growth in the future.
Factors such as purchase price, charging time, driving range, safety and battery life are
critical to customer demand for EVs. In addition, the demand for EVs is also supported by
favorable government regulations and policies. Driven by various favorable factors, the market
demand for EVs have grown significantly in recent years. According to the F&S Report, the
sales volume of EVs in China increased from approximately 777 thousand units in 2017 to
approximately 6,883 thousand units in 2022, representing a CAGR of 54.7%. The EV battery
annual installations in China grew along with the increase in the sales volume of EVs, which
increased from 36.1GWh in 2017 to 294.6GWh in 2022, representing a CAGR of 52.2%.
According to the same source, China’s EV in terms of sales volume and EV battery annual
installations will further grow at a CAGR of 21.3% and 41.1%, respectively, from 2022 to
2027.
The strong demands for our EV battery products could provide us with stronger
bargaining power and help us to become profitable. According to the F&S Report, there has
been an undersupply of EV battery products in recent years and the markets of EV battery
products still have great potential of increase in the future. To capture sales opportunities
brought by such undersupply, we have been expanding and will continue to expand our EV
battery production capacity and output. Higher margins are typically associated with the
economies of scale from higher utilization of our production capacity to meet growing
customer demands. Our ability to price our products is also substantially affected by the
prevailing market trend.
The demand for ESS battery products is affected by various factors such as policies that
promote renewable power generation and energy storage adoption, the cost of renewable
energy, and the cost of corresponding energy storage system. According to the F&S Report, the
global ESS battery annual installations increased from 2.4GWh in 2017 to 119.3GWh in 2022,
representing a CAGR of 121.4%. According to the same source, the global ESS battery annual
installations will further grow at a CAGR of 53.7% from 2022 to 2027. Any given long-term
contracts for ESS battery products with large volume might also affect our overall profitability
within a short period of time to the extent that we are not able to timely adjust our selling prices
to reflect, among others, fluctuations in raw materials prices.
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Expansion and Management of Production Capacity and Improvement of Efficiency
Growth in our revenue and market share depends to a large extent on our ability to expand
our production capacity to meet growing demand. In order to meet growing customer demand
for our products, we have significantly increased our production capacity and output in the past
few years, and have expanded, trained and managed our workforce along with the increase in
our production capacity. As of June 30, 2023, our designed annual production capacity reached
35.2GWh. We expect our designed annual production capacity to reach 62GWh by 2023. See
“Business – Production – Existing production Facilities” and “Business – Production – Planned
Production Facilities.” Separately, as we expand our production capacity, we typically
experience a production ramp-up period before we can reach the optimal utilization rate.
During ramp-up period, we would record higher unit manufacturing and direct labor costs. As
such, as we continue our rapid expansion plan, our profitability can be affected. However, as
products manufactured at these new production lines during the ramp-up period will account
for a lesser proportion of our overall production output, the negative impact of the ramp-up
period of those new production lines on our profitability will be less pronounced going forward
as compared with the Track Record Period.
The ability to manage production ramp-up, maintain and improve our production
efficiency also affects our profitability and results of operations. We have taken several
initiatives in recent years to improve our production efficiency, including (i) developing new
production technologies, (ii) installing advanced equipment and machinery, and
(iii) optimizing the production processes and techniques. Our ability to rapidly implement new
technologies and improve manufacturing processes gives us the flexibility to optimize the use
of our production lines. We have also been able to shorten the period we need to reach the
optimal utilization rate from the commencement of production at a new production line since
our inception. See “Business – Production – Existing Production Facilities.” In addition, we
have improved our capability to coordinate the production of different types of products across
our production facilities and/or alter production schedules in response to the changes in market
demand. Such ability would in turn bring us more customers and help us attract more sales
opportunities, while utilizing our production capacity efficiently. Going forward, as we
continue to expand our production capacity and establish additional production facilities, we
are committed to continuing to maintain and improve our production efficiency. More
specifically, through the improvement of our production efficiency, we lowered the unit direct
labor costs of our battery products from RMB0.05 per Wh in 2020 to RMB0.03 per Wh in 2022
and from RMB0.05 per Wh in the six months ended June 30, 2022 to RMB0.04 per Wh in the
six months ended June 30, 2023, and the unit manufacturing costs of our battery products from
RMB0.09 per Wh in 2020 to RMB0.05 per Wh in 2022. Going forward, we expect that the
further improvement of our production efficiency will help us become profitable.
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Fluctuation in Prices of Raw Materials
The prices of the raw materials directly affect our cost of sales and our gross profit.
Historically, the price of raw materials experienced significant fluctuation. In 2020, 2021 and
2022 and for the six months ended June 30, 2022 and 2023, costs of raw materials accounted
for 67.5%, 68.3%, 79.9%, 74.3% and 69.1% of our cost of sales for the respective periods and
59.2%, 78.8%, 74.0%, 76.9% and 66.3% of our revenue for the respective periods, respectively.
Cathode materials, primarily including LFP, lithium NCM and aluminum foil, and anode
materials, primarily including graphite and copper foil, accounted for the majority of our raw
materials costs. In particular, 2020, 2021 and 2022 and for the six months ended June 30, 2022
and 2023, the cost of cathode materials amounted to RMB191.4 million, RMB661.4 million,
RMB6,498.9 million, RMB1,638.4 million and RMB2,551.7 million, accounting for 24.0%,
27.2%, 47.9%, 39.4% and 40.3% of our cost of sales, respectively. According to the F&S
Report, the average price of lithium carbonate, the major raw material for LFP, decreased by
33.8% from RMB71,200 per ton in 2019 to RMB47,100 per ton in 2020. As a result, the
average price of the cathode materials for LFP battery products decreased by 25.8% from
RMB50,300 per ton in 2019 to RMB37,300 per ton in 2020. Such decrease was primarily due
to the oversupply of raw materials such as lithium carbonate in the market in the first half year
of 2020 as the market demand was not as strong as expected. Correspondingly, we recorded a
gross profit of RMB111.1 million in 2020. However, according to the F&S Report, the average
prices of lithium carbonate increased by 178.3% from RMB47,100 per ton in 2020 to
RMB131,100 per ton in 2021, which further increased significantly to RMB496,100 per ton in
2022. As a result, the average price of the cathode material for LFP battery products increased
by 61.1% from RMB37,300 per ton in 2020 to RMB60,100 per ton in 2021, which further
increased by 162.6% to RMB157,800 per ton in 2022. Such increase was primarily due to an
overall increase in demand for EVs in the market as the result of rapid development of EV
industry. Since our adjustment of selling prices of our battery products lagged behind the
increase in purchase prices of raw material in 2021, we recorded a gross loss of RMB324.9
million correspondingly in 2021. Despite the significant increase in prices of raw materials in
2022, we recorded a gross profit of RMB1,088.3 million in 2022 due to (i) our adjustment of
prices of both of our EV and ESS battery products in response to the rapid increase of raw
material prices, (ii) our further improved production efficiency, and (iii) our improved product
offering. However, due to the temporary slowdown in the EV industry in early 2023, the
average price for lithium carbonate decreased as compared to that in 2022. According to the
F&S Report, the average price for lithium carbonate decreased from RMB461,200 per ton in
the six months ended June 30, 2022 to RMB333,100 per ton in the six months ended June 30,
2023. Despite the decrease in the average prices of raw materials, the material cost of cathode
materials amounted to RMB1,638.4 million in the six months ended June 30, 2022 and
RMB2,551.7 million in the six months ended June 30, 2023, accounting for 39.4% and 40.3%
of our cost of sales, respectively. Such increase was primarily due to that in the first half of
2023, we mainly used the raw materials procured in the second half of 2022, the prices of
which were higher than those used in the first half of 2022. According to the F&S Report, in
the three months ended September 30, 2023, the average price for lithium carbonate was
RMB239,900 per ton, and the average price for the cathode material for LFP battery products
was RMB82,500 per ton. See “Risk Factors – Risks Relating to Our Industry and Business –
We are Exposed to Risks Relating to Price Fluctuations of Raw Materials.”
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The following sensitivity analysis illustrates the effects of hypothetical fluctuations in our
average price of raw materials on our gross profit/(loss) before income tax for the periods
indicated, assuming all other factors affecting our profitability had remained unchanged.
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB thousands)
Change in average price of raw
materials
-/+ 5% ........................................... +/-26,855 +/-83,101 +/-541,790 +/-154,440 +/-218,498
-/+ 10% ......................................... +/-53,711 +/-166,202 +/-1,083,579 +/-308,880 +/-436,997
-/+ 15% ......................................... +/-80,566 +/-249,303 +/-1,625,369 +/-463,320 +/-655,495
-/+ 20% ......................................... +/-107,421 +/-322,404 +/-2,167,158 +/-617,760 +/-873,993
In response to the rapid and sharp fluctuation in prices of raw materials, we have
historically taken and going forward will continue to take measures such as (i) strategic
cooperation with major suppliers of raw materials to primarily lock the quantity of our key raw
materials in advance based on our prudent estimation of market trend and according to our
production plan, (ii) adjusting our selling price by entering into supplemental agreements with
some of our customers since November 2021 and introducing price adjustment mechanism into
contracts with some of our customers in the second quarter of 2022, and (iii) leveraging on our
unique supply chain advantages from Tsingshan Group’s network to actively help our suppliers
to source feedstock materials, such as lithium carbonate, thereby ensuring sufficient supply of
our raw materials at competitive prices. Being part of the Tsingshan Group ecosystems
facilitates the process of building trusts and business relationships with various raw material
suppliers. We will also be able to capitalize on Tsingshan’s various strategic endeavors in the
upstream of the industry value chain and have opportunities to make strategic investment in
upstream raw material suppliers and secure supplies of important raw materials. See “Business
– Raw Materials, Components and Suppliers – Raw Materials, Components and Supply
Agreements.” However, we may not have strong bargaining power with customers and
suppliers, and may not be able to effectively mitigate the impact of raw material price
fluctuations despite all the measures being put in place.
Product Mix
We have a diversified product mix. By usage, we offer EV battery products and ESS
battery products. By cathode materials, we offer LFP battery products and ternary lithium
battery products. By product type, we offer battery cells, battery modules and battery packs
(including battery boxes, battery racks and energy storage containers for ESS packs) that can
be used for EVs or ESSs. Meanwhile, we offer battery products with a wide range of capacity.
Factors such as production process and efficiency and capacity of battery products affect the
per Wh manufacturing and direct labor costs, while market acceptance and supply-demand
dynamics have strong effect on the per Wh selling price. As such, on a per Wh basis, the selling
price and production costs vary widely across our different products, and our profitability has
been and will continue to be affected by the mix of our products.
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In general, LFP battery products, our main battery products during the Track Record
Period, have lower selling prices than ternary lithium battery products, reflecting the cost
differences between the major cathode materials. The major cathode materials for LFP battery
products is LFP, while the major cathode materials for ternary lithium battery products
typically include nickel and cobalt in addition to lithium, combined with aluminum or
manganese, which in the aggregate cost more than LFP alone. Small capacity battery products
tend to have higher per Wh manufacturing and direct labor cost as the various fixed costs, such
as depreciation and amortization of equipment and utility costs, to be borne by a unit of battery
would be similar, regardless of the actual energy capacity. Therefore, these small capacity
battery products usually have higher per Wh selling prices to cover the higher per Wh costs.
To the extent that we are not able to charge a higher selling price or we choose to price these
products more competitively, we may sell these products at a loss. During the Track Record
Period, the gross losses from the sales of our ESS battery products are partially attributable to
the competitive pricing of small capacity battery products. In addition, battery cells, battery
modules and battery packs (including battery boxes, battery racks and energy storage
containers for ESS packs) involve different levels of production activities and need different
amounts of raw materials per Wh, hence the differences in per Wh production costs and selling
prices. Battery modules and battery packs typically have higher per Wh selling prices and per
Wh production costs than battery cells, as battery modules and battery packs involve more
complex manufacturing processes. However, to the extent we are not able to set a price that is
sufficient to cover the incremental production costs either as a result of insufficient bargaining
power or less-than-optimal production efficiency, we would need to sell these products at a
loss, this partially resulted in our gross losses in the past. Lastly, different supply-demand
dynamics in different markets can also result in different per Wh selling prices for battery
products used for EVs and ESSs.
Research and Development and New Customers Orders
The ability to develop battery technologies and introduce new products that meet the
demand and preference of our customers is crucial to our growth. As such, we have devoted
significant resources to R&D activities. During the Track Record Period, our R&D expenses
increased significantly. Factors such as salaries to our R&D personnel, the purchase of R&D
equipment and related increase in depreciation, and the raw materials and consumables
expenses have contributed to the increase in our R&D expenses.
Our supply arrangements with our new customers typically require an upfront R&D
process for us to tailor our products to the customers’ specifications. Such R&D activities
would incur expenses and costs, and we may charge those customers a R&D service fee for
those R&D activities.
After the R&D process and before a new product enters into mass production stage, we
conduct trial production and deliver prototypes to our customers. Prototypes typically have
higher selling prices because the production costs are typically higher on per Wh basis at the
trial production phase due to the limited output and the time needed to configure the production
lines. Historically, the higher selling prices of the prototypes cannot offset the higher per unit
production costs, and we were not able to record gross profit from the sale of these prototypes.
FINANCIAL INFORMATION
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The Impact of COVID-19
The outbreak of COVID-19 pandemic has materially and adversely affected the global
economy since the first quarter of 2020. In response, the PRC government and the governments
of other countries have implemented numerous anti-pandemic measures, including travel bans
and restrictions, quarantines, remote work arrangement and shutdowns. Particularly, the
resurgence of COVID-19 pandemic due to the transmitted Omicron in the PRC in 2022 resulted
in extended duration of aforementioned measures. However, after the new measures issued by
the PRC government in late 2022 which aimed to ease the restrictive anti-pandemic measures
taken before, substantially all of the cities in the PRC eased or lifted the restrictive measures
in January 2023.
During the Track Record Period and up to the Latest Practicable Date, we did not
experience temporary closure or shutdown of our offices or production facilities due to the
COVID-19 pandemic. However, as a result of those restrictive and anti-pandemic measures
implemented before in places where our operation, production and R&D located, the mobility
of some of our employees was affected and some of our employees had to work remotely
during their quarantine. In particular, during the outbreak of COVID-19 in Shanghai in the first
half of 2022, the employees in our R&D department in Shanghai were required to work from
home, which resulted in some delay of our R&D processes in certain projects. Such delay only
had limited impact on our overall R&D progress, as we managed to catch up the progress very
soon after our R&D employees resumed their normal R&D activities. In response, we
implemented various precautionary measures and flexibly adjusted work arrangement of our
employees in line with government guidelines and regulations, which ensured that we could
maintain sufficient number of personnel at our office, production facilities and R&D centers
to continue our daily operation, production and R&D activities. We have and will continue to
closely track the health and wellness status of our employees by routinely check their
temperature before they could enter into our offices and production facilities while the
COVID-19 related restrictive and anti-pandemic measures are still in place. Moreover, the
construction of ancillary infrastructures and site visits by our customers in some of our
production facilities were affected as the result of COVID-19 pandemic prevention and control
measures. However, as the new measures issued by the PRC government in late 2022, the
construction and site visits in our production facilities that were affected before have already
resumed.
As our raw materials suppliers scattered over the country, the production activities of
some of them were affected, which in turn resulted in the delay or failure to deliver raw
materials we ordered to us. However, such delay or failure to deliver raw materials to us did
not materially affect our operation or production activities, because we actively contacted with
our suppliers and strategically procured key raw materials in advance according to our
production plan, and thus our inventories were sufficient to support our normal production
activities to fulfill orders from our clients when abovementioned delay or failure to deliver raw
materials occurred. During the Track Record Period and up to the Latest Practicable Date, our
production activities have not encountered any material disruption, nor has our product
delivery been materially affected by the COVID-19 pandemic.
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However, there is no assurance that our operation or production activities will not be
affected in the future due to the COVID-19 pandemic and relevant restrictive measures. See
“Risk Factors – Risks Relating to Our Industry and Business – We face risks related to health
epidemics, including the COVID-19 pandemic, which could have a material adverse effect on
our business and results of operations.” To address the potential risk, we have a working group
in place to monitor and manage the risk in relation to the COVID-19 pandemic according to
our emergence management procedures, and have set emergency plans to deal with different
levels of outbreak in our offices and production facilities while the COVID related restrictive
and anti-pandemic measures are still in place. Accordingly, our Directors believe that the
outbreak of COVID-19 has not had, and will not have, any material adverse impact on the
Group’s business, financial condition or results of operations.
BASIS OF PRESENTATION
Our financial statements have been prepared in accordance with International Financial
Reporting Standards (the “IFRSs”), which comprise all standards and interpretations approved
by the International Accounting Standards Board. All IFRSs effective for the Track Record
Period commencing from 1 January 2023, together with the relevant transitional provisions,
have been early adopted by us in the preparation of the financial statement throughout the
Track Record Period.
SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES
Note 2.3 to “Appendix I – Accountants’ Report” to this document sets forth certain
significant accounting policies, which are important for understanding our financial conditions
and results of operations. Some of our accounting policies involve subjective assumptions,
estimates and judgments that are discussed in note 3 to “Appendix I – Accountants’ Report.”
In the application of our accounting policies, our management is required to make estimates
and assumptions about the carrying amounts of assets and liabilities that are not readily
apparent from other sources. Our estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from
these estimates. Our estimates and underlying assumptions are reviewed by our management
on an ongoing basis. See note 3 to “Appendix I – Accountants’ Report.”
FINANCIAL INFORMATION
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RESULTS OF OPERATIONS
The table below summarizes our results of operations and as percentages of our total
revenue for the periods indicated.
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
Revenue .................................. 906,986 100.0% 2,109,144 100.0% 14,647,778 100.0% 4,016,575 100.0% 6,594,794 100.0%
Cost of sales............................ (795,888) (87.8)% (2,434,024) (115.4)% (13,559,490) (92.6)% (4,157,865) (103.5)% (6,327,560) (95. 9)%
Gross profit/(loss) .................. 111,098 12.2% (324,880) (15.4)% 1,088,288 7.4% (141,290) (3.5)% 267,234 4.1%
Other income and gains........... 12,307 1.4% 35,323 1.7% 167,818 1.1% 23,976 0.6% 85,990 1.3%
Selling and distribution
expenses............................... (34,036) (3.8)% (72,346) (3.4)% (320,795) (2.2)% (98,897) (2.5)% (157,715) (2.4)%
Administrative expenses .......... (34,007) (3.7)% (160,612) (7.6)% (346,787) (2.4)% (151,759) (3.8)% (239,655) (3.6)%
R&D expenses......................... (72,716) (8.0)% (245,558) (11.6)% (767,685) (5.2)% (257,142) (6.4)% (505,246) (7.7)%
Impairment losses on financial
assets, net ............................ (1,951) (0.2)% (1,585) (0.1)% (81,050) (0.6)% (2,182) (0.1)% (249,102) (3.8)%
Other expenses ........................ (11,199) (1.2)% (1,892) (0.1)% (75) (0.0)% – – (5,817) (0.1)%
Finance costs........................... (22,775) (2.5)% (32,659) (1.5)% (188,925) (1.3)% (78,178) (1.9)% (113,114) (1.7)%
Share of profits and losses of
Joint ventures....................... – – – – (1,587) (0.0)% – – (681) (0.0)%
Loss before tax ....................... (53,279) (5.9)% (804,209) (38.1)% (450,798) (3.1)% (705,472) (17.6)% (918,106) (13.9)%
Income tax expenses................ – – – – (25) (0.0)% – – (1,628) (0.0)%
Loss for the year/period ........ (53,279) (5.9)% (804,209) (38.1)% (450,823) (3.1)% (705,472) (17.6)% (919,734) (13.9)%
Attributable to:
Owners of the parent ........... (40,843) (4.5)% (717,227) (34.0)% (354,121) (2.4)% (609,030) (15.2)% (710,215) (10.8)%
Non-controlling interests...... (12,436) (1.4)% (86,982) (4.1)% (96,702) (0.7)% (96,442) (2.4)% (209,519) (3.2)%
FINANCIAL INFORMATION
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NON-IFRS MEASURE
To supplement our consolidated statements of profit or loss that are presented in
accordance with IFRS, we also use adjusted EBITDA as a non-IFRS measure, which is not
required by, or presented in accordance with IFRS. We believe that this non-IFRS measure
facilitates comparisons of operating performance from period to period by eliminating
potential impacts of certain items. We believe that this measure provides useful information to
investors and others in understanding and evaluating our consolidated statements of profit or
loss in the same manner as they help our management. However, our presentation of adjusted
EBITDA (non-IFRS measure) may not be comparable to similar item measures presented by
other companies. The use of this non-IFRS measure has limitations as an analytical tool, and
you should not consider it in isolation from, or as substitute for analysis of, our consolidated
statements of profit or loss or financial condition as reported under IFRS.
We define adjusted EBITDA (non-IFRS measure) as loss for the year adding back income
tax expenses, financial cost, depreciation and amortization and share incentive expense, and
deducting interest income. The share incentive expense is non-cash equity-settled employee
related expense arising from grant of share incentive awards.
Y ear Ended December 31,
Six Months Ended
June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
Loss for the year/period .................. (53,279) (804,209) (450,823) (705,472) (919,734)
Income tax expenses .......................... – – 25 – 1,628
Finance cost ........................................ 22,775 32,659 188,925 78,178 113,114
Interest income.................................... (2,523) (9,211) (96,071) (14,093) (67,166)
Depreciation and amortization ............ 89,441 166,371 514,280 168,516 420,519
Share incentive expense ...................... – 42,608 133,637 63,912 77,127
Adjusted EBITDA
(non-IFRS measure) ....................... 56,414 (571,782) 289,973 (408,959) (374,512)
Adjusted EBITDA margin
(non-IFRS measure)......................... 6.2% (27.1)% 2.0% (10.2)% (5.7)%
We recorded negative adjusted EBITDA (non-IFRS measures) of RMB571.8 million in
2021, primarily due to that we recorded gross loss for the corresponding year. We managed to
record positive adjusted EBITDA (non-IFRS measures) of RMB290.0 million in 2022. Such
change was primarily because we managed to turn gross losses into gross profits in 2022.
However, due to (i) the gross losses of our EV battery products, and (ii) our increased operating
expenses and impairment losses on financial assets, we recorded negative adjusted EBITDA
(non-IFRS measures) of RMB374.5 million with negative adjusted EBITDA margin (non-IFRS
measure) of 5.7% in the six months ended June 30, 2023, which was decreased from negative
adjusted EBITDA (non-IFRS measures) of RMB409.0 million with negative adjusted EBITDA
margin (non-IFRS measure) of 10.2% in the six months ended June 30, 2022, primarily due to
the fact that we managed to turn the gross losses of RMB141.3 million in the six months ended
June 30, 2022 into the gross profits of RMB267.2 million in the six months ended June 30,
2023. See “– Principal Components of Statement of Profit or Loss and Other Comprehensive
Income – Gross Profit/(Loss) and Gross Profit Margin.”
FINANCIAL INFORMATION
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PRINCIPAL COMPONENTS OF STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Revenue
Revenue by Product – Usage
Our revenue is derived from the sales of our battery products, which can be used in EV
and ESS, as well as revenue from other businesses. The table below sets forth a breakdown of
our revenue by product usage for the periods indicated.
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
EV battery products .... 673,192 74.2% 981,507 46.5% 4,642,801 31.7% 1,662,547 41.4% 1,247,794 18.9%
LFP EV battery
products ............... 527,739 58.2% 879,564 41.7% 4,222,740 28.8% 1,378,006 34.3% 946,475 14.4%
Ternary lithium EV
battery products ... 145,453 16.0% 101,943 4.8% 420,061 2.9% 284,541 7.1% 301,319 4.5%
ESS battery products... 182,105 20.1% 859,459 40.7% 8,400,597 57.4% 1,881,473 46.8% 4,320,526 65.5%
LFP ESS battery
products .............. 177,408 19.6% 859,459 40.7% 8,398,738 57.3% 1,879,811 46.8% 4,317,794 65.5%
Ternary lithium ESS
battery products .. 4,697 0.5% – – 1,859 0.0% 1,662 0.0% 2,732 0.0%
Other businesses
Sales of wastes (1) .... 43,744 4.8% 251,167 11.9% 796,789 5.4% 456,113 11.4% 165,218 2.5%
R&D services (2) ....... 6,299 0.7% 7,188 0.4% 22,308 0.2% 11,347 0.3% 12,316 0.2%
Others (3) ................. 1,646 0.2% 9,823 0.5% 785,283 5.3% 5,095 0.1% 848,940 12.9%
Subtotal ...................... 51,689 5.7% 268,178 12.8% 1,604,380 10.9% 472,555 11.8% 1,026,474 15.6%
Total ........................... 906,986 100.0% 2,109,144 100.0% 14,647,778 100.0% 4,016,575 100.0% 6,594,794 100.0%
Notes:
(1) The sales of wastes primarily include revenue from sales of used raw materials such as low concentration crude
NMP, and other wastes, such as wasted aluminum foil, wasted copper foil and wasted battery cells. See
“Business – Marketing, Sales and Customers – Our Customers.” Starting in July 2022, instead of selling crude
NMP, we consigned third-party companies to process the crude NMP, and thus no revenue was recognized from
the sales of crude NMP from then on. Under the new arrangement, the processing fees of the crude NMP were
included in inventories and recorded as our cost of sales when relevant battery products are sold. Therefore,
as the revenue from sales of crude NMP as wastes constituted a substantial majority of the revenue from sales
of wastes before adopting the new arrangement, we expect our revenue contribution from sales of wastes as
a percentage of our total revenue to decrease significantly going forward.
(2) The revenue from provision of R&D services refers to charges on the customers for the upfront R&D services
for the purpose of developing customized battery products.
(3) Others mainly include revenue from sales of battery components.
FINANCIAL INFORMATION
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We pursue a dual-focus strategy on both EV and ESS batteries. During the Track Record
Period, revenue from sales of both EV and ESS battery products increased rapidly. In 2020, as
some of our EV battery products passed the verification processes required by our EV
manufacturer customers, we allocated our increased production capacity to seize the
opportunities and satisfy the increasing demand from such EV manufacturers, which resulted
in a larger revenue contribution from our EV battery products as compared with that of our ESS
battery products. In 2021, we strategically increased our sales to ESS manufacturer customers
to pursue the growth potential, and thus the revenue contribution from sales of ESS battery
products increased to a level similar to sales of EV battery products. In 2022, as a result of the
continuous expansion of our production capacity and customer bases, the sales of both of our
EV and ESS battery products increased significantly as compared with those in 2021. In
particular, the sales of our ESS battery products surpassed the sales of our EV battery products
in 2022 primarily due to (i) our further expansion of production capacity in 2022, (ii) our
allocation of more increased production capacity to our ESS battery products to meet the
increasing downstream demands for our ESS battery products, and (iii) the strong overseas
demands for our ESS battery products for both household and commercial industrial
applications. Against the backdrop of decrease in downstream demands of EVs in the overall
industry in the first half of 2023 as compared to that of the second half of 2022 as the
macro-economy was still in the process of restoration in China and overseas, we leveraged the
flexibility of our dual-focus strategy to allocate more production capacity to our ESS battery
products that had a higher gross profit margin as compared to that of our EV batteries to meet
the increasing downstream demands for ESS battery products in the six months ended June 30,
2023. As a result, the revenue from our ESS battery products in the six months ended June 30,
2023 increased significantly both in terms of absolute and as a percentage to our total revenue
of the same period as compared that in the six months ended June 30, 2022.
The revenue from other businesses increased significantly from RMB268.2 million in
2021 to RMB1,604.4 million in 2022, primarily due to (i) a significant increase in sales of
battery components since the second half of 2022, and (ii) the significant increase in sales of
wastes in line with our increased output of battery products. The revenue from other businesses
increased significantly from RMB472.6 million in the six months ended June 30, 2022 to
RMB1,026.5 million in the six months ended June 30, 2023, primarily due to the sales of
battery components in the six months ended June 30, 2023, which was partially offset by the
decrease in revenue from sales of wastes in the six months ended June 30, 2023 as a result of
the new arrangement for the disposal of crude NMP since July 2022 as mentioned above.
FINANCIAL INFORMATION
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Revenue by Product – Battery Type
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
LFP battery
products .......... 705,148 77.7% 1,739,022 82.5% 12,621,477 86.2% 3,257,817 81.1% 5,264,269 79.8%
Ternary lithium
battery
products .......... 150,149 16.6% 101,944 4.7% 421,921 2.9% 286,203 7.1% 304,051 4.6%
Other businesses . 51,689 5.7% 268,178 12.8% 1,604,380 10.9% 472,555 11.8% 1,026,474 15.6%
Total ................... 906,986 100.0% 2,109,144 100.0% 14,647,778 100.0% 4,016,575 100.0% 6,594,794 100.0%
During the Track Record Period, we generated a substantial majority of revenue from
sales of LFP battery products. The exponential growth of revenue from our LFP battery
products during the Track Record Period was mainly attributable to (i) our increased sales
volume of ESS battery products, the substantial majority of which were LFP battery products,
and (ii) the preference of LFP battery products of our EV manufacturer customers due to the
lower cost and higher battery safety of LFP battery products.
Revenue by Region
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
PRC(1) ................. 904,476 99.7% 2,091,700 99.2% 14,480,096 98.8% 3,905,432 97.2% 6,218,709 94.3%
Overseas (1)(2) ...... 2,510 0.3% 17,444 0.8% 167,682 1.2% 111,143 2.8% 376,085 5.7%
Total ................... 906,986 100.0% 2,109,144 100.0% 14,647,778 100.0% 4,016,575 100.0% 6,594,794 100.0%
Notes:
(1) Based on the location of our customer who signed the sales and purchase agreements with us. Some of our PRC
customers are ESS system integrators that export their products integrating our battery products to overseas
end users.
(2) Mainly includes Indonesia, Australia, Morocco, Turkey, India, Brazil, Poland and Belgium.
FINANCIAL INFORMATION
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--- page 348 ---
PRC is our major market, and we generated a substantial majority of revenue from
customers in the PRC during the Track Record Period. During the same period, the majority
of our revenue from overseas was derived from the direct sales of ESS battery products for
industrial uses to overseas customers, the sales volume of which was easily affected by the
demands of our customers for their large-scale commercial ESS projects.
Sales V olume and Average Selling Price of Battery Products
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
Sales
volume
Average
selling
price
Sales
volume
Average
selling
price
Sales
volume
Average
selling
price
Sales
volume
Average
selling
price
Sales
volume (1)
Average
selling
price (1)
(GWh) (RMB/Wh) (GWh) (RMB/Wh) (GWh) (RMB/Wh) (GWh) (RMB/Wh) (GWh) (RMB/Wh)
Product type – Usage
EV battery products........ 1.24 0.54 1.87 0.52 6.13 0.76 2.20 0.76 1.82 0.69
LFP EV battery
products................... 1.05 0.50 1.73 0.51 5.66 0.75 1.87 0.74 1.44 0.66
Ternary lithium EV
battery products....... 0.19 0.76 0.14 0.67 0.48 0.88 0.34 0.85 0.38 0.78
ESS battery products ...... 0.31 0.59 1.43 0.60 10.48 0.80 2.50 0.75 5.95 0.73
LFP ESS battery
products ................. 0.31 0.57 1.43 0.60 10.48 0.80 2.49 0.75 5.94 0.73
Ternary lithium ESS
battery products ..... 0.01 0.53 – – 0.00 0.88 0.00 0.82 0.01 0.38
Total ............................. 1.55 0.55 3.30 0.56 16.61 0.79 4.70 0.75 7.77 0.72
Product type –
Battery type
LFP battery products ...... 1.35 0.52 3.14 0.55 16.13 0.78 4.36 0.75 7.38 0.71
Ternary lithium battery
products ...................... 0.20 0.75 0.16 0.64 0.48 0.88 0.34 0.85 0.39 0.78
Total ............................. 1.55 0.55 3.30 0.56 16.61 0.79 4.70 0.75 7.77 0.72
Location of customer
PRC................................ 1.55 0.55 3.29 0.55 16.46 0.78 4.61 0.74 7.29 0.71
Overseas ......................... 0.00 0.99 0.01 1.08 0.15 1.08 0.09 1.23 0.48 0.78
Total ............................. 1.55 0.55 3.30 0.56 16.61 0.79 4.70 0.75 7.77 0.72
Note:
(1) The sales volume and the average selling prices in the six months ended June 30, 2023 has accounted for the
effect of sales return of 0.23GWh EV battery products. See “– Period-to-Period Comparison of Results of
Operations – Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022 – Revenue – EV
Battery Products.”
FINANCIAL INFORMATION
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--- page 349 ---
Our sales volume of battery products increased significantly from 1.55GWh in 2020 to
16.61GWh in 2022, representing a CAGR of 227.4%, primarily due to (i) the rapid
development of both EV and ESS industries, (ii) the rapid expansion of our production
capacity, and (iii) our continuous efforts to expand our customer base. Our sales volume of
battery products increased from 4.70GWh in the six months ended June 30, 2022 to 7.77GWh
in the six months ended June 30, 2023, primarily due to the significant increase in sales volume
of our ESS battery products, attributable to (i) the rapid development of the global ESS
industry and our strategic allocation of more resources to our ESS battery products, (ii) the
expansion of our production capacity, and (iii) our continuous efforts in expanding our ESS
customer base. In the same period, the fluctuations in our average selling prices were mainly
due to (i) the fluctuation in prevailing market prices of battery products, (ii) the fluctuation in
costs of raw materials, and (iii) the adjustment of selling prices of our battery products. The
average selling price of our battery products remained relatively stable at RMB0.55 per Wh in
2020 and RMB0.56 per Wh in 2021, which further increased to RMB0.79 per Wh in 2022 ,
primarily due to our adjustment of selling prices in response to the increased purchase price of
key raw materials. The average selling price of our battery products decreased from RMB0.75
per Wh in the six months ended June 30, 2022 to RMB0.72 per Wh in the six months ended
June 30, 2023, primarily due to the overall downward industry trend of selling prices of
lithium-ion battery products as a result of the decrease in the prices of the key raw material,
lithium carbonate, in the six months ended June 30, 2023 as compared to the corresponding
period in 2022.
From 2020 to 2022 and in the six months ended June 30, 2023, the average selling prices
of our EV battery products were lower than those of our ESS battery products, primarily due
to different product mix. As compared with our ESS battery products, our EV battery products
had a larger proportion of large capacity batteries which generally had lower average selling
prices on a per Wh basis.
During the Track Record Period, the average selling prices of LFP battery products were
lower than those of ternary lithium battery products, primarily due to the relatively lower cost
of raw materials for LFP battery products, which enabled us to set a more competitive price for
our LFP battery products.
During the Track Record Period, the average selling prices of our battery products to
overseas were generally higher than those to the PRC primarily due to (i) that products sold
to overseas were mainly customized ESS battery products with functions and features catering
to the special local conditions, and (ii) the higher costs involved in overseas sales.
FINANCIAL INFORMATION
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--- page 350 ---
Cost of Sales
Cost of Sales by Nature
Our cost of sales primarily consists of (i) raw material costs, including (a) cathode
materials, primarily including LFP (for LFP battery products), lithium NCM (for ternary
lithium battery products) and aluminum foil, (b) anode materials, primarily including graphite
and copper foil, (c) separators, (d) electrolyte solutions, and (e) other materials, primarily
including top cover, aluminum shell; (ii) manufacturing costs, including the depreciation and
amortization of our plants and other manufacturing costs; (iii) direct labor costs, being the
staff-related costs of our manufacturing operations; and (iv) other costs for the sales of wastes,
R&D services, and others.
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
Cost of Sales for
Battery Products
Raw material costs
Cathode materials...... 191,392 24.0% 661,350 27.2% 6,498,935 47.9% 1,638,434 39.4% 2,551,679 40.3%
Anode materials ........ 126,839 15.9% 365,513 15.0% 1,768,638 13.0% 592,066 14.2% 743,842 11.8%
Separators.................. 38,083 4.8% 87,828 3.6% 446,832 3.3% 139,700 3.4% 233,767 3.7%
Electrolyte solutions.. 56,453 7.1% 268,390 11.0% 1,102,621 8.1% 389,744 9.4% 358,929 5.7%
Other materials.......... 124,339 15.7% 278,938 11.5% 1,018,766 7.6% 328,858 7.9% 481,751 7.6%
Sub-total ...................... 537,106 67.5% 1,662,019 68.3% 10,835,792 79.9% 3,088,802 74.3% 4,369,968 69.1%
Manufacturing costs
Depreciation and
amortization ........... 48,355 6.1% 98,401 4.0% 341,624 2.5% 109,178 2.6% 302,162 4.8%
Other manufacturing
costs....................... 91,321 11.5% 220,149 9.0% 488,410 3.6% 234,890 5.7% 361,800 5.7%
Sub-total ...................... 139,676 17.6% 318,550 13.0% 830,034 6.1% 344,068 8.3% 663,962 10.5%
Direct labor costs.......... 71,224 8.9% 174,614 7.2% 499,924 3.7% 254,631 6.1% 286,346 4.5%
Cost of Sales for
Other Businesses
Other costs.................... 47,882 6.0% 278,841 11.5% 1,393,740 10.3% 470,364 11.3% 1,007,284 15.9%
Total ............................. 795,888 100.0% 2,434,024 100.0% 13,559,490 100.0% 4,157,865 100.0% 6,327,560 100.0%
FINANCIAL INFORMATION
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--- page 351 ---
Raw materials costs remained the largest component of our cost of sales throughout the
Track Record Period. Manufacturing costs and direct labor costs as a percentage of our total
cost of sales decreased from 2020 to 2022 primarily due to (i) the increase in raw materials
costs as a result of the increase in purchase price of raw materials, and (ii) the improvement
of production efficiency and economies of scale. Our other costs increased in absolute terms
during from 2020 to 2022, primarily due to (i) our increased sales of wastes which was in line
with our increased production volume of battery products, and (ii) a significant increase in
sales of battery components in the second half of 2022 as we established cooperation with a
U.S. EV manufacturer in relation to the sales of battery components. Our other costs increased
in both absolute amount and as a percentage of our total cost of sales from the six months ended
June 30, 2022 to the six months ended June 30, 2023, primarily due to the significant increase
in our sales of battery components since the second half of 2022 for the above-mentioned
reason. Our manufacturing costs as a percentage of our total cost of sales increased from 8.3%
in the six months ended June 30, 2022 to 10.5% in the six months ended June 30, 2023,
primarily due to the increase in unit costs of our EV battery products mainly attributable to the
decrease in sales of our EV battery products which reduced the economies of scale of
manufacturing our EV battery products as the fixed costs did not decrease to the same extent.
Our direct labor costs decreased from 6.1% in the six months ended June 30, 2022 to 4.5% in
the six months ended June 30, 2023, primarily due to the decrease in unit direct labor costs of
our ESS battery products as a result of our continuous efforts to improve the production
efficiency. Starting in July 2022, instead of selling crude NMP, which previously constituted
a substantial majority of the revenue from sales of wastes, we consigned third-party companies
to process the crude NMP. See “– Principal Components of Statement of Profit or Loss and
Other Comprehensive Income – Revenue.” Therefore, no cost of sales for the selling of crude
NMP has been recognized since July 2022, which resulted in a decrease in the other costs
overall as a percentage of our total costs in 2022 as compared to 2021.
The table below set forth a breakdown of the total cost of sales and unit cost of sales for
the periods indicated:
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB per Wh, except for percentages)
(unaudited)
Cost of
sales
Unit
cost of
sales
Cost of
sales
Unit
cost of
sales
Cost of
sales
Unit
cost of
sales
Cost of
sales
Unit
cost of
sales
Cost of
sales
Unit
cost of
sales
Product Type – Usage
EV battery products ..................... 542,758 0.44 1,084,796 0.58 4,496,594 0.73 1,579,440 0.72 1,279,877 0.70
As % to total cost of sales ....... 68.2% 44.6% 33.2% 38.0% 20.2%
ESS battery products.................... 205,248 0.64 1,070,387 0.76 7,669,156 0.73 2,108,059 0.85 4,040,397 0.68
As % to total cost of sales ....... 25.8% 44.0% 56.5% 50.7% 63.8%
FINANCIAL INFORMATION
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--- page 352 ---
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB per Wh, except for percentages)
(unaudited)
Cost of
sales
Unit
cost of
sales
Cost of
sales
Unit
cost of
sales
Cost of
sales
Unit
cost of
sales
Cost of
sales
Unit
cost of
sales
Cost of
sales
Unit
cost of
sales
Product Type – Battery Type
LFP battery products.................... 608,862 0.45 2,019,125 0.64 11,784,031 0.73 3,427,555 0.78 4,994,801 0.68
As % to total cost of sales ....... 76.5% 83.0% 86.9% 82.4% 78.9%
Ternary lithium battery products.. 139,144 0.70 136,058 0.85 381,719 0.79 259,944 0.82 325,473 0.83
As % to total cost of sales ....... 17.5% 5.6% 2.8% 6.3% 5.1%
The table below set forth a breakdown of the unit cost of raw materials and as percentages
of unit cost of sales for the periods indicated.
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB per Wh, except for percentages)
(unaudited)
Product type – Usage
EV battery products............. 0.33 76.2% 0.47 81.2% 0.64 87.9% 0.61 84.5% 0.56 80.1%
ESS battery products ........... 0.40 60.1% 0.55 73.0% 0.66 89.8% 0.70 83.2% 0.56 82.8%
Product type – Battery type
LFP battery products ........... 0.32 70.1% 0.49 76.6% 0.64 87.9% 0.65 83.4% 0.56 82.1%
Ternary lithium battery
products ........................... 0.55 79.3% 0.72 85.0% 0.66 89.8% 0.72 87.7% 0.69 82.7%
Cost of raw materials as percentage of the total cost of sales of each product continued
increasing during from 2020 to 2022 driven by both our efforts to improve production
efficiency, and shorten the ramp-up period for new production facilities, as well as fluctuations
in purchase prices of raw materials. However, as a percentage of the total cost of sales, the cost
of raw materials decreased in the six months ended June 30, 2023 as compared to that of the
six months ended June 30, 2022, primarily due to the decrease in price of raw materials. See
“– Period-to-Period Comparison of Results of Operations.”
FINANCIAL INFORMATION
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--- page 353 ---
Gross Profit/(Loss) and Gross Profit Margin
Gross Profit/(Loss) and Gross Profit Margin by Product – Usage
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
(in RMB thousands, except for percentages)
(unaudited)
EV battery products................ 130,434 19.4% (103,289) (10.5)% 146,207 3.1% 83,107 5.0% (32,083) (2.6)%
LFP EV battery products ... 118,840 22.5% (69,175) (7.9)% 102,555 2.4% 51,974 3.8% (12,671) (1.3)%
Ternary lithium EV battery
products ......................... 11,594 8.0% (34,114) (33.5)% 43,652 10.4% 31,133 10.9% (19,412) (6.4)%
ESS battery products .............. (23,143) (12.7)% (210,928) (24.5)% 731,441 8.7% (226,586) (12.0)% 280,129 6.5%
LFP ESS battery products .. (22,555) (12.7)% (210,928) (24.5)% 734,892 8.8% (221,712) (11.8)% 282,139 6.5%
Ternary lithium ESS
battery products ............. (588) (12.5)% 0 0.0% (3,451) (185.6)% (4,874) (293.3)% (2,010) (73.6)%
Other businesses..................... 3,807 7.4% (10,663) (4.0)% 210,640 13.1% 2,189 0.5% 19,188 1.9%
Total....................................... 111,098 12.2% (324,880) (15.4)% 1,088,288 7.4% (141,290) (3.5)% 267,234 4.1%
In 2020, we recorded gross losses of our ESS battery products as compared with gross
profits of our EV battery products in the same year. In 2021, we recorded gross losses for both
EV and ESS battery products, while the negative gross profit margin of our ESS battery
products was higher than that of our EV battery products. This is primarily due to differences
in product mix for EV battery products and ESS battery products. More specifically, our ESS
battery products had a higher proportion of small capacity batteries, which were less profitable
during the Track Record Period as (i) our production efficiency of small capacity batteries had
not achieved the optimal level and was still in the process of improvement, (ii) we set the
selling prices of our small capacity batteries at a relatively competitive level to capture our
market share, and such pricing in turn prevented us from recouping the higher per Wh costs for
those small capacity battery products and (iii) small capacity battery products tend to have
higher per Wh manufacturing and direct labor costs as the various fixed costs such as
depreciation and amortization of equipment and utility costs to be borne by a unit of battery
would be similar, regardless of the actual capacity, which in turn exacerbated the production
efficiency issue. We managed to turn the gross losses of our EV and ESS battery products into
a gross profit in 2022, primarily due to (i) our adjustment of prices of both of our EV and ESS
battery products in response to the rapid increase of raw material prices, which was also in line
with the prevailing market trends according to the F&S Report, (ii) our further improved
production efficiency, and (iii) our improved product offering. The gross profit margin of our
ESS battery products was higher than that of our EV battery products in 2022, primarily due
FINANCIAL INFORMATION
– 344 –


--- page 354 ---
to (i) the higher selling prices of our ESS battery products and (ii) our improved production
efficiency of ESS battery products benefited from the economies of scale brought by the larger
sales volume of such products in 2022. We recorded gross losses for our EV battery products
in the six months ended June 30, 2023, compared with gross profits in the six months ended
June 30, 2022, primarily due to (i) the temporary slowdown in the EV industry in early 2023
and the increasing competition in the EV industry, (ii) that we offered a one-off discount in the
aggregate of approximately RMB28 million on the selling price of our EV battery products sold
to one of our major OEM customers, in consideration of the temporary slowdown in the EV
industry in China in early 2023 and the long-term strategic cooperation with the customer, and
(iii) the higher unit manufacturing costs attributable to the decrease in sales of our EV battery
products, while the fixed costs did not decrease to the same extent.
In 2021, we recorded gross loss of our other businesses of RMB10.7 million, with a
negative gross profit margin of 4.0%, primarily due to the gross loss for the sales of our wastes,
mainly including crude NMP, as a result of the increase in corresponding raw material costs
and that our selling price for those crude NMP did not increase to the same extent. In 2022,
we also managed to turn the gross loss of our other businesses into gross profit of RMB210.7
million, with a gross profit margin of 13.1%. Such change was primarily due the fact that we
significantly increased our sales of battery components in the second half of 2022, which were
profitable.
Gross Profit/(Loss) and Gross Profit Margin by Product – Battery Type
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
(in RMB thousands, except for percentages)
(unaudited)
LFP battery product ........ 96,286 13.7% (280,103) (16.1)% 837,446 6.6% (169,738) (5.2)% 269,468 5.1%
Ternary lithium battery
products....................... 11,005 7.3% (34,114) (33.5)% 40,202 9.5% 26,259 9.2% (21,422) (7.0)%
Other businesses ............. 3,807 7.4% (10,663) (4.0)% 210,640 13.1% 2,189 0.5% 19,188 1.9%
Total ............................... 111,098 12.2% (324,880) (15.4)% 1,088,288 7.4% (141,290) (3.5)% 267,234 4.1%
FINANCIAL INFORMATION
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--- page 355 ---
During the Track Record Period, the gross profit or loss from the sales of our LFP battery
products was primarily affected by (i) the fluctuation in purchase prices of raw materials, (ii)
the release of the benefit of economies of scale as the result of our expansion of production
capacity, (iii) the prevailing industry trend, and (iv) product mix, particularly in different
battery capacity. The gross profit or loss from the sales of our ternary lithium battery products
experienced stronger fluctuation during the Track Record Period, primarily due to (i) the
relatively small production volume of our ternary lithium battery products as a result of the
then limited production capacity and we were yet to form economies of scale for the ternary
lithium battery products, and (ii) the strong fluctuation in purchase prices of cathode materials
of ternary lithium battery products.
Gross Profit/(Loss) and Gross Profit Margin by Region
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
Gross
Profit/
(loss)
Gross
Profit
Margin
(in RMB thousands, except for percentages)
(unaudited)
PRC .............................. 109,805 12.1% (333,607) (15.9)% 1,071,086 7.4% (161,011) (4.1)% 210,764 3.4%
Overseas ....................... 1,293 51.5% 8,727 50.0% 17,202 10.3% 19,721 17.7% 56,470 15.0%
Total ............................. 111,098 12.2% (324,880) (15.4)% 1,088,288 7.4% (141,290) (3.5)% 267,234 4.1%
During the Track Record Period, sales to overseas customers were more profitable than
sales to domestic customers primarily because the products we sold to overseas were mainly
customized ESS battery packs that commanded higher selling prices and resulted in a higher
gross profit margin. The gross profit margin for the sales to overseas customers decreased from
51.5% in 2020 and 50.0% in 2021 to 10.3% in 2022, primarily because (i) the competitive
prices we offered to our overseas customers in 2022 due to the increasing competition in
overseas markets and in consideration of obtaining more market share, and (ii) the rapid
increase in raw material prices in 2022. Our gross profit margin for sales to overseas customers
decreased from 17.7% in the six months ended June 30, 2022 to 15.0% in the six months ended
June 30, 2023, primarily due to our adjustment of selling prices in response to the increasing
competition.
FINANCIAL INFORMATION
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--- page 356 ---
Other Income and Gains
Our other income and gains primarily comprise (i) government grants, (ii) interest
income, (iii) foreign exchange gains, net, (iv) financial assets at fair value through profit or
loss, and (v) others. Our government grants included (i) government grants related to assets,
which were primarily related to our investment in equipment and plant, and (ii) government
grants related to income, which were primarily subsidies for our R&D activities. None of these
government grants are subject to any unfulfilled condition.
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
Government grants..........
Related to assets.......... 2,098 17.0% 4,032 11.4% 8,939 5.3% 3,422 14.3% 8,745 10.2%
Related to income ....... 6,936 56.4% 15,533 44.0% 43,196 25.7% 2,322 9.7% 1,967 2.3%
Interest income ............... 2,523 20.5% 9,211 26.0% 96,071 57.2% 14,093 58.8% 67,166 78.1%
Foreign exchange
gains, net..................... – – 4,939 14.0% 11,962 7.1% 3,230 13.5% 2,397 2.8%
Financial assets at
fair value through
profit or loss................ –––– 2,186 1.3% – – 1,959 2.3%
Others ............................. 750 6.1% 1,608 4.6% 5,464 3.4% 909 3.8% 3,756 4.3%
Total ............................... 12,307 100.0% 35,323 100.0% 167,818 100.0% 23,976 100.0% 85,990 100.0%
as % of Total
Revenue ................... 1.4% 1.7% 1.1% 0.6% 1.3%
FINANCIAL INFORMATION
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--- page 357 ---
Selling and Distribution Expenses
Our selling and distribution expenses primarily include (i) warranties granted to the
battery products sold and after services, (ii) salaries and welfare for employees for our sales
and distribution personnel, (iii) marketing fees, (iv) entertainment fees incurred from our sales
and marketing activities, (v) traveling expenses, (vi) depreciation and amortization for
properties and equipment related to selling and distribution activities, and (vii) share incentive
expense.
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
Warranties and after
services .................. 20,061 58.9% 36,652 50.7% 239,078 74.5% 68,499 69.3% 91,658 58.1%
Salaries and welfare... 6,640 19.5% 20,766 28.7% 37,964 11.8% 15,584 15.8% 18,189 11.5%
Marketing fees ........... 3,338 9.8% 5,381 7.4% 8,270 2.6% 2,241 2.3% 17,183 10.9%
Entertainment fees ..... 1,854 5.4% 2,755 3.8% 6,135 1.9% 1,461 1.5% 5,904 3.7%
Traveling expenses..... 1,211 3.6% 2,664 3.7% 3,458 1.1% 1,791 1.8% 4,005 2.5%
Depreciation and
amortization ........... 58 0.2% 459 0.6% 6,176 1.9% 190 0.2% 7,442 4.7%
Share incentive
expense................... –––– 5 5 0 0.2% – 0.0% 1,310 0.8%
Others ........................ 874 2.6% 3,669 5.1% 19,164 6.0% 9,131 9.1% 12,024 7.8%
Total .......................... 34,036 100.0% 72,346 100.0% 320,795 100.0% 98,897 100.0% 157,715 100.0%
as % of Total
Revenue .............. 3.8% 3.4% 2.2% 2.5% 2.4%
During the Track Record Period, expenses for warranties and after services were the
largest component of our selling and distribution expenses. As expenses for warranties and
after services are directly linked to our sales volume, we expect such expenses to grow in line
with our sales and continue to account for the largest component of our selling and distribution
expenses.
Administrative Expenses
Our administrative expenses primarily comprise (i) salaries and welfare for our
administrative personnel, (ii) office expenses, (iii) depreciation and amortization for properties
and equipment related to administrative activities, (iv) consultancy fee paid to various agencies
such as audit, applications of patents and legal advice, (v) traveling expenses, (vi) taxes, and
(vii) share incentive expense.
FINANCIAL INFORMATION
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--- page 358 ---
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
Salaries and welfare ........... 12,043 35.4% 71,034 44.2% 129,016 37.2% 54,243 35.7% 80,758 33.7%
Office expenses .................. 3,368 9.9% 23,828 14.8% 24,685 7.1% 10,744 7.1% 19,501 8.1%
Depreciation and
amortization .................... 9,664 28.4% 15,949 9.9% 48,927 14.1% 24,587 16.2% 35,194 14.7%
Consultancy fee .................. 2,828 8.3% 8,293 5.2% 18,066 5.2% 8,736 5.8% 27,364 11.4%
Traveling expenses ............. 482 1.4% 1,349 0.8% 2,101 0.6% 1,222 0.8% 2,381 1.0%
Taxes .................................. 3,065 9.0% 3,768 2.3% 22,040 6.4% 4,330 2.9% 23,719 9.9%
Share incentive expense ..... – – 29,706 18.5% 90,121 26.0% 44,559 29.4% 46,053 19.2%
Others................................. 2,557 7.6% 6,685 4.3% 11,831 3.4% 3,338 2.1% 4,685 2.0%
Total................................... 34,007 100.0% 160,612 100.0% 346,787 100.0% 151,759 100.0% 239,655 100.0%
as % of Total Revenue .... 3.7% 7.6% 2.4% 3.8% 3.6%
In 2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023, we recorded
consultancy fee of RMB2.8 million, RMB8.3 million, RMB18.1 million, RMB8.7 million and
RMB27.4 million, respectively. Such increase was primarily due to the growth of our business,
which required for more expertise in areas, such as auditing, legal advice, environmental
consultancy and talent recruiting.
Research and Development Expenses
Our R&D expenses primarily comprise (i) salaries and welfare for R&D personnel, (ii)
expenses for raw materials and consumables used in our R&D activities, (iii) depreciation and
amortization of facilities and equipment for R&D activities, (iv) consultancy fee for R&D
activities in relation to consigned R&D, intelligent property agency and expert consultancy,
(v) share incentive expense, (vi) office expenses, and (vii) traveling expenses.
FINANCIAL INFORMATION
– 349 –


--- page 359 ---
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
Salaries and welfare ........... 40,122 55.2% 118,706 48.3% 390,586 50.9% 129,433 50.3% 203,129 40.2%
Raw materials and
consumables.................... 17,142 23.6% 74,554 30.4% 223,760 29.1% 72,406 28.2% 208,656 41.3%
Depreciation and
amortization .................... 12,102 16.6% 17,720 7.2% 44,993 5.9% 14,066 5.5% 33,054 6.5%
Consultancy fee ................. 19 0.0% 1,205 0.5% 19,972 2.6% 2,320 0.9% 9,106 1.8%
Share incentive expense ..... – – 12,903 5.3% 41,272 5.4% 19,355 7.5% 27,767 5.5%
Office expenses .................. 170 0.2% 6,778 2.8% 28,338 3.7% 7,538 2.9% 12,175 2.4%
Traveling expense............... 357 0.5% 838 0.3% 2,641 0.3% 1,825 0.7% 2,342 0.5%
Others
(1) ............................. 2,804 3.9% 12,854 5.2% 16,123 2.1% 10,199 4.0% 9,017 1.8%
Total................................... 72,716 100.0% 245,558 100.0% 767,685 100.0% 257,142 100.0% 505,246 100.0%
as % of Total Revenue .... 8.0% 11.6% 5.2% 6.4% 7.7%
(1) Mainly including testing fees and maintenance expense.
In 2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023, we recorded
research and development expenses of RMB72.7 million, RMB245.6 million, RMB767.7
million, RMB257.1 million and RMB505.2 million, respectively. Such increase was primarily
due to the increasing research and developments activities brought about by the overall growth
of our business to satisfy the different needs of our customers and also maintain our
competitive advantages in the lithium-ion battery industry.
During the Track Record Period, the salaries and welfare remained as the largest part of
our research and development expenses. In 2020, 2021 and 2022 and the six months ended June
30, 2022 and 2023, the amounts of salaries and welfare expenses were RMB40.1 million,
RMB118.7 million, RMB390.6 million, RMB129.4 million and RMB203.1 million,
respectively. Such increase was primarily due to an increase in number of R&D personnel and
an increase in per capita salaries to attract more talents.
In 2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023, the amounts
of consultancy fees of were RMB19,000, RMB1.2 million, RMB20.0 million, RMB2.3 million
and RMB9.1 million, respectively. Such increase was primarily due to the increasing need of
external professional advice and expertise in relation to our R&D activities in response to the
overall growth of our business and different needs of our customers.
FINANCIAL INFORMATION
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--- page 360 ---
In 2020, 2021 and 2022, the amount of others were RMB2.8 million, RMB12.9 million
and RMB16.1 million, respectively. Such increase was primarily due to the overall growth of
our business which requires more R&D activities, which incurred more fees and expenses for
sample testing and R&D equipment.
Finance Costs
Our finance costs primarily comprise (i) interest expenses on bank loans and other loans,
and (ii) interest expenses on lease liabilities.
The table below sets forth a breakdown of our finance costs and as percentages of our
total revenue for the periods indicated.
Y ear Ended December 31, Six Months Ended June 30,
2020 2021 2022 2022 2023
(in RMB thousands, except for percentages)
(unaudited)
Interest expenses on
bank loans and other
loans ........................... 11,851 52.0% 30,673 93.9% 227,390 120.4% 111,352 142.4% 120,774 106.8%
Interest expenses on
lease liabilities ............ 10,924 48.0% 1,986 6.1% 1,814 0.9% 935 1.2% 810 0.7%
Less: interest
capitalized
(1) ............... –––– (40,279) (21.3)% (34,109) (43.6)% (8,470) (7.5)%
Total............................... 22,775 100.0% 32,659 100.0% 188,925 100.0% 78,178 100.0% 113,114 100.0%
as % of Total
Revenue ................... 2.5% 1.5% 1.3% 1.9% 1.7%
Note:
(1) Interests on borrowings directly attributable to construction of our production facilities were capitalized.
Income Tax Expenses
We did not record income tax expenses in 2020 and 2021 and the six months ended June
30, 2022, primarily due to that we did not record taxable income during the corresponding year
or period. We recorded income tax expenses of RMB25,000 and RMB1.6 million in 2022 and
the six months ended June 30, 2023, respectively, primarily due to that one of our subsidiaries
recorded taxable income in the corresponding year/period.
FINANCIAL INFORMATION
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--- page 361 ---
PERIOD-TO-PERIOD COMPARISON OF RESULTS OF OPERATIONS
Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
Revenue
Six Months Ended
June 30,
2022 2023 % Change
(in RMB thousands, except for percentages)
(unaudited)
Revenue
EV battery products .................................... 1,662,547 1,247,794 (24.9)%
ESS battery products................................... 1,881,473 4,320,526 129.6%
Other businesses ......................................... 472,555 1,026,474 117.2%
Total............................................................... 4,016,575 6,594,794 64.2%
Our revenue increased by 64.2% from RMB4,016.6 million in the six months ended June
30, 2022 to RMB6,594.8 million in the six months ended June 30, 2023, primarily due to the
strong growth in revenue from our ESS battery products and our other businesses.
EV Battery Products
Six Months Ended
June 30,
2022 2023 % Change
(in RMB thousands, except for percentages)
(unaudited)
EV battery products........................................ 1,662,547 1,247,794 (24.9)%
Percentage of revenue................................. 41.4% 18.9%
Six Months Ended
June 30,
2022 2023 % Change
EV battery products
Sales volume (GWh)................................... 2.20 1.82 (17.3)%
Average selling price (RMB/Wh)................ 0.76 0.69 (9.2)%
FINANCIAL INFORMATION
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--- page 362 ---
Our revenue from sales of EV battery products decreased by 24.9% from RMB1,662.5
million in the six months ended June 30, 2022 to RMB1,247.8 million in the six months ended
June 30, 2023, primarily due to the decrease in sales volume of our EV battery products by
17.3% from 2.20GWh in the six months ended June 30, 2022 to 1.82GWh in the six months
ended June 30, 2023, which was primarily because (i) the temporary slowdown in the EV
industry in China in early 2023, as a result of the decline in EV subsidies and the competition
from ICE vehicles, directly affected the market demands for EVs, (ii) certain EV manufacturers
did not place their orders for EV batteries in early 2023 because they expected the price of EV
batteries to further decrease as the price of lithium carbonate, decreased and the expectation
that such decrease may continue, (iii) we were leaning our focus towards higher-end car models
and the relevant products were still in the process of being upgraded or developed, and (iv) the
sales return of approximately RMB157 million of our EV battery products. Such customer was
a designated EV battery pack supplier of an EV manufacturer that directly requested the use
of our products, and the reason for the sales return was that the EV manufacturer upgraded its
car models in response to the market competition and thus changed the demands for our EV
battery products. We have established business relationship with such customer since 2019, and
it was among the top five largest customers in 2020, 2021 and 2022. We negotiated with the
customer and accepted the sales return in consideration of long-term strategic cooperation with
it and the EV manufacturer, and that those EV battery products could be compatible for other
similar car models in the markets and ready for resales after limited adjustment. Such sales
return was one-off in nature and was the result of commercial negotiation and was not due to
any product defects of ours and there was no dispute between us and the customer in relation
to such sales return. Our relationship with the customer and the EV manufacturer was
unaffected by the sales return and we continue to provide EV battery products for such EV
manufacturer afterwards. The decrease in the average selling price of our EV battery products
from RMB0.76 per Wh in the six months ended June 30, 2022 to RMB0.69 per Wh in the six
months ended June 30, 2023 also drove the decrease in our revenue from sales of EV battery
products, which was primarily due to the decrease in prices of key raw materials, and it was
in line with the prevailing trend in the EV battery market.
ESS Battery Products
Six Months Ended
June 30,
2022 2023 % Change
(in RMB thousands, except for percentages)
(unaudited)
ESS battery products ...................................... 1,881,473 4,320,526 129.6%
Percentage of revenues ............................... 46.8% 65.5%
Six Months Ended
June 30,
2022 2023 % Change
ESS battery products
Sales volume (GWh)................................... 2.50 5.95 138.0%
Average selling price (RMB/Wh)................ 0.75 0.73 (2.7)%
FINANCIAL INFORMATION
– 353 –


--- page 363 ---
Our revenue from sales of ESS battery products increased by 129.6% from RMB1,881.5
million in the six months ended June 30, 2022 to RMB4,320.5 million in the six months ended
June 30, 2023, primarily due to a 138.0% increase in sales volume from 2.50GWh in the six
months ended June 30, 2022 to 5.95GWh in the six months ended June 30, 2023, which was
attributable to (i) the rapid development of the ESS industry globally and our allocation of
more resources to develop our ESS battery products in responses to the increase in market
demand, (ii) the expansion of our production capacity, and (iii) our continuous efforts in
expanding our ESS customer base. The increase in sales volume was partially offset by a 2.7%
decrease in the average selling price from RMB0.75 per Wh in the six months ended June 30,
2022 to RMB0.73 per Wh in the six months ended June 30, 2023. Such decrease was primarily
due to the decrease in prices of key raw materials, and it was in line with the prevailing trend
in the ESS battery market.
Other Businesses
Our revenue from other businesses increased by 117.2% from RMB472.6 million for the
six months ended June 30, 2022 to RMB1,026.5 million for the six months ended June 30,
2023, primarily due to the sales of battery components in the six months ended June 30, 2023.
During the same period, we offered a sales discount of approximately RMB56.0 million to a
major customer for the sales of battery components in consideration of increasing market
competition and the strategic long-term co-operation with this customer.
Cost of Sales
Six Months Ended
June 30,
2022 2023 % Change
(in RMB thousands, except for percentages)
(unaudited)
Cost of Sales for Battery Products
Cost of Sales
Raw material costs
Cathode materials .................................... 1,638,434 2,551,679 55.7%
Anode materials....................................... 592,066 743,842 25.6%
Separators................................................ 139,700 233,767 67.3%
Electrolytes.............................................. 389,744 358,929 (7.9)%
Other materials........................................ 328,858 481,751 46.5%
Sub-total .................................................... 3,088,802 4,369,968 41.5%
FINANCIAL INFORMATION
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--- page 364 ---
Six Months Ended
June 30,
2022 2023 % Change
(in RMB thousands, except for percentages)
(unaudited)
Manufacturing costs
Depreciation and amortization................. 109,178 302,162 176.8%
Other manufacturing costs....................... 234,890 361,800 54.0%
Sub-total .................................................... 344,068 663,962 93.0%
Direct labor costs........................................ 254,631 286,346 12.5%
Cost of Sales for Other Businesses
Other costs.................................................. 470,364 1,007,284 114.1%
Total............................................................... 4,157,865 6,327,560 52.2%
Percentage of revenue ............................. 103.5% 95.9%
Our cost of sales increased significantly from RMB4,157.9 million in the six months
ended June 30, 2022 to RMB6,327.6 million in the six months ended June 30, 2023, primarily
due to (i) a 41.5% increase in raw materials costs, as a result of a significant increase in sales
volume of our battery products; (ii) a 93.0% increase in manufacturing costs as a result of our
increased number of production facilities in operation in the six months ended June 30, 2023
and the 65.3% increase in sales volume; and (iii) a 114.1% increase in other costs, as a result
of an increase in costs for sales of battery components.
Cost of Raw Materials Per Wh
Six Months Ended
June 30,
2022 2023 % Change
(in RMB per Wh, except for percentages)
EV battery products........................................ 0.61 0.56 (8.2)%
Percentage of per unit cost of sales............ 84.5% 80.1%
ESS battery products ...................................... 0.70 0.56 (20.0)%
Percentage of per unit cost of sales............ 83.2% 82.8%
Total ............................................................... 0.66 0.56 (15.2)%
Percentage of per unit cost of sales............ 83.8% 82.1%
FINANCIAL INFORMATION
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--- page 365 ---
The unit cost of raw materials for our EV battery products decreased by 8.2% from
RMB0.61 per Wh in the six months ended June 30, 2022 to RMB0.56 per Wh in the six months
ended June 30, 2023, primarily due to the decrease in prices of raw materials in the six months
ended June 30, 2023. For the same reason, the unit cost of raw materials for ESS battery
products decreased by 20.0% from RMB0.70 per Wh for the six months ended June 30, 2022
to RMB0.56 per Wh in the six months ended June 30, 2023. Correspondingly, the unit cost of
raw materials as a percentage of unit cost of sales of our EV battery products and ESS battery
products decreased from 84.5% and 83.2% in the six months ended June 30, 2022 to 80.1% and
82.8% in the six months ended June 30, 2023, respectively.
Manufacturing Costs Per Wh
Six Months Ended
June 30,
2022 2023 % Change
(in RMB per Wh, except for percentages)
EV battery products........................................ 0.06 0.09 50.0%
Percentage of per unit cost of sales............ 8.9% 13.3%
ESS battery products ...................................... 0.08 0.08 –
Percentage of per unit cost of sales............ 9.7% 12.2%
Total ............................................................... 0.07 0.09 28.6%
Percentage of per unit cost of sales............ 9.3% 12.5%
The unit manufacturing costs of our EV battery products increased by 50% from
RMB0.06 per Wh in the six months ended June 30, 2022 to RMB0.09 per Wh in the six months
ended June 30, 2023, primarily due to the decrease in sales of our EV battery products in the
six months ended June 30, 2023, which reduced the economies of scale of manufacturing our
EV battery products as the fixed costs thereof did not decrease to the same extent. The unit
manufacturing costs of our ESS battery products remained relatively stable at RMB0.08 per
Wh in the six months ended June 30, 2022 and 2023. As the result, the unit manufacturing costs
of our battery products increased by 28.6% from RMB0.07 per Wh in the six months ended
June 30, 2022 to RMB0.09 per Wh in the six months ended June 30, 2023.
Direct Labor Costs Per Wh
Six Months Ended
June 30,
2022 2023 % Change
(in RMB per Wh, except for percentages)
EV battery products........................................ 0.05 0.05 –
Percentage of per unit cost of sales............ 6.6% 6.5%
ESS battery products ...................................... 0.06 0.03 (50.0)%
Percentage of per unit cost of sales............ 7.1% 5.0%
Total ............................................................... 0.05 0.04 (20.0)%
Percentage of per unit cost of sales............ 6.9% 5.4%
FINANCIAL INFORMATION
– 356 –


--- page 366 ---
The unit direct labor costs of our EV battery products remained relatively stable as
RMB0.05 per Wh in the six months ended June 30, 2022 and 2023, respectively. The unit direct
labor costs of our ESS battery products decreased by 50.0% from RMB0.06 per Wh in the six
months ended June 30, 2022 to RMB0.03 per Wh in the six months ended June 30, 2023,
primarily due to continuous efforts to improve the production efficiency. As a result, the unit
director labor costs of our battery products decrease by 20.0% from RMB0.05 per Wh in the
six months ended June 30, 2022 to RMB0.04 per Wh in the six months ended June 30, 2023,
reflecting our improvement of production efficiency.
Gross Profit/(Loss) and Gross Profit Margin
Six Months Ended June 30,
2022 2023
(in RMB thousands, except for
percentages)
(unaudited)
Gross Profit/(Loss)
EV Battery Products.................................................... 83,107 (32,083)
ESS Battery Products .................................................. (226,586) 280,129
Other businesses.......................................................... 2,189 19,188
Total ............................................................................... (141,290) 267,234
Gross Profit/(loss) Margin .............................................. (3.5)% 4.1%
We managed to turn the gross losses of RMB141.3 million in the six months ended June
30, 2022 into gross profits of RMB267.2 million in the six months ended June 30, 2023,
primarily due to that we managed to turn the gross losses of our ESS battery products in the
six months ended June 30, 2022 into the gross profits in the six months ended June 30, 2023.
Such change was primarily due to (i) the decrease of prices of key raw materials, (ii) our
further improved production efficiency, and (iii) our strategic adjustment of our product
offering.
In the six months ended June 30, 2023, our battery products average selling price
decreased by 2.7% to RMB0.72 per Wh from RMB0.75 per Wh in the six months ended
June 30, 2022, which was primarily due to the decrease in the prices of key raw materials, and
it was in line with the prevailing market trend.
On the other hand, our per unit cost of sales for our battery products decreased by 11.5%
from RMB0.78 per Wh in the six months ended June 30, 2022 to RMB0.69 per Wh in the six
months ended June 30, 2023, among which (i) our raw material costs decreased by 15.2% from
RMB0.66 per Wh in the six months ended June 30, 2022 to RMB0.56 per Wh in the six months
ended June 30, 2023 primarily due to the decrease in purchase prices of raw materials; and (ii)
our manufacturing costs and director labor costs together decreased by 7.7% from RMB0.13
per Wh in the six months ended June 30, 2022 to RMB0.12 per Wh in the six months ended
June 30, 2023, primarily due to (a) our continuous efforts in improving production efficiency,
and (b) the benefit of economies of scale as we further increased our production capacity.
FINANCIAL INFORMATION
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--- page 367 ---
EV Battery Products
Six Months Ended June 30,
2022 2023
(in RMB thousands, except for percentages)
(unaudited)
Gross
Profit/
(Loss)
Gross
Profit
Margin
Gross
Profit/
(Loss)
Gross
Profit
Margin
EV battery products ....................... 83,107 5.0% (32,083) (2.6)%
We recorded gross profits of RMB83.1 million, with a gross profit margin of 5.0%, for
our EV battery products in the six months ended June 30, 2022. However, we recorded gross
losses of RMB32.1 million, with a negative gross profit margin of 2.6%, for our EV battery
products in the six months ended June 30, 2023. Such change was primarily due to (i) a 9.2%
decrease in average selling price of our EV battery products from RMB0.76 per Wh in the six
months ended June 30, 2022 to RMB0.69 per Wh in the six months ended June 30, 2023, and
(ii) an increase in the unit manufacturing costs of our EV battery products by 50.0% from
RMB0.06 per Wh in the six months ended June 30, 2022 to RMB0.09 per Wh in the six months
ended June 30, 2023, primarily due to the decrease in sales of our EV battery products in the
six months ended June 30, 2023 which reduced the economies of scale of manufacturing our
EV battery products as the fixed costs thereof did not decrease to the same extent. The 8.2%
decrease in the unit raw material costs of our EV battery products from RMB0.61 per Wh in
the six months ended June 30, 2022 to RMB0.56 per Wh in the six months June 30, 2023
partially offset the negative impact from the decrease of average selling prices and increase of
unit manufacturing costs. In addition, we offered a one-off discount in the aggregate of
approximately RMB28 million on the selling price of our EV battery products sold to one of
our major OEM customers, in consideration of the temporary slowdown in the EV industry in
China in early 2023 and the long-term strategic cooperation with the customer, which also led
to the gross losses for our EV battery products in the six months ended June 30, 2023.
ESS battery products
Six Months Ended June 30,
2022 2023
(in RMB thousands, except for percentages)
(unaudited)
Gross
Profit/
(Loss)
Gross
Profit
Margin
Gross
Profit/
(Loss)
Gross
Profit
Margin
ESS battery products...................... (226,586) (12.0)% 280,129 6.5%
FINANCIAL INFORMATION
– 358 –


--- page 368 ---
We managed to turn the gross losses from our ESS battery products of RMB226.6 million
with a negative profit margin of 12.0% in the six months ended June 30, 2022 to the gross
profits of RMB280.1 million with a gross profit margin of 6.5% in the six months ended
June 30, 2023. Such change was primarily due to (i) a 20.0% decrease in unit cost of raw
materials of our ESS battery products from RMB0.70 per Wh in the six months ended June 30,
2022 to RMB0.56 per Wh in the six months ended June 30, 2023, as a result of the decrease
in the prices of raw materials, and (ii) a 50.0% decrease in unit direct labor costs of our ESS
battery products from RMB0.06 per Wh in the six months ended June 30, 2022 to RMB0.03
per Wh in the six months ended June 30, 2023, as a result of our economies of scale as we
rapidly increased our production capacity and improved production efficiency. The 2.7%
decrease in the average selling price of our ESS battery products from RMB0.75 per Wh in the
six months ended June 30, 2022 to RMB0.73 per Wh in the six months ended June 30, 2023
partially offset the gain from decrease in unit cost of raw materials and direct labor costs.
Other Income and Gains
Other income and gains increased significantly from RMB24.0 million in the six months
ended June 30, 2022 to RMB86.0 million in the six months ended June 30, 2023, primarily due
to an increase in interest income of RMB53.1 million, which was attributable to an increase in
bank balances and time deposits, primarily as a result of the receiving of proceeds from
Pre-IPO Investments in the second half of 2022.
Selling and Distribution Expenses
Six Months Ended
June 30,
2022 2023 % Change
(in RMB thousands, except for percentages)
(unaudited)
Selling and distribution expenses ................... 98,897 157,715 59.5%
Percentage of revenue................................. 2.5% 2.4%
Selling and distribution expenses increased by 59.5% from RMB98.9 million in the six
months ended June 30, 2022 to RMB157.7 million in the six months ended June 30, 2023,
primarily due to (i) a significant increase in warranties and after services fees of RMB23.2
million, attributable to an increase in sales volume of our battery products, (ii) an increase in
marketing fees of RMB14.9 million, attributable to the increasing needs of marketing and
promotion services to further enhance our market recognition, and (iii) an increase in
depreciation and amortization of RMB7.3 million attributable to our purchase of properties and
equipment related to selling and distribution activities for our expansion. As a percentage of
our revenue, selling and distribution expenses decreased from 2.5% in the six months ended
June 30, 2022 to 2.4% in the six months ended June 30, 2023 as we achieved improved
economies of scale along with our business grew.
FINANCIAL INFORMATION
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--- page 369 ---
Administrative Expenses
Six Months Ended
June 30,
2022 2023 % Change
(in RMB thousands, except for percentages)
(unaudited)
Administrative expenses ................................. 151,759 239,655 57.9%
Percentage of revenue................................. 3.8% 3.6%
Administrative expenses increased by 57.9% from RMB151.8 million in the six months
ended June 30, 2022 to RMB239.7 million in the six months ended June 30, 2023, primarily
due to (i) an increase in salaries and welfare of RMB26.5 million, attributable to an increase
in number of our administrative personnel for our expansion and an increase in per capita
salaries, (ii) an increase in depreciation and amortization of RMB10.6 million attributable to
our purchase of properties and equipment related to administrative activities for our expansion,
(iii) an increase in consultancy fees of RMB18.6 million for the increasing needs of auditing
and legal services, and (iv) an increase in tax of RMB19.4 million, attributable to the increase
in property tax for our expansion of production facilities. As a percentage of our revenue,
administrative expenses decreased from 3.8% in the six months ended June 30, 2022 to 3.6%
in the six months ended June 30, 2023, primarily due to stronger economies of scale and the
improvement of our efficiency in management.
Research and Development Expenses
Six Months Ended
June 30,
2022 2023 % Change
(in RMB thousands, except for percentages)
(unaudited)
R&D expenses ................................................ 257,142 505,246 96.5%
Percentage of revenue................................. 6.4% 7.7%
R&D expenses increased by 96.5% from RMB257.1 million in the six months ended
June 30, 2022 to RMB505.2 million in the six months ended June 30, 2023, primarily due to
(i) an increase in salaries and welfare of RMB73.7 million attributable to an increase in number
of R&D personnel and an increase in per capita salaries to attract more talents, and (ii) an
increase in raw materials and consumables expenses of RMB136.3 million for our increased
R&D activities. As a percentage to our revenue, research and development expenses increased
from 6.4% in the six months ended June 30, 2022 to 7.7% in the six months ended June 30,
2023, primarily due to an overall increase in need of our R&D activities to meet customers’
demands and maintain our competitive advantages in response to the increasing market
competition.
FINANCIAL INFORMATION
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--- page 370 ---
Impairment Losses on Financial Assets
Our impairment losses on financial assets increased significantly from RMB2.2 million
in the six months ended June 30, 2022 to RMB249.1 million in the six months ended June 30,
2023, primarily due to the provision for impairment losses of trade receivables we prudently
recorded for certain EV battery products customers on an individual basis in consideration of
their operating performance, liquidity position and our communication with them on the
payment schedules.
Other Expenses
We did not record other expenses in the six months ended June 30, 2022, while we
recorded other expenses of RMB5.8 million in the six months ended June 30, 2023.
Finance Costs
Our finance cost increased by 44.6% from RMB78.2 million in the six months ended
June 30, 2022 to RMB113.1 million in the six months ended June 30, 2023 primarily due to
an increase in interest-bearing bank borrowings to finance the construction of our production
facilities and daily operation. See “– Indebtedness.”
Loss for the Period
As a result of the foregoing, our loss for the period increased from RMB705.5 million in
the six months ended June 30, 2022 to RMB919.7 million in the six months ended June 30,
2023.
Y ear Ended December 31, 2022 Compared to Y ear Ended December 31, 2021
Revenue
Y ear Ended December 31,
2021 2022 % Change
(in RMB thousands, except for percentages)
Revenue
EV battery products .................................... 981,507 4,642,801 373.0%
ESS battery products................................... 859,459 8,400,597 877.4%
Other businesses ......................................... 268,178 1,604,380 498.3%
Total............................................................... 2,109,144 14,647,778 594.5%
Our revenue increased significantly from RMB2,109.1 million in 2021 to RMB14,647.8
million in 2022, primarily due to the strong growth in revenues from all our products.
FINANCIAL INFORMATION
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--- page 371 ---
EV Battery Products
Y ear Ended December 31,
2021 2022 % Change
(in RMB thousands, except for percentages)
EV battery products........................................ 981,507 4,642,801 373.0%
Percentage of revenue................................. 46.5% 31.7%
Y ear Ended December 31,
2021 2022 % Change
EV battery products........................................
Sales volume (GWh)................................... 1.87 6.13 227.8%
Average selling price (RMB/Wh)................ 0.52 0.76 46.2%
Our revenue from sales of EV battery products increased significantly from RMB981.5
million in 2021 to RMB4,642.8 million in 2022, primarily due to (i) a 227.8% increase in sales
volume from 1.87GWh in 2021 to 6.13GWh in 2022, which was attributable to (a) the rapid
development of EV industry in the PRC, (b) our continuous effort to expand our customer base
of our EV battery products from 78 customers in 2021 to 147 customers in 2022, and (c) the
expansion of our effective production capacity, and (ii) a 46.2% increase in average selling
price from RMB0.52 per Wh in 2021 to RMB0.76 per Wh in 2022, which was primarily
attributable to our update of selling prices in response to the increased purchase price of key
raw materials. In response to raw material price increase, in November 2021, we started to
adjust our pricing by entering into supplemental agreements with our customers. In the second
quarter of 2022, we started to introduce price adjustment mechanism into our contracts with
customers in response to fluctuations in raw material prices. The new pricing mechanism is
made possible by the market dynamics and our increasing bargaining power. The higher selling
price of our EV battery products was also in line with the prevailing trend in the EV battery
market.
ESS Battery Products
Y ear Ended December 31,
2021 2022 % Change
(in RMB thousands, except for percentages)
ESS battery products ...................................... 859,459 8,400,597 877.4%
Percentage of revenues ............................... 40.7% 57.4%
Y ear Ended December 31,
2021 2022 % Change
ESS battery products ......................................
Sales volume (GWh)................................... 1.43 10.48 632.9%
Average selling price (RMB/Wh)................ 0.60 0.80 33.3%
FINANCIAL INFORMATION
– 362 –


--- page 372 ---
Our revenue from sales of ESS battery products increased significantly from RMB859.5
million in 2021 to RMB8,400.6 million in 2022, primarily due to (i) a significant increase in
sales volume from 1.43GWh in 2021 to 10.48GWh in 2022, which was attributable to (a) the
rapid development of the global ESS industry and our allocation of more resources to develop
our ESS battery products in responses to the increase in market demand, (b) the expansion of
our effective production capacity, and (c) our continuous efforts in expanding our customer
base of our ESS battery products from 206 customers in 2021 to 273 customers in 2022, and
(ii) a 33.3% increase in the average selling price from RMB0.60 per Wh in 2021 to RMB0.80
per Wh in 2022, primarily due to our adjustment of selling prices in response to the increased
purchase price of key raw materials. The higher selling price of our ESS battery products was
also in line with the prevailing trend in the ESS battery market.
Other Businesses
Our revenue from other businesses increased significantly from RMB268.2 million in
2021 to RMB1,604.4 million in 2022, primarily due to a significant increase in revenue from
sales of wastes and others, which was attributable to (i) an increase in sales of wastes, primarily
crude NMP, generated in our manufacturing process, which was in line with our rapidly
increased production volume of battery products, (ii) an increase in average selling price of
wastes due to the increase in market prices of raw materials that could be recycled from the
wastes, and (iii) a significant increase in sales of battery components in 2022. Despite the
increase in an absolute amount from 2021 to 2022, the revenue from sales of wastes as a
percentage of our total revenue decreased from 11.9% in 2021 to 5.4% in 2022, primarily due
to our adoption of new arrangement for the disposal of crude NMP since July 2022. See “–
Principal Components of Statement of Profit or Loss and Other Comprehensive Income –
Revenue – Revenue by Product – Battery Type.”
Cost of Sales
Y ear Ended December 31,
2021 2022 % Change
(in RMB thousands, except for percentages)
Cost of Sales for Battery Products
Cost of sales
Raw material costs
Cathode materials .................................... 661,350 6,498,935 882.7%
Anode materials....................................... 365,513 1,768,638 383.9%
Separators................................................ 87,828 446,832 408.8%
Electrolytes.............................................. 268,390 1,102,621 310.8%
Other materials........................................ 278,938 1,018,766 265.2%
Sub-total .................................................... 1,662,019 10,835,792 552.0%
FINANCIAL INFORMATION
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--- page 373 ---
Y ear Ended December 31,
2021 2022 % Change
(in RMB thousands, except for percentages)
Manufacturing costs
Depreciation and amortization................. 98,401 341,624 247.2%
Other manufacturing costs....................... 220,149 488,410 121.9%
Sub-total .................................................... 318,550 830,034 160.6%
Direct labor costs........................................ 174,614 499,924 186.3%
Cost of Sales for Other Businesses
Other costs.................................................. 278,841 1,393,740 399.8%
Total............................................................... 2,434,024 13,559,490 457.1%
Percentage of revenue................................. 115.4% 92.6%
Our cost of sales increased significantly from RMB2,434.0 million in 2021 to
RMB13,559.5 million in 2022, primarily due to (i) a 552.0% increase in raw materials costs,
as a result of (a) a 403.3% increase in sales volume of our battery products, and (b) an increase
in purchase prices of raw materials; (ii) a 160.6% increase in manufacturing costs as a result
of our increased number of production facilities in operation in 2022 and the 403.3% increase
in sales volume; (iii) a 186.3% increase in direct labor costs as a result of an increase in the
number of our production employees from approximately 3,231 as of December 31, 2021 to
approximately 5,249 as of December 31, 2022 and the 403.3% increase in sales volume; and
(iv) a significant increase in other costs, as a result of an (a) increase in costs for sales of
wastes, which was mainly attributable to an increase in the production volume of our battery
products and (b) a significant increase in sales of battery components since the second half of
2022.
Cost of Raw Materials Per Wh
Y ear Ended December 31,
2021 2022 % Change
(in RMB per Wh, except for percentages)
EV battery products........................................ 0.47 0.64 36.2%
Percentage of per unit cost of sales............ 81.2% 87.9%
ESS battery products ...................................... 0.55 0.66 20.0%
Percentage of per unit cost of sales............ 73.0% 89.8%
Total .............................................................. 0.50 0.65 30.0%
Percentage of per unit cost of sales .......... 77.1% 89.1%
FINANCIAL INFORMATION
– 364 –


--- page 374 ---
Due to a rapid increase in the purchase prices of our raw materials, the unit cost of raw
materials for our EV battery products increased by 36.2% from RMB0.47 per Wh in 2021 to
RMB0.64 per Wh in 2022. For the same reason, the unit cost of raw materials for ESS battery
products increased by 20.0% from RMB0.55 per Wh in 2021 to RMB0.66 per Wh in 2022. Due
to the increasing raw material costs and our continuous efforts to improve the production
efficiency which lowered the unit manufacturing and direct labor costs, the unit cost of raw
materials as a percentage of unit cost of sales of our EV battery products and ESS battery
products increased from 81.2% and 73.0% in 2021 to 87.9% and 89.8% in 2022, respectively.
Manufacturing Costs Per Wh
Y ear Ended December 31,
2021 2022 % Change
(in RMB per Wh, except for percentages)
EV battery products........................................ 0.07 0.06 (14.3)%
Percentage of per unit cost of sales............ 12.3% 7.7%
ESS battery products ...................................... 0.13 0.05 (61.5)%
Percentage of per unit cost of sales............ 17.3% 6.3%
Total ............................................................... 0.10 0.05 (50.0)%
Percentage of per unit cost of sales............ 14.8% 6.8%
Direct Labor Costs Per Wh
Y ear Ended December 31,
2021 2022 % Change
(in RMB per Wh, except for percentages)
EV battery products........................................ 0.04 0.03 (25.0)%
Percentage of per unit cost of sales............ 6.5% 4.4%
ESS battery products ...................................... 0.07 0.03 (57.1)%
Percentage of per unit cost of sales............ 9.7% 3.9%
Total ............................................................... 0.05 0.03 (40.0)%
Percentage of per unit cost of sales............ 8.1% 4.1%
In 2022, both of our unit manufacturing costs and direct labor costs decreased both in
absolute terms and as a percentage of our unit cost of sales, reflecting further improvement of
our production efficiency.
FINANCIAL INFORMATION
– 365 –


--- page 375 ---
Gross Profit/(Loss) and Gross Profit Margin
Y ear Ended December 31,
2021 2022
(in RMB thousands, except for
percentages)
Gross Profit/(Loss)
EV Battery Products ....................................................... (103,289) 146,207
ESS Battery Products...................................................... (210,928) 731,441
Other businesses ............................................................. (10,663) 210,640
Total ............................................................................... (324,880) 1,088,288
Gross Profit/(loss) Margin .............................................. (15.4)% 7.4%
We managed to turn the gross loss of both of our EV and ESS battery products into gross
profit in 2022 and recorded a gross profit of RMB1,088.3 million in total, with a gross profit
margin of 7.4%. Such change was primarily due to (i) our adjustment of prices of our ESS
battery products in response to the rapid increase of raw material prices, which was also in line
with the prevailing market trends according to the F&S Report, (ii) our further improved
production efficiency, and (iii) our improved product offering.
In 2022, our battery products average selling price increased by 41.1% to RMB0.79 per
Wh from RMB0.56 per Wh, which reflected our efforts in adjusting our selling price in
response to raw material price increase and our increasing bargaining power. In particular, in
response to raw material price increase, in November 2021, we started to adjust our pricing by
entering into supplemental agreements with our customers. In the second quarter of 2022, we
started to introduce price adjustment mechanism into our contracts with customers in response
to fluctuations in raw material prices. The new pricing mechanism is made possible by the
market dynamics and our increasing bargaining power.
On the other hand, our per unit cost of sales for our battery products increased by 12.3%
from RMB0.65 per Wh in 2021 to RMB0.73 per Wh in 2022, among which (i) our raw material
costs increased by 30.0% from RMB0.50 per Wh in 2021 to RMB0.65 per Wh in 2022
primarily due to increases in raw material prices; (ii) our manufacturing costs decreased by
50.0% from RMB0.10 per Wh in 2021 to RMB0.05 per Wh in 2022, and our direct labor costs
decreased by 40.0% from RMB0.05 per Wh in 2021 to RMB0.03 per Wh in 2022, primarily due
to (i) our continuous efforts in improving production efficiency, and (ii) the benefit of
economies of scale as we further increase our production capacity.
FINANCIAL INFORMATION
– 366 –


--- page 376 ---
In 2022, we also managed to turn the gross loss of our other businesses into gross profit
of RMB210.7 million, with a gross profit margin of 13.1%, as compared to the gross loss of
RMB10.7 million in 2021. Such change was primarily due to the fact that we significantly
increased our sales of battery components in the second half of 2022, which were profitable.
EV Battery Products
Y ear Ended December 31,
2021 2022
(in RMB thousands, except for percentages)
Gross
Profit/(Loss)
Gross Profit
Margin
Gross
Profit/(Loss)
Gross Profit
Margin
EV battery products ............... (103,289) (10.5)% 146,207 3.1%
We managed to turn the gross loss from our EV battery products of RMB103.3 million
with negative gross profit margin of 10.5% in 2021 to gross profit of RMB146.2 million with
gross profit margin of 3.1% in 2022, primarily due to (i) a 46.2% increase in the average selling
price of our EV battery products from RMB0.52 per Wh in 2021 to RMB0.76 per Wh in 2022
as we adjusted our selling prices in response to the rapid increase in purchase price of key raw
materials in 2022, and (ii) a 14.3% decrease in unit manufacturing cost of our EV battery
products from RMB0.07 per Wh in 2021 to RMB0.06 per Wh in 2022, and a 25.0% decrease
in unit direct labor costs of our EV battery products from RMB0.04 per Wh in 2021 to
RMB0.03 per Wh in 2022, as a result of our economies of scale as we expanded our production
capacity and improved production efficiency. The 36.2% increase in unit cost of raw materials
from RMB0.47 per Wh in 2021 to RMB0.64 per Wh in 2022 partially offset the gain from
higher average selling prices and lower manufacturing costs.
ESS battery products
Y ear Ended December 31,
2021 2022
(in RMB thousands, except for percentages)
Gross
Profit/(Loss)
Gross Profit
Margin
Gross
Profit/(Loss)
Gross Profit
Margin
ESS battery products.............. (210,928) (24.5)% 731,441 8.7%
FINANCIAL INFORMATION
– 367 –


--- page 377 ---
We managed to turn the gross loss from our ESS battery products of RMB210.9 million
with a negative profit margin of 24.5% in 2021 to the gross profit of RMB731.4 million with
a gross profit margin of 8.7% in 2022. Such change was primarily due to (i) a 33.3% increase
in the average selling price of our ESS battery products from RMB0.60 per Wh in 2021 to
RMB0.80 per Wh in 2022 as we adjusted our selling prices of some ESS battery products in
responses to the rapid increase in purchase prices of raw materials, and (ii) a 61.5% decrease
in unit manufacturing costs of our ESS battery products from RMB0.13 per Wh in 2021 to
RMB0.05 per Wh in 2022 and a 57.1% decrease in unit direct labor costs of our ESS battery
products from RMB0.07 per Wh in 2021 to RMB0.03 per Wh in 2022, as a result of our
economies of scale as we rapidly increased our production capacity and improved production
efficiency. The 20.0% increase in unit cost of raw materials from RMB0.55 per Wh in 2021 to
RMB0.66 per Wh in 2022 partially offset the gain from higher average selling prices and lower
manufacturing and direct labor costs.
Other Income and Gains
Other income and gains increased by 375.1% from RMB35.3 million in 2021 to
RMB167.8 million in 2022, primarily due to (i) an increase in interest income of RMB86.9
million, which was attributable to an increase in our time deposits, and (ii) an increase in
government grants of RMB32.6 million as subsidies for our construction of production
facilities and contributions for the development of local economies.
Selling and Distribution Expenses
Y ear Ended December 31,
2021 2022 % Change
(in RMB thousands, except for percentages)
Selling and distribution expenses ................... 72,346 320,795 343.4%
Percentage of revenue................................. 3.4% 2.2%
Selling and distribution expenses increased by 343.4% from RMB72.3 million in 2021 to
RMB320.8 million in 2022, primarily due to (i) a significant increase in warranties and after
services fees of RMB202.4 million, attributable to an increase in sales volume of our battery
products, and (ii) an increase in salaries and welfare of RMB17.2 million, attributable to an
increase in the number of our sales employees and the increased per capita salaries. As a
percentage of our revenue, selling and distribution expenses decreased from 3.4% in 2021 to
2.2% in 2022 as we achieved improved economies of scale along with our business growth.
FINANCIAL INFORMATION
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--- page 378 ---
Administrative Expenses
Y ear Ended December 31,
2021 2022 % Change
(in RMB thousands, except for percentages)
Administrative expenses ................................. 160,612 346,787 115.9%
Percentage of revenue................................. 7.6% 2.4%
Administrative expenses increased by 115.9% from RMB160.6 million in 2021 to
RMB346.8 million in 2022, primarily due to (i) an increase in salaries and welfare of RMB58.0
million, attributable to an increase in number of our administrative personnel for our expansion
and an increase in per capita salaries, (ii) an increase in depreciation and amortization of
RMB33.0 million attributable to our purchase of properties and equipment related to
administrative activities for our expansion, and (iii) an increase in share incentive expense of
RMB60.4 million. As a percentage of our revenue, administrative expenses decreased from
7.6% in 2021 to 2.4% in 2022, primarily due to stronger economies of scale and the
improvement of our efficiency in management.
Research and Development Expenses
Y ear Ended December 31,
2021 2022 % Change
(in RMB thousands, except for percentages)
R&D expenses ................................................ 245,558 767,685 212.6%
Percentage of revenue................................. 11.6% 5.2%
R&D expenses increased by 212.6% from RMB245.6 million in 2021 to RMB767.7
million in 2022, primarily due to (i) an increase in salaries and welfare of RMB271.9 million
attributable to an increase in number of R&D personnel and an increase in per capita salaries
to attract more talents, (ii) an increase in expenses for raw materials and consumables of
RMB149.2 million for our increased R&D activities, and (iii) an increase in share incentive
expense of RMB28.4 million. As a percentage to our revenue, R&D expenses decreased from
11.6% in 2021 to 5.2% in 2022, as we achieved better economies of scale.
FINANCIAL INFORMATION
– 369 –


--- page 379 ---
Impairment Losses on Financial Assets
Our net impairment losses on financial assets increased significantly from RMB1.6
million in 2021 to RMB81.1 million in 2022, primarily due to the fact that we recorded an
amount of impairment losses for one of our customers because of its deteriorate liquidity
position.
Other Expenses
We recorded other expenses of RMB1.9 million in 2021, while our other expenses in 2022
was RMB75,000.
Finance Costs
Our finance costs increased significantly from RMB32.7 million in 2021 to RMB188.9
million in 2022, primarily due to the increase in interest-bearing bank borrowings to finance
the construction of our production facilities and daily operation. See “– Indebtedness.”
Loss for the Y ear
As a result of the foregoing, our loss for the year decreased from RMB804.2 million in
2021 to RMB450.8 million in 2022.
Y ear Ended December 31, 2021 Compared to Y ear Ended December 31, 2020
Revenue
Y ear ended December 31,
2020 2021 % Change
(in RMB thousands, except for percentages)
Revenue
EV battery products........................................ 673,192 981,507 45.8%
ESS battery products ...................................... 182,105 859,459 372.0%
Other businesses ............................................. 51,689 268,178 418.8%
Total............................................................... 906,986 2,109,144 132.5%
Our revenue increased by 132.5% from RMB907.0 million in 2020 to RMB2,109.1
million in 2021, primarily due to the growth in revenues from all our products, particularly the
strong growth in revenue from our ESS battery products.
FINANCIAL INFORMATION
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--- page 380 ---
EV Battery Products
Y ear ended December 31,
2020 2021 % Change
(in RMB thousands, except for percentages)
EV battery products........................................ 673,192 981,507 45.8%
Percentage of revenue................................. 74.2% 46.5%
Y ear ended December 31,
2020 2021 % Change
EV battery products........................................
Sales volume (GWh)................................... 1.24 1.87 50.8%
Average selling price (RMB/Wh)................ 0.54 0.52 (3.7)%
Our revenue from sales of EV battery products increased by 45.8% from RMB673.2
million in 2020 to RMB981.5 million in 2021, primarily due to a 50.8% increase in sales
volume from 1.24 GWh in 2020 to 1.87 GWh in 2021, which was attributable to (i) our
expansion of effective production capacity from 3,260 MWh in 2020 to 4,239 MWh in 2021,
and (ii) our continuous efforts to expand our customer base of our EV battery products from
41 customers in 2020 to 78 customers in 2021. Such increase was partially offset by a 3.7%
decrease in the average selling price of our EV battery products from RMB0.54 per Wh in 2020
to RMB0.52 per Wh in 2021, which was in line with the market trend in 2021, despite the
increase in purchase prices of raw materials.
ESS Battery Products
Y ear ended December 31,
2020 2021 % Change
(in RMB thousands, except for percentages)
ESS battery products ...................................... 182,105 859,459 372.0%
Percentage of revenues ............................... 20.1% 40.7%
Y ear ended December 31,
2020 2021 % Change
ESS battery products ......................................
Sales volume (GWh)................................... 0.31 1.43 361.3%
Average selling price (RMB/Wh)................ 0.59 0.60 1.7%
FINANCIAL INFORMATION
– 371 –


--- page 381 ---
Our revenue from sales of our ESS battery products increased significantly from
RMB182.1 million in 2020 to RMB859.5 million in 2021, primarily due to a significant
increase in our sales volume of ESS battery products from 0.31GWh in 2020 to 1.43GWh in
2021, which was attributable to (i) the rapid growth of ESS industry, (ii) rapid expansion of our
effective production capacity from 3,260 MWh in 2020 to 4,239 MWh in 2021 and strategic
allocation of resources to ESS battery products to implement our dual-focus strategy on both
EV and ESS, and (iii) our continuous efforts to expand our customer base of our ESS battery
products from 156 customers in 2020 to 206 customers in 2021. The average selling price of
our ESS battery product remained relatively stable at RMB0.59 per Wh in 2020 and RMB0.60
per Wh in 2021, which was in line with the industry pricing trend of ESS battery products in
2021, despite the increase in purchase prices of raw materials.
The above mismatch between the market trend of the average selling prices of EV and
ESS battery products and the purchase prices of raw materials in 2021 was primarily due to that
the adjustment in selling prices by the manufacturers lagged behind the increase in purchase
prices of raw materials. According to the F&S Report, the rapid increase in purchase prices of
raw materials mainly happened by the end of 2021, while the manufacturers of lithium-ion
battery products did not manage to adjust their selling prices correspondingly in the same year
given the limitation of time.
Other Businesses
Our revenue from other businesses increased significantly from RMB51.7 million in 2020
to RMB268.2 million in 2021, primarily due to a significant increase in revenue from sales of
wastes, which was attributable to (i) an increase in sales of wastes, primarily crude NMP,
generated in our manufacturing process, which was in line with the increase in our production
volume, and (ii) an increase in average selling prices of wastes due to the increased market
prices of raw materials that could be recycled from the wastes.
Cost of Sales
Y ear ended December 31,
2020 2021 % Change
(in RMB thousands, except for percentages)
Cost of Sales for Battery Products
Cost of sales
Raw material costs
Cathode materials .................................... 191,392 661,350 245.5%
Anode materials....................................... 126,839 365,513 188.2%
Separators................................................ 38,083 87,828 130.6%
Electrolytes.............................................. 56,453 268,390 375.4%
Other materials........................................ 124,339 278,938 124.3%
Sub-total ........................................................ 537,106 1,662,019 209.4%
FINANCIAL INFORMATION
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--- page 382 ---
Y ear ended December 31,
2020 2021 % Change
(in RMB thousands, except for percentages)
Manufacturing costs
Depreciation and amortization .................... 48,355 98,401 103.5%
Other manufacturing costs .......................... 91,321 220,149 141.1%
Sub-total ........................................................ 139,676 318,550 128.1%
Direct labor costs ........................................... 71,224 174,614 145.2%
Cost of Sales for Other Businesses .............
Other costs ..................................................... 47,882 278,841 482.4%
Total............................................................... 795,888 2,434,024 205.8%
Percentage of revenue................................. 87.8% 115.4%
Our cost of sales increased by 205.8% from RMB795.9 million in 2020 to RMB2,434.0
million in 2021, primarily due to (i) an 209.4% increase in cost of raw materials, as a result
of (a) a 114.3% increase in the sales volume of our battery products in 2021, and (b) an increase
in the purchase prices of our raw materials, such as lithium carbonate in 2021; (ii) a 128.1%
increase in manufacturing costs as a result of a 114.3% increase in sales volume of our battery
products in 2021; (iii) a 145.2% increase in direct labor costs as a result of a 114.3% increase
in sales volume of our battery products, and (iv) a significant increase in other costs, primarily
due to the increase in costs for sales of wastes, attributable to an increase in the production
volume of our battery products.
Cost of Raw Materials Per Wh
Y ear Ended December 31,
2020 2021 % Change
(in RMB per Wh, except for percentages)
EV battery products........................................ 0.33 0.47 42.4%
Percentage of per unit cost of sales............ 76.2% 81.2%
ESS battery products ...................................... 0.40 0.55 37.5%
Percentage of per unit cost of sales............ 60.1% 73.0%
Total ............................................................... 0.35 0.50 42.9%
Percentage of per unit cost of sales............ 71.8% 77.1%
FINANCIAL INFORMATION
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--- page 383 ---
Due to the rapid increase in the purchase prices of our raw materials, the unit cost of raw
materials for our EV battery products increased by 42.4% from RMB0.33 per Wh in 2020 to
RMB0.47 per Wh in 2021. For the same reason, the unit cost of raw materials for our ESS
battery products increased by 37.5% from RMB0.40 per Wh in 2020 to RMB0.55 per Wh in
2021. Due to the increasing raw material costs and our continuous efforts to improve the
production efficiency which lowered the unit manufacturing and direct labor costs, the unit cost
of raw materials as a percentage of the unit cost of sales of both of our EV and ESS battery
products increased from 76.2% and 60.1% in 2020 to 81.2% and 73.0% in 2021, respectively.
Manufacturing Costs Per Wh
Y ear Ended December 31,
2020 2021 % Change
(in RMB per Wh, except for percentages)
EV battery products........................................ 0.07 0.07 –
Percentage of per unit cost of sales............ 15.7% 12.3%
ESS battery products ...................................... 0.18 0.13 (27.8)%
Percentage of per unit cost of sales............ 26.5% 17.3%
Total ............................................................... 0.09 0.10 11.1%
Percentage of per unit cost of sales............ 18.7% 14.8%
Direct Labor Costs Per Wh
Y ear Ended December 31,
2020 2021 % Change
(in RMB per Wh, except for percentages)
EV battery products........................................ 0.04 0.04 –
Percentage of per unit cost of sales............ 8.1% 6.5%
ESS battery products ...................................... 0.09 0.07 (22.2)%
Percentage of per unit cost of sales............ 13.4% 9.7%
Total ............................................................... 0.05 0.05 –
Percentage of per unit cost of sales............ 9.5% 8.1%
In 2021, our unit manufacturing and direct labor costs remained relatively stable in
absolute terms as compared with 2020, while decreased significantly as a percentage of our
unit cost of sales from 2020. The unit manufacturing costs for our EV battery products
increased from RMB0.09 per Wh in 2020 to RMB0.10 per Wh in 2021, primarily as a result
of increase in sales volume of our ESS battery products, which include a higher proportion of
small capacity battery products which generally have higher per unit manufacturing cost.
FINANCIAL INFORMATION
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--- page 384 ---
Gross Profit/(Loss) and Gross Profit Margin
Y ear ended December 31,
2020 2021
(in RMB thousands, except for
percentages)
Gross Profit/(Loss)
EV Battery Products.................................................... 130,434 (103,289)
ESS Battery Products .................................................. (23,143) (210,928)
Others.......................................................................... 3,807 (10,663)
Total ............................................................................... 111,098 (324,880)
Gross Profit/(loss) Margin .............................................. 12.2% (15.4)%
We recorded gross profit of RMB111.1 million in 2020, with gross profit margin of
12.2%. However, our gross profit turned into gross loss of RMB324.9 million in 2021, with
negative gross profit margin of 15.4%. Such change was primarily due to that (i) our EV battery
products recorded gross loss in 2021 instead of gross profit as in 2020, and (ii) our gross loss
from ESS battery products further increased.
In 2021, our battery products average selling price remained relatively stable at RMB0.56
per Wh as compared with RMB0.55 per Wh in 2020, which was in line with market trend. Also,
as most of our sales contracts did not contain any price adjustment mechanism, we were not
able to increase the selling price of our battery products to our customers despite the steep
increases in raw material prices.
On the other hand, our per unit cost of sales for our battery products increased by 35.4%
from RMB0.48 per Wh in 2020 to RMB0.65 per Wh in 2021, among which (i) our raw material
costs increased by 42.9% from RMB0.35 per Wh in 2020 to RMB0.50 per Wh in 2021
primarily due to steep increases in raw material prices; (ii) our manufacturing costs increased
by 11.1% from RMB0.09 per Wh in 2020 to RMB0.10 per Wh in 2021 primarily due to a
significant increase in sales volume of our small capacity ESS battery products; and (iii) our
direct labor costs remained relatively stable at RMB0.05 in 2020 and 2021.
FINANCIAL INFORMATION
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--- page 385 ---
EV Battery Products
Y ear ended December 31,
2020 2021
(in RMB thousands, except for percentages)
Gross
Profit/
(Loss)
Gross
Margin
Gross
Profit/
(Loss)
Gross
Margin
EV Battery Products....................... 130,434 19.4% (103,289) (10.5)%
We recorded gross profit from our EV battery products of RMB130.4 million in 2020,
with a gross profit margin of 19.4%, while we recorded gross loss from our EV battery products
of RMB103.3 million in 2021, with negative gross profit margin of 10.5%. Such change was
primarily due to (i) a 42.4% increase unit cost of raw materials of our EV battery products from
RMB0.33 per Wh in 2020 to RMB0.47 per Wh in 2021, which in turn was the result of the rapid
increase in purchase price of raw materials as a result of supply shortage in the market in 2021,
and (ii) the fact that we were not able to timely adjust our selling prices of EV battery products
in responses to the rapid increase in purchase prices of raw materials due to prevailing market
trend, and the average selling price for our EV battery products decreased by 3.7% from
RMB0.54 per Wh in 2020 to RMB0.52 per Wh in 2021.
ESS battery products
Y ear ended December 31,
2020 2021
(in RMB thousands, except for percentages)
Gross
Profit/
(Loss)
Gross
Margin
Gross
Profit/
(Loss)
Gross
Margin
ESS Battery Products ..................... (23,143) (12.7)% (210,928) (24.5)%
The gross loss from our ESS battery products increased from RMB23.1 million in 2020
to RMB210.9 million in 2021, primarily due a significant increase in sales volume of our ESS
battery products. Our negative gross profit margin of ESS battery products increased from
12.7% in 2020 to 24.5% in 2021, primarily due to (i) a 37.5% increase unit cost of raw
materials from RMB0.40 per Wh in 2020 to RMB0.55 per Wh in 2021, which in turn was the
result of the rapid increase in purchase price of raw materials as a result of supply shortage in
the market in 2021, and (ii) the fact that we were not able to timely adjust our selling prices
of ESS battery products in responses to the rapid increase in purchase prices of raw materials
due to prevailing market trend, and the average selling price for our ESS battery products
remained relatively stable at RMB0.59 per Wh in 2020 and RMB0.60 per Wh in 2021.
FINANCIAL INFORMATION
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--- page 386 ---
Other Income and Gains
Other income and gains increased by 187.0% from RMB12.3 million in 2020 to RMB35.3
million in 2021, primarily due to (i) an increase in government grants of RMB10.5 million
primarily as subsidies for our increased R&D activities in 2021; (ii) an increase in interest
income of RMB6.7 million for our increased time deposits; and (iii) foreign exchange gains of
RMB4.9 million from the acquisition of Batterotech Jiashan in 2021, the consideration of
which was denominated in USD.
Selling and Distribution Expenses
Y ear ended December 31,
2020 2021 % Change
(in RMB thousands, except for percentages)
Selling and distribution expenses ................... 34,036 72,346 112.6%
Percentage of revenue................................. 3.8% 3.4%
Selling and distribution expenses increased by 112.6% from RMB34.0 million in 2020 to
RMB72.3 million in 2021, primarily due to (i) an increase in warranties and after services of
RMB16.6 million attributable to an increase in sales volume of our battery products, and (ii)
an increase in salaries and welfare of RMB14.1 million attributable to an increase in the
number of our sales employees and an increase in per capita salaries. As a percentage of our
revenue, selling and distribution expenses decreased from 3.8% in 2020 to 3.4% in 2021.
Administrative Expenses
Y ear ended December 31,
2020 2021 % Change
(in RMB thousands, except for percentages)
Administrative expenses ................................. 34,007 160,612 372.3%
Percentage of revenue................................. 3.7% 7.6%
Administrative expenses increased significantly from RMB34.0 million in 2020 to
RMB160.6 million in 2021, primarily due to (i) an increase in salaries and welfare of RMB59.0
million mainly attributable to (a) an increase in number of our administrative personnel for our
expansion project and an increase in per capita salaries, and (b) the reduction of social
securities contribution as part of the favorable government policies as the result of the
COVID-19 in 2020, (ii) the share incentive expense of RMB29.7 million recorded in 2021, (iii)
an increase in office expenses of RMB20.5 million, and (iv) an increase in depreciation and
amortization of RMB6.3 million attributable to an increase in property and equipment related
to our administrative activities. As a percentage of our revenue, administrative expenses
increased from 3.7% in 2020 to 7.6% in 2021, primarily because we increased our
administrative personnel and office equipment in 2021 to catch up with the administrative tasks
resulting from our rapid growth as well as to support our future expansion.
FINANCIAL INFORMATION
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--- page 387 ---
Research and Development Expenses
Y ear ended December 31,
2020 2021 % Change
(in RMB thousands, except for percentages)
R&D expenses ................................................ 72,716 245,558 237.7%
Percentage of revenue................................. 8.0% 11.6%
R&D expenses increased by 237.7% from RMB72.7 million in 2020 to RMB245.6 million
in 2021, primarily due to (i) an increase in salaries and welfare of RMB78.6 million
attributable to an increase in number of R&D personnel in 2021 and an increase in per capita
salaries as a way to attract talents, (ii) an increase in material expenses of RMB57.4 million,
and (iii) a share incentive expense of RMB12.9 million in 2021. As a percentage of our
revenue, R&D expenses increased from 8.0% in 2020 to 11.6% in 2021, primarily due to the
increased number of R&D personnel we hired to support our key R&D programs. See
“Business – Research and Development – Our Research and Development Roadmap.”
Impairment losses on financial assets
Our net impairment losses on financial assets decreased by 20.0% from RMB2.0 million
in 2020 to RMB1.6 million in 2021, primarily due to the collection of trade receivables aged
more than six months from certain customers.
Other Expenses
Other expenses decreased by 83.0% from RMB11.2 million in 2020 to RMB1.9 million
in 2021, primarily attributable to a one-off payment in 2020 in relation to the acquisition of
Batterotech Wuhan.
Finance Costs
Finance costs increased by 43.4% from RMB22.8 million in 2020 to RMB32.7 million in
2021, primarily due to the increase in interest-bearing bank borrowings to finance the
construction of our production facilities and daily operation. See “– Indebtedness.”
Loss for the Y ear
As a result of the foregoing, our loss for the year increased significantly from RMB53.3
million in 2020 to RMB804.2 million in 2021.
FINANCIAL INFORMATION
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--- page 388 ---
LIQUIDITY AND CAPITAL RESOURCES
During the Track Record Period, we financed our operations primarily through banking
facilities, equity fund raised, loans from related parties and cash generated from operating
activities. As of June 30, 2023, we had RMB4,021.5 million in cash and cash equivalents. We
fully received proceeds of an aggregate amount of approximately RMB8.5 billion from the
Pre-IPO Investments by November 2022. See “History and Development – Establishment and
Development of the Company – Pre-IPO Investments.”
Going forward, we believe our liquidity requirements will be satisfied by using funds
from a combination of proceeds from Pre-IPO Investments, banking facilities and net proceeds
from the Global Offering.
Taking into account the net proceeds from the Global Offering and banking facilities
available to us, our Directors believe that we have sufficient working capital to meet our
present and future cash requirements for at least the next 12 months from the date of
publication of this prospectus. After making reasonable inquiries of our management about our
working capital, the Joint Sponsors concur with the Directors’ view.
Net Current Assets/Liabilities
The table below sets forth our current assets and liabilities as of the dates indicated.
As of December 31,
As of
June 30,
As of
October 31,
2020 2021 2022 2023 2023
(in RMB thousands)
(unaudited)
Current assets:
Inventories....................... 244,570 720,654 3,245,649 3,028,454 3,659,451
Trade and bills
receivables ................... 611,826 1,053,510 4,194,057 3,553,114 3,807,994
Contract assets ................ 6,686 20,935 113,426 166,995 144,511
Prepayments, other
receivables and other
assets ........................... 36,959 639,139 717,908 437,134 753,991
Financial assets at fair
value through profit or
loss .............................. 50,454 – 17,186 116,959 675,000
Due from related parties.. 17,219 41,604 1,405,883 763,802 926,931
Restricted cash ................ 40,850 817,327 1,843,528 1,857,888 601,038
Cash and cash
equivalents................... 146,430 580,507 4,901,062 4,021,452 5,748,454
Total current assets ....... 1,154,994 3,873,676 16,438,699 13,945,798 16,317,370
FINANCIAL INFORMATION
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--- page 389 ---
As of December 31,
As of
June 30,
As of
October 31,
2020 2021 2022 2023 2023
(in RMB thousands)
(unaudited)
Current liabilities:
Trade and bills payables.. 586,609 1,660,312 6,773,324 5,902,947 6,376,029
Other payables and
accruals........................ 208,521 1,196,526 2,787,628 3,663,832 4,695,347
Contract liabilities ........... 8,855 158,538 184,408 303,411 154,080
Interest-bearing bank
borrowings ................... 173,205 367,136 465,209 843,396 2,193,094
Lease liabilities ............... 6,464 8,760 9,616 11,239 10,239
Deferred government
grants ........................... 3,904 6,389 13,355 22,707 41,602
Due to related parties ...... 1,132,459 3,029,579 117,383 55,184 55,695
Tax payable ..................... – – 25 – –
Provisions........................ 2,139 2,804 48,534 86,302 99,162
Total current liabilities .. 2,122,156 6,430,044 10,399,482 10,889,018 13,625,248
Net current
assets/(liabilities) ........ (967,162) (2,556,368) 6,039,217 3,056,780 2,692,122
Comparison between October 31, 2023 and June 30, 2023
Our net current assets decreased from RMB3,056.8 million as of June 30, 2023 to
RMB2,692.1 million as of October 31, 2023, primarily due to (i) an increase in current
liabilities, including (a) an increase in trade and bills payables of RMB473.1 million, (b) an
increase in other payables and accruals of RMB1,031.5 million, and (c) an increase in
interest-bearing bank borrowings of RMB1,349.7 million; and (ii) a decrease in restricted
shares of RMB1,256.9 million. Such increase in current liabilities was mostly offset by an
increase in the current assets, including (i) an increase in inventories of RMB451.0 million, (ii)
an increase in prepayments, other receivables and other assets of RMB316.9 million, (iii) an
increase in financial assets at fair value through profit or loss of RMB558.0 million, and (iv)
an increase in cash and cash equivalents of RMB1,727.0 million.
FINANCIAL INFORMATION
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--- page 390 ---
Comparison between June 30, 2023 and December 31, 2022
Our net current assets decreased from RMB6,039.2 million as of December 31, 2022 to
RMB3,056.8 million as of June 30, 2023, primarily due to (i) a decrease in current assets,
including (a) a decrease in the trade and bills receivables of RMB640.9 million, (b) a decrease
in the amount due from related parties of RMB642.1 million, and (c) a decrease in cash and
cash equivalents of RMB879.6 million, and (ii) an increase in current liabilities, including (a)
an increase in other payables and accruals of RMB876.2 million, and (b) an increase in the
interest-bearing bank borrowings of RMB378.2 million. Such change was partially offset by a
decrease in trade and bills payables of RMB870.4 million. See “– Selected Balance Sheet
Items,” and “– Cash Flow.”
Comparison between December 31, 2022 and December 31, 2021
Our net current liabilities of RMB2,556.4 million as of December 31, 2021 turned into net
current assets of RMB6,039.2 million as of December 31, 2022, primarily due to (i) an increase
in current assets, including (a) an increase in inventories of RMB2,525.0 million, (b) an
increase in trade and bills receivables of RMB3,140.5 million, (c) an increase in due from
related parties of RMB1,364.3 million, (d) an increase in restricted cash of RMB1,026.2
million, and (e) an increase in cash and cash equivalent of RMB4,320.6 million mainly as a
result of the Pre-IPO Investment; and (ii) a decrease in amounts due to related parties of
RMB2,912.2 million for our repayment of loans from related parties. Such increase in current
assets was partially offset by an increase in current liabilities, including (i) an increase in trade
and bills payables of RMB5,113.0 million, and (ii) an increase in other payables and accruals
of RMB1,591.1 million. These changes are largely in line with the growth of our operational
scale. See “History and Development – Establishment and Development of the Company –
Pre-IPO Investment,” and “– Selected Balance Sheet Items,” and “– Cash Flow.”
Comparison between December 31, 2021 and December 31, 2020
Our net current liabilities increased from RMB967.2 million as of December 31, 2020 to
RMB2,556.4 million as of December 31, 2021, primarily due to an increase in current
liabilities, including (i) an increase in trade and bills payables of RMB1,073.7 million, (ii) an
increase in other payables and accruals of RMB988.0 million, and (iii) an increase in amount
due to related parties of RMB1,897.1 million. Such increase in current liabilities was partially
offset by an increase in current assets, including (i) an increase in inventories of RMB476.1
million, (ii) an increase in trade and bills receivables of RMB441.7 million, (iii) an increase
in prepayments, other receivables and other assets of RMB602.2 million, (iv) an increase in
restricted cash of RMB776.5 million, and (v) an increase in cash and cash equivalents of
RMB434.1 million. These changes are largely in line with the growth of our operational scale.
See “– Selected Balance Sheet Items,” and “– Cash Flow.”
FINANCIAL INFORMATION
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--- page 391 ---
SELECTED BALANCE SHEET ITEMS
Inventories
Our inventories include (i) raw materials, (ii) work in progress, and (iii) finished goods.
As of December 31, 2020, 2021 and 2022 and June 30, 2023, raw materials accounted for
46.3%, 55.2%, 38.9% and 21.6% of our inventories, respectively.
The table below sets forth a breakdown of our inventory balances as of the dates
indicated.
As of December 31, As of June 30,
2020 2021 2022 2023
(in RMB thousands)
Raw materials................ 113,229 46.3% 398,149 55.2% 1,263,202 38.9% 652,061 21.6%
Work in progress ........... 67,578 27.6% 171,054 23.7% 522,294 16.1% 670,334 22.1%
Finished goods............... 63,763 26.1% 151,451 21.1% 1,460,153 45.0% 1,706,059 56.3%
Total.............................. 244,570 100.0% 720,654 100.0% 3,245,649 100.0% 3,028,454 100.0%
Our inventories increased significantly from 2020 to 2022 as we continued to expand our
production scale. As the prices of key raw materials for our battery products, such as LFP,
increased sharply, and due to the shortage of supply of raw materials in 2021, we strategically
procured these raw materials in advance to secure our raw material supplies according to our
production plan. As a result, raw materials accounted for a larger portion of our inventories as
of December 31, 2021 as compared with December 31, 2020 and 2022. However, our
inventories decreased from RMB3,245.6 million as of December 31, 2022 to RMB3,028.5
million as of June 30, 2023, primarily due to the decrease in amount of raw materials in
inventories which was mostly offset by an increase in our finished goods.
Our raw materials increased significantly from RMB398.1 million as of December 31,
2021 to RMB1,263.2 million as of December 31, 2022, primarily due to (i) the significant
increase in raw material prices in 2022, and (ii) the increase in procurement of raw materials
in line with our rapid business growth. Our finished goods increased significantly from
RMB151.5 million as of December 31, 2021 to RMB1,460.2 million as of December 31, 2022,
primarily due to (i) our increased output to satisfy our customer demands, and (ii) we received
more orders from our customers for our products towards the end of 2022. Our raw materials
decreased significantly from RMB1,263.2 million as of December 31, 2022 to RMB652.1
million as of June 30, 2023, primarily due to the continuous decrease in the raw material prices
in the first half of 2023, while we prioritized to utilize our raw materials in stock first and
became more prudent at procuring raw materials.
FINANCIAL INFORMATION
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--- page 392 ---
Aging Analysis and Impairment
The table below sets forth an aging analysis of our inventories as of the dates indicated.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
Within one year ...................................... 231,138 699,108 3,206,155 3,010,461
Between one to two years....................... 12,070 16,934 29,652 11,954
Between two to three years .................... 1,362 4,233 7,792 3,866
Over three years ..................................... – 379 2,050 2,173
Total ....................................................... 244,570 720,654 3,245,649 3,028,454
The table below sets forth the movements in the loss allowance for impairment of
inventories as of the dates indicated.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
At the beginning of the year................... 23,592 7,152 89,772 64,986
Provision for impairment losses, net ...... (16,440) 82,620 (24,786) 264,692
At the end of the year .......................... 7,152 89,772 64,986 329,678
We recorded the net provision for impairment losses of inventories of RMB82.6 million
as of December 31, 2021, primarily due to the rapid increase in purchase prices of raw
materials in 2021 and the fact that we did not manage to adjust the selling prices of our battery
products accordingly in a timely manner, which together resulted in the net realizable value of
our inventories lower than their costs. We recorded the reversal of impairment losses of
RMB24.8 million as of December 31, 2022, primarily due to the increase in the selling prices
of our battery products, which increased the net realizable value of our inventories, which
resulted in the net realizable value of our inventories higher than their costs. We recorded the
net provision for impairment losses of inventories of RMB264.7 million as of June 30, 2023,
primarily due to the decrease in average selling prices of our EV and ESS battery products as
a result of decrease in raw material prices in the first half of 2023, which resulted in the net
realizable value of our inventories lower than their costs.
FINANCIAL INFORMATION
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--- page 393 ---
Turnover Days
Y ear Ended December 31,
Six
Months
Ended
June 30,
2020 2021 2022 2023
Inventory turnover days (1) ........... 89 72 53 90
Note:
(1) Inventory turnover days for each year/period equals the average of the beginning and ending balances of
inventory for that year/period divided by cost of sales for that year/period and multiplied by 365 days for the
year ended December 31 and by 181 days for the six months ended June 30.
We implement stringent controls and periodically review on inventory efficiency. Our
inventory turnover days decreased from 89 days in 2020 to 72 days in 2021, and further to 53
days in 2022, primarily due to our improvement in production efficiency and inventory
management. However, our inventory turnover days increased from 53 days in 2022 to 90 days
in the six months ended June 30, 2023, primarily due to the slowdown of sales attributable to
the decrease in orders in the first half of 2023 as affected by the overall market condition.
Subsequent Utilization
As of October 31, 2023, 77.1% of our total inventories as of June 30, 2023, or
RMB2,590.4 million, were utilized or sold.
The table below sets forth the subsequent utilization as of October 31, 2023 in terms of
amount and as a percentage of our inventories as of June 30, 2023 by type.
As of October 31, 2023
(in RMB thousands, except
for percentages)
Raw materials ......................................................... 533,781 77.3%
Work in progress .................................................... 726,831 100.0%
Finished goods........................................................ 1,329,747 68.5%
Total ....................................................................... 2,590,359 77.1%
FINANCIAL INFORMATION
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--- page 394 ---
Trade and Bills Receivables
Our trade and bills receivables primarily arise from sales of our products on credit. We
typically grant credit terms of one to three months to eligible customers. See “Business –
Marketing, Sales and Customers – Our Customers.”
The table below sets forth our trade and bills receivables as of the dates indicated.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
Trade receivables ................... 417,100 626,834 3,614,199 2,964,824
Bills receivables..................... 196,779 430,314 664,546 920,053
Impairment............................. (2,053) (3,638) (84,688) (331,763)
Total ...................................... 611,826 1,053,510 4,194,057 3,553,114
During the Track Record Period, our trade and bills receivables grew significantly as our
sales increased. All trade and bills receivables above were attributable to independent third
parties.
We seek to maintain strict control over our outstanding receivables and have a credit
control department to minimize credit risk. Our senior management regularly reviews the
recoverability of our outstanding balances and when appropriate, provides for impairment of
these trade receivables. Trade receivables relating to customers with known financial
difficulties or significant doubt on collection are assessed individually for impairment
allowance. The remaining trade receivables are grouped and collectively assessed for
impairment allowance. Under the collective approach, an impairment analysis is performed at
each reporting date using a provision matrix to measure expected credit losses. The provision
rates are based on aging analysis for grouping of customers that have similar loss patterns.
Generally, trade receivables are written off according to management approval. See note 20 to
“Appendix I – Accountants’ Report.” We believe that our exposure to the risks of being unable
to collect payments is small.
FINANCIAL INFORMATION
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--- page 395 ---
Aging Analysis and Impairment
The table below sets forth an aging analysis of our trade and bills receivables as of the
dates indicated.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
Within three months ............. 500,130 828,764 3,636,705 2,069,501
Three months to
six months ......................... 102,211 194,882 529,776 1,103,413
Six months to one year .......... 6,891 20,626 18,230 376,787
Between one to two years ...... 2,594 9,238 9,346 3,413
Total ...................................... 611,826 1,053,510 4,194,057 3,553,114
The table below sets forth the movements in the loss allowance for impairment of trade
receivables as of the dates indicated.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
At the beginning of the year .. 102 2,053 3,638 84,688
Impairment losses, net ........... 1,951 1,585 81,050 247,075
At the end of the year .......... 2,053 3,638 84,688 331,763
During the Track Record Period, as a result of our effective collection and credit control,
a substantial majority of our trade receivables aged within six months, and the impairment
losses we recorded represent a relatively minor portion of the balance of our trade receivables.
We recorded the net impairment losses of RMB81.1 million in 2022, primarily due to that we
provided impairment losses of RMB74.5 million for one of our customers who suffered
deteriorate liquidity position. We recorded the net impairment losses of RMB247.1 million in
the six months ended June 30, 2023, primarily due to the provision for impairment losses we
prudently made in the six months ended June 30, 2023 for certain EV battery products
customers in consideration of their operating performance, liquidity position and our
communication with them on the payment schedules.
FINANCIAL INFORMATION
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--- page 396 ---
Turnover Days
Y ear Ended December 31,
Six Months
Ended
June 30,
2020 2021 2022 2023
Trade receivables turnover
days(1)(2) ............................... 114 95 70 112
Note:
(1) Trade receivables turnover days for each year/period equals the average of the beginning and ending balances
of trade receivables for that year/period divided by revenue for that year/period and multiplied by 365 days
for the year ended December 31 and by 181 days for the six months ended June 30.
(2) Including the amount of due from the related parties in trade natures. The turnover days for trade receivables
attributable only to independent third parties were 104 days, 97 days 60 days, and 103 days, respectively.
Our trade receivables turnover days of 114 days in 2020 exceeded our credit terms of one
to three months, primarily because we recorded a large amount of trade receivables towards the
end of 2020, most of which were not due or fully settled as of December 31, 2020. Our trade
receivables turnover days decrease from 114 days in 2020 to 95 days in 2021, and further
decreased to 70 days in 2022, primarily due to our enhanced collection efforts. However, our
trade receivable turnover days increased from 70 days in 2022 to 112 days in the six months
ended June 30, 2023, primarily due to the delay of payment from our customers against the
backdrop of unfavorable overall market conditions in the first half of 2023 together with the
impact of spring festive.
Subsequent Settlement
The temporary slowdown in China’s EV market in early 2023 affected cash flow
management of some of our customers. As of October 31, 2023, 71.2% of our trade and bills
receivables as of June 30, 2023, or RMB2,766.0 million, were settled.
The table below sets forth the subsequent settlement as of October 31, 2023 in terms of
amount and as a percentage of our trade and bills receivables as of June 30, 2023 by aging.
As of October 30, 2023
(in RMB thousands, except for
percentages)
Within three months .............................................. 1,734,117 82.8%
Three months to six months .................................. 850,543 75.9%
Six months to one year........................................... 181,318 27.8%
One to two years .................................................... – –
Total ....................................................................... 2,765,978 71.2%
FINANCIAL INFORMATION
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--- page 397 ---
Based on the our prudent estimation and judgment, and in accordance with the our
accounting policies, we have made sufficient provision for impairment for our trade and bills
receivables for each aging group during the Track Record Period. For trade and bills
receivables relating to customers with known financial difficulties or significant doubt on
collection, the Company has assessed individually for impairment allowance and recorded
impairment losses of RMB173.9 million for the six months ended of June 30, 2023. For other
customers, the Company still maintained stable cooperations with them and the management
did not identify any known financial difficulties or significant doubt on collection, and thus
performed an impairment analysis using a provision matrix to measure expected credit losses
on collective basis. Accordingly, we recorded impairment loss of RMB73.2 million for the six
months ended June 30, 2023, with increased rates of expected loss especially for the trade
receivables aged one to two years, in consideration of the slower collection of our trade
receivables resulting from tightened cash flow of our customers mainly due to overall economy
and market condition in the first half of 2023. In particular, for trade receivables aging more
than six months, the Company has conducted internal analysis and initiated the
communications with the relevant customers to facilitate the repayment.
Contract Assets
The table below sets forth our contract assets as of the dates indicated.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
Contract assets arising from:
Sale of products.................. 6,686 20,935 113,426 169,022
Impairment............................. – – – (2,027)
Total ...................................... 6,686 20,935 113,426 166,995
During the Track Record Period, we recorded contract assets from the sales of products,
the receipt of the consideration of which is conditional. Contract assets will be transfered to
receivables upon the expiration of warranty period when we have unconditional right to receive
consideration from the customers. Our contract assets increased from RMB20.9 million as of
December 31, 2021 to RMB113.4 million as of December 31, 2022 and further to RMB167.0
million as of June 30, 2023, primarily due to the growth of our overall business and sales
volume of our battery products.
The Group and the Company seeks to maintain strict control over its outstanding contract
assets and has a credit control process to minimize credit risk. As of June 30, 2023, we recorded
impairment to contract assets of RMB2.0 million to reflect the credit risk of one of our major
OEM customers. In view of the aforementioned and the fact that the Group’s and the
Company’s contract assets relate to a large number of diversified customers, there is no
significant concentration of credit risk. The Group and the Company does not hold any
collateral or other credit enhancements over its contract assets balances. Contract assets are
non-interest-bearing.
FINANCIAL INFORMATION
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--- page 398 ---
The table below sets forth the expected timing of recovery for contract assets as of the
dates indicated.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
Within one year...................... 35 1,490 97,425 78,058
After one year........................ 6,651 19,445 16,001 88,937
Total ...................................... 6,686 20,935 113,426 166,995
Subsequent Certification
As of October 31, 2023, 20.2% of our contract assets as of June 30, 2023, or RMB34.1
million, were certified.
Prepayments, Other Receivables and Other Assets
Our current portion of prepayments, other receivables and other assets primarily include
(i) prepayment for raw materials, (ii) value-added-tax recoverable, and (iii) deposits and other
receivables. Value-added tax recoverable primarily represent the value-added input tax in
excess of the value-added output tax, which is expected to be deductible or recoverable within
one year.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
Prepayments ........................... 10,717 552,499 310,066 121,121
Value-added-tax recoverable .. 24,254 73,017 148,377 265,008
Deposits and other
receivables
(1) ...................... 1,988 13,623 259,465 51,005
Total ...................................... 36,959 639,139 717,908 437,134
Note:
(1) Including capitalized listing expenses.
FINANCIAL INFORMATION
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--- page 399 ---
Our prepayments, other receivables and other assets increased significantly from
RMB37.0 million as of December 31, 2020 to RMB639.1 million as of December 31, 2021,
primarily due to (i) an increase in prepayment for raw materials of RMB541.8 million, as we
were required to make a large amount of prepayment under a raw material supply agreement
with a large procurement amount we entered into in 2021, and (ii) an increase in
value-added-tax recoverable of RMB48.8 million. Our prepayments, other receivables and
other assets increased from RMB639.1 million as of December 31, 2021 to RMB717.9 million
as of December 31, 2022, primarily due to (i) an increase in deposits and other receivables of
RMB245.8 million, mainly of which were investment amount receivables for the subscription
of REPT SAIC by the other joint venture partner, and (ii) an increase in value-added-tax
recoverable of RMB75.4 million, which was partially offset by a decrease in prepayments of
RMB242.4 million due to the subsequent settlement with our raw materials suppliers. Our
prepayment, other receivables and other assets decreased from RMB717.9 million as of
December 31, 2022 to RMB437.1 million as of June 30, 2023, primarily due to (i) the decrease
in prepayments for the procurement of raw materials as a result of our adjustment of
procurement strategies in response to the fluctuation of prices of raw materials in the first half
of 2023, and (ii) the full settlement of the foregoing outstanding investment amounts and the
subsequent of our prepayments to our suppliers.
Aging Analysis
The table below sets forth an aging analysis of our current portion of prepayments, other
receivables and other assets as of the dates indicated.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
Within six months .................. 35,629 638,516 693,618 400,700
Six months to one year .......... 197 324 21,332 2,269
Between one to two years ...... 4 162 2,958 34,165
Over two years....................... 1,129 137 – –
Total ...................................... 36,959 639,139 717,908 437,134
Subsequent Utilization
As of October 31, 2023, 52.9% of our current portion of prepayments, other receivables
and other assets as of June 30, 2023, or RMB231.2 million, were utilized.
FINANCIAL INFORMATION
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--- page 400 ---
Financial Assets at Fair Value through Profit or Loss
The table below sets forth the our financial assets at fair value through profit or loss as
of the dates indicated.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
Other unlisted investment, at
fair value .............................. 50,454 – 15,000 115,497
Forward foreign exchange
contracts ............................... – – 2,186 1,462
Total......................................... 50,454 – 17,186 116,959
The unlisted investments were wealth management products issued by banks in Mainland
China. They were mandatorily classified as financial assets at fair value through profit or loss
as their contractual cash flows are not solely payments of principal and interest. As of
December 31, 2020, 2021 and 2022 and June 30, 2023, the unlisted investments amounting to
RMB50.5 million, nil, RMB15.0 million and RMB115.5 million, respectively, were pledged for
issuance of bills payables.
We form our portfolio of wealth management products with the view of achieving (i) a
relatively low level of risk, (ii) good liquidity and (iii) an enhanced yield. Our investment
decisions are made on a case-by-case basis and after due and careful consideration of a number
of factors, including but not limited to our overall financial condition, market and investment
conditions, economic developments, investment cost, duration of investment and the expected
returns and potential risks of such investment.
We have also established a set of internal control measures to safeguard our exposure to
investment risks in connection with the purchase of wealth managements. Such measures
include: (i) our investment in wealth management products shall be authorized and approved
by our financial department, (ii) our finance department is responsible for ensuring that the
wealth management products are properly recorded in our financial statements and monitoring
the performance of our wealth management products, and any significant or adverse fluctuation
in the wealth management products shall be reported to our management in a timely manner.
Any proposed investment in wealth management products which are not made in
accordance with our treasury policy shall be subject to the approval of our Board.
After Listing, we intend to continue our investments in the wealth management products
strictly in accordance with our internal policies and measures and the requirements under
Chapter 14 of the Listing Rules.
FINANCIAL INFORMATION
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--- page 401 ---
Amount Due from Related Parties
The table below sets forth the amount of due from related parties as of the dates indicated.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
Due from related parties –
current ................................ 17,219 41,604 1,405,883 763,802
Due from related parties –
non-current ......................... 1,880 1,887 1,887 2,333
Total ...................................... 19,099 43,491 1,407,770 766,135
The amounts due from related parties are trade-related, unsecured, interests-free and
repayable on demand. The management of the Company considers there is no significant credit
risk for amounts due from related parties. See note 38 to “Appendix I – Accountants’ Report.”
Restricted Cash
Our restricted cash primarily consist of (i) restricted time deposits, which comprises (a)
time deposits pledged for bills payables and (b) time deposits pledged for letter of guarantee,
and (ii) restricted bank deposits.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
Restricted time deposits .........
Pledged for bills payables .. 40,746 810,300 1,749,158 1,409,165
Pledged for letter of
guarantee......................... 102 7,024 34,359 48,691
Restricted bank deposits......... 2 3 60,011 400,032
Total ...................................... 40,850 817,327 1,843,528 1,857,888
As of December 31, 2020, 2021 and 2022, and June 30, 2023, our restricted cash were
RMB40.9 million, RMB817.3 million, RMB1,843.5 million and RMB1,857.9 million,
respectively. The continuous increase in our restricted time deposits from 2020 to 2022 was
primarily due to a significant increase in the amount of pledged deposits for bill payables,
attributable to (i) our rapid business growth during the Track Record Period, and (ii) an
increase in use of bank acceptance bills to settle with our suppliers. See “– Trade and Bills
Payables.”
FINANCIAL INFORMATION
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--- page 402 ---
Investments in Joint Ventures
The table below sets forth the share of net assets from our joint ventures as of the dates
indicated.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
Shares of net assets................ – – 132,391 168,933
Particulars of the joint venture are as follows:
Name
Particulars of
issued shares held
Place of
registration
and business
Percentage of
ownership
interest
attributable
to the Group Principal activity
SAIC REPT EV Battery
System Co., Ltd.
(ᒄд๿ऌਗɢཥϫӻ୕Ϟ
ʮ̡) (“SAIC REPT”) .....
Registered capital
of RMB1 each
China 34% Manufacture and
sale of battery
products
Zhejiang Qingruida Precision
Technology Co., Ltd. ( एϪ
ʮ̡)
(“Qingruida”) ......................
Registered capital
of RMB1 each
China 40% Manufacture and
sale of battery
accessories
SAIC REPT, which is considered a material joint venture of the Group, acts as the
Group’s strategic partner engaged in manufacture of battery products and is accounted for
using the equity method. As of the Latest Practicable Date, the Company, Liuzhou SAIC
Technology Development Co., Ltd. (“ʮ̡”) which is a wholly owned
sub-subsidiary of SAIC Motor ( ɪӛණྠ) and Liuzhou Chuangling Technology Partnership
(Limited Partnership) (“ҦΥྫΆุ(Υྫ)”) held 34.0%, 56.0% and 10.0% of
ownership interest in SAIC REPT, respectively.
Qingruida, which is considered a joint venture of the Group, acts as the Group’s strategic
partner engaged in manufacture of battery accessories and is accounted for using the equity
method. As of the Latest Practicable Date, the Company and Wenzhou Jianeng Business
Management Co., Ltd. (“ʮ̡”) held 40.0% and 60.0% of ownership
interest in Qingruida, respectively. As of the same date, Qingruida was not put into production.
Trade and Bills Payables
Our trade and bills payables primarily comprise payables to our suppliers for raw
materials. Our trade payables are non-interest-bearing and are normally settled on 90 to
180-day terms.
FINANCIAL INFORMATION
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--- page 403 ---
The table below sets forth an aging analysis of our trade and bills payables as of the dates
indicated.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
Within one year...................... 586,119 1,660,128 6,772,880 5,814,714
One to two years.................... 490 184 444 88,214
Over two years....................... – – – 19
Total ...................................... 586,609 1,660,312 6,773,324 5,902,947
As of December 31, 2020, 2021 and 2022, our trade and bills payables were RMB586.6
million, RMB1,660.3 million and RMB6,773.3 million, respectively. The continuous increase
in our trade and bills payables during the Track Record Period was primarily due to our rapid
business growth. As of June 30, 2023, our trade and bills payables decreased from RMB6,773.3
million as of December 31, 2022 to RMB5,902.9 million, primarily due to our repayment of
amounts due to our suppliers and our more prudent procurement of raw materials in the first
half of 2023.
Turnover Days
Y ear Ended December 31,
Six Months
Ended
June 30,
2020 2021 2022 2023
Trade and bills payables
turnover days (1) ........... 180 168 114 181
Note:
(1) Trade and bills payables turnover days for each year/period equals the average of the beginning and
ending balances of trade and bills payables for that year/period divided by cost of sales for that
year/period and multiplied by 365 days for the year ended December 31 and by 181 days for the six
months ended June 30.
Our trade and bills payables turnover days decreased from 180 days in 2020 to 168 days
in 2021, and further decreased to 114 days in 2022, primarily due to an increase in prepayment
for raw materials and the short credit terms provided by our suppliers in response to the supply
shortage of raw materials in the market. Our trade and bills payables turnover days increased
from 114 days in 2022 to 181 days in six months ended June 30, 2023, as we negotiated with
our suppliers to extend the payment period in consideration of the slowdown of the overall
market condition in the first half of 2023.
FINANCIAL INFORMATION
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--- page 404 ---
Subsequent Settlement
As of October 31, 2023, 82.4% of our trade and bills payables as of June 30, 2023, or
RMB4,861.5 million, were settled.
Other Payables and Accruals
Our other payables and accruals primarily comprise (i) payable for purchase of property,
plant and equipment, (ii) salary payables, (iii) deposit received from our suppliers and
customers, and (iv) other tax payables.
The table below sets forth our other payables and accruals as of the dates indicated.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
Payables for purchase of
property, plant and
equipment ........................... 139,601 913,246 2,199,559 3,105,719
Salary payables ...................... 30,307 113,900 307,610 311,290
Deposit received .................... – 134,624 184,371 125,366
Other tax payables ................. 3,145 3,908 35,722 64,844
Others
(1) ................................. 35,468 30,848 60,366 56,613
Total ...................................... 208,521 1,196,526 2,787,628 3,663,832
Note:
(1) Others mainly include payables for labor expenses, utility, rent and consultancy fees of agencies.
Our other payables and accruals increased significantly from RMB208.5 million as of
December 31, 2020 to RMB1,196.5 million as of December 31, 2021, primarily due to (i) an
increase in payables for purchase of property, plant and equipment of RMB773.6 million
attributable to the construction of our production facilities in 2021, (ii) an increase in salary
payables of RMB83.6 million attributable to an increase in scale of our personnel in line with
our rapid business growth, and (iii) an increase in deposit received of RMB134.6 million from
our suppliers for the ensurance of equipment quality and from our customers to reserve our
production capacity. Our other payables and accruals increased from RMB1,196.5 million as
of December 31, 2021 to RMB2,787.6 million as of December 31, 2022, primarily due to an
increase in payables for purchase of property, plant and equipment of RMB1,286.3 million
attributable to our expansion of our production facilities. Our other payables and accruals
increased from RMB2,787.6 million as of December 31, 2022 to RMB3,663.8 million as of
June 30, 2023, primarily due to an increase in payables for purchase of property, plant and
equipment of RMB906.2 million attributable to our increased procurement of equipment and
construction of plants for phase I of Foshan production facility, phase II of Jiashan production
facility and Liuzhou production facility in the first half of 2023.
FINANCIAL INFORMATION
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--- page 405 ---
The table sets forth an aging analysis of our payables for property, plant and equipment
as of the dates indicated.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
Within six months .................. 139,337 912,691 1,649,350 2,203,502
Six months to one year .......... – – 460,279 838,545
Between one to two years ...... – 555 89,404 62,957
Over two years....................... 264 – 526 715
Total ...................................... 139,601 913,246 2,199,559 3,105,719
Contract Liabilities
Our contract liabilities comprise advances received from our customers. We typically
require our customers to pay part of the consideration for their purchases from us upon or prior
to the delivery of the products. The table below sets forth our contract liabilities as of the dates
indicated.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
Advances received from
customers............................ 8,855 158,538 184,408 303,411
As of December 31, 2020, 2021 and 2022 and June 30, 2023, our contract liabilities were
RMB8.9 million, RMB158.5 million, RMB184.4 million and RMB303.4 million, respectively.
The increase in our contract liabilities was primarily due to the increase in sales of our products
along with our business growth.
Subsequent Recognition
As of October 31, 2023, 68.8% of our contract liabilities as of June 30, 2023, or
RMB211.2 million, were recognized as revenue.
FINANCIAL INFORMATION
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--- page 406 ---
CASH FLOWS
The table below sets forth our cash flows for the periods indicated.
Y ear Ended December 31,
Six
Months
Ended
June 30,
2020 2021 2022 2023
(in RMB thousands)
Operating profit/(loss) before
working capital changes ..... 61,579 (459,442) 563,819 221,374
Changes in working capital.... 112,446 (1,507,063) (2,890,363) 164,957
Interest received..................... 2,523 9,211 96,071 67,166
Net cash flows generated
from/(used in) operating
activities ............................. 176,548 (1,957,294) (2,230,473) 453,497
Net cash flows used in
investing activities.............. (689,374) (2,920,950) (3,981,731) (3,902,802)
Net cash generated from
financing activities ............. 631,197 5,307,490 10,531,636 2,570,166
Net increase in cash and
cash equivalents ................ 118,371 429,246 4,319,432 (879,139)
Net foreign exchange
difference............................ (2,005) 4,831 1,123 (471)
Cash and cash equivalents
at beginning of
the year/period.................... 30,064 146,430 580,507 4,901,062
Cash and cash equivalents
at end of the year/period .. 146,430 580,507 4,901,062 4,021,452
FINANCIAL INFORMATION
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--- page 407 ---
Operating Activities
In 2021 and 2022, we recorded net cash used in operating activities of RMB1,957.3
million and RMB2,230.5 million, respectively, primarily due to that (i) we have not managed
to record net profit, and (ii) we were still at the stage of rapid growth in scale of our business,
as a result of which, we recorded significant increase in trade and bills receivables, inventories
and prepayment to our suppliers for the expansion of our business during the year/period,
respectively.
In the six months ended June 30, 2023, we had net cash generated from operating
activities of RMB453.5 million, primarily due to our loss before tax of RMB918.1 million, as
adjusted for the items including (i) non-cash and non-operating items, primarily comprising (a)
finance costs of RMB113.1 million, (b) depreciation of property, plant and equipment of
RMB405.3 million, (c) net provision for impairment of trade receivables of RMB247.1 million,
(d) net provision for product warranty of RMB88.9 million, (e) provision for impairment of
inventories of RMB264.7 million, and (f) a share incentive expense of RMB77.1 million; and
(ii) changes in working capital, which primarily comprised (a) a decrease in trade and bills
receivables of RMB338.3 million, which was due to an increase in our sales, (b) a decrease in
amounts due from related parties of RMB641.6 million, as the sales to our related parties
decreased, (c) a decrease in trade and bills payables of RMB870.4 million, which was the result
of our settlement with our suppliers, and (d) an increase in contract liabilities of RMB119.0
million as a result of an increase in sales of our products along with our business growth.
In 2022, we had net cash used in operating activities of RMB2,230.5 million, primarily
due to our loss before tax of RMB450.8 million, as adjusted for the items including (i) non-cash
and non-operating items, primarily comprising (a) finance costs of RMB188.9 million, (b)
depreciation of property, plant and equipment of RMB490.8 million, (c) net provision for
impairment of trade receivables of RMB81.1 million, (d) net provision for product warranty of
RMB239.1 million, and (e) a share incentive expense of RMB133.6 million; and changes in
working capital, which primarily comprised (a) an increase in trade and bills receivables of
RMB3,210.8 million. which was due to an increase in our sales, (b) an increase in amounts due
from related parties of RMB1,364.3 million, as we increased our sales to our related parties,
(c) an increase in inventories of RMB2,498.2 million, which was attributable to the expansion
of our production activities, (d) an increase in trade and bills payables of RMB5,113.0 million,
which was the result of our rapid business growth, and (e) an increase in restricted cash of
RMB1,026.2 million as we increased the use of bank acceptance notes to settle with our
suppliers and pledged our deposits.
FINANCIAL INFORMATION
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--- page 408 ---
In 2021, we had net cash used in operating activities of RMB1,957.3 million, primarily
due to our loss before tax of RMB804.2 million, as adjusted for the items including:
(i) non-cash and non-operating items, primarily comprising (a) a provision for product
warranty of RMB36.7 million, (b) a provision for impairment of inventories of RMB82.6
million, (c) a depreciation of property, plant and equipment of RMB151.1 million, (d) finance
costs of RMB32.7 million, and (e) a share incentive expense of RMB42.6 million; and (ii)
changes in working capital, which primarily comprised (a) an increase in trade and bills
receivables of RMB443.2 million, which was due to an increase in our sales, (b) an increase
in prepayments and other receivables and other assets of RMB581.2 million, which was
primarily due to the prepayment we made to secure raw materials supply, (c) an increase in
other non-current assets of RMB512.5 million, (d) an increase in inventories of RMB558.7
million, which was attributable to the expansion of our production activities, (e) an increase in
trade and bills payables of RMB1,073.2 million, which was the result of our rapid business
growth, and (f) an increase in restricted cash of RMB776.5 million as we increased the use of
bank acceptance notes to settle with our suppliers and pledged our deposits.
In 2020, we had net cash generated from operating activities of RMB176.5 million,
primarily due to our loss before tax of RMB53.3 million, as adjusted for the following items:
(i) non-cash and non-operating items primarily comprised (a) a provision for product warranty
of RMB20.1 million, (b) a depreciation of property, plant and equipment of RMB69.6 million,
(c) a depreciation of right-of-use assets of RMB19.1 million, and (d) finance costs of RMB22.8
million; and (ii) changes in working capital, which primarily comprised (a) an increase in trade
and bills receivables of RMB517.7 million, which was due to an increase in our sales, (b) an
increase in amounts due to related parties of RMB360.4 million, (c) an increase in inventories
of RMB85.9 million, which was attributable to the expansion of our production activities, and
(d) an increase in trade and bills payables of RMB386.0 million which was the result of our
rapid business growth.
Going forward, we aim to improve our net operating cash outflow through (i) the increase
of sales revenue to be generated from our confirmed orders and project pipelines in
development, through continuous expanding our customer base; (ii) our price adjustment
mechanism with customers in response to fluctuations in raw material prices, upgrade in
product offerings and therefore expected improvement in gross margin; (iii) strengthened cost
control, through further improvement of production efficiency, optimization of production
process and reduction of wastes; and (iv) improvement in working capital efficiency, through
(a) establishing cash flow management and monitoring mechanism, (b) closely monitoring the
operation status of our customers and the aging analysis of the trade receivables to reduce the
impairment losses, and (c) refined inventory management to accelerate the turnover of the
inventories and maintain an optimal inventory level. See “Business – Business Sustainability
– Path to Profitability.”
FINANCIAL INFORMATION
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--- page 409 ---
Investing Activities
In the six months ended June 30, 2023, we had net cash used in investing activities of
RMB3,902.8 million, primarily due to the purchase of items of property, plant and equipment
of RMB3,615.0 million.
In 2022, we had net cash used in investing activities of RMB3,981.7 million, primarily
due to the purchase of items of property, plant and equipment of RMB3,713.0 million.
In 2021, we had net cash used in investing activities of RMB2,921.0 million, primarily
due to (i) the purchase of items of property, plant and equipment of RMB2,362.7 million,
(ii) the acquisition of subsidiaries under common control of RMB443.3 million, and (iii) the
purchase of right-of-use assets of RMB154.6 million.
In 2020, we had net cash used in investing activities of RMB689.4 million, primarily due
to the purchase of property, plant and equipment of RMB727.8 million.
Financing Activities
In the six months ended June 30, 2023, we had net cash generated from financing
activities of RMB2,570.2 million, primarily due to new bank loans of RMB2,808.1 million,
which was partially offset by repayment of bank loans of RMB325.6 million.
In 2022, we had net cash generated from financing activities of RMB10,531.6 million,
primarily due to (i) the proceeds from contribution from shareholders of RMB8,940.8 million
as the result of the Pre-IPO Investment, (ii) new bank loans of RMB5,290.9 million, (iii) new
loans from related parties of RMB2,184.2 million, which was partially offset by (i) repayment
of bank loans of RMB1,190.4 million, and (ii) repayment of loans from related parties of
RMB4,837.9 million.
In 2021, we had net cash generated from financing activities of RMB5,307.5 million,
primarily due to (i) proceeds from contribution from shareholders of RMB2,615.0 million,
(ii) new bank loans of RMB538.1 million, and (iv) new loans of related parties of RMB5,269.5
million, which was partially offset by (i) repayment of bank loans of RMB241.0 million, and
(ii) repayment of loans from related parties of RMB3,342.4 million.
In 2020, we had net cash generated from financing activities of RMB631.2 million,
primarily due to (i) proceeds from contribution from original shareholders of subsidiaries
acquired under common control of RMB231.0 million, (ii) new bank loans of RMB100.8
million, and (iii) new loans of related parties of RMB463.8 million, which was partially offset
by repayment of loans from related parties of RMB134.9 million.
FINANCIAL INFORMATION
– 400 –


--- page 410 ---
INDEBTEDNESS
The following table sets forth our indebtedness as of the dates indicated:
As of December 31,
As of
June 30,
As of
October 31,
2020 2021 2022 2023 2023
(in RMB thousands)
(unaudited)
Interest-bearing bank
borrowings .................... 281,205 578,576 4,651,174 7,134,912 9,095,464
Loans and related
interests due to related
parties ........................... 638,930 2,576,484 2,599 – –
Lease liabilities................. 44,079 41,585 35,444 32,976 29,503
Contingent liabilities......... –––– –
Total ................................. 964,214 3,196,645 4,689,217 7,167,888 9,124,967
Interest-bearing Bank Borrowings
The table below sets forth our borrowings as of the dates indicated.
As of December 31,
As of
June 30,
As of
October 31,
2020 2021 2022 2023 2023
(in RMB thousands)
(unaudited)
Current
Bank loans – secured........ 100,927 274,373 105,038 682,457 1,290,760
Bank loans – unsecured .... – – 200,231 – 200,048
Current portion of
long-term bank
loans – secured.............. 72,278 92,763 4,777 5,379 314,447
Current portion of long-
term bank
loans – unsecured ........ – – 1,148 2,320 227,014
Current portion of long-
term other
loans – secured ............ – – 154,015 153,240 160,825
Non-current
Bank loans – secured........ 108,000 211,440 3,896,585 4,692,696 5,240,009
Bank loans – unsecured ... – – 26,880 1,411,320 1,461,193
Other loans – secured ...... – – 262,500 187,500 201,167
Total ................................. 281,205 578,576 4,651,174 7,134,912 9,095,464
FINANCIAL INFORMATION
– 401 –


--- page 411 ---
As of December 31, 2020, 2021 and 2022 and June 30, 2023, we had bank borrowings
with effective interest rate ranging from 2.80% to 4.80% of RMB281.2 million, RMB578.6
million, RMB4,651.2 million and RMB7,134.9 million, respectively. As of October 31, 2023,
we had interest-bearing bank borrowings of RMB9,095.5 million. Such bank loans were
primarily used for capital expenditure and operational purposes, most of which were secured
by the pledge of certain of the Group’s leasehold land or bills receivables, or the guarantee
from the companies controlled by our Controlling Shareholder. See note 27 to “Appendix I –
Accountants’ Report.” As of the Latest Practicable Date, there were no other loans or
guarantees provided by the Controlling Shareholders or any of their close associates to or for
the benefit of the Group.
As of October 31, 2023, we had unutilized banking facilities of RMB13,420.5 million.
Loans and Related Interests Due to Related Parties
The table below set forth a breakdown of our outstanding balance of loans and related
interests due to related parties as of the date indicated. Such loans were mainly used for our
production expansion plans and the below balance as of the dates indicated is of non-trade
nature.
As of December 31,
As of
June 30,
As of
October 31,
2020 2021 2022 2023 2023
(in RMB thousands)
(unaudited)
Yongqing Technology (1) .... 583,000 1,073,057 2,599 – –
Tsingshan Group (1) ........... 55,930 1,503,427 – – –
Total ................................. 638,930 2,576,484 2,599 – –
Note:
(1) Yongqing Technology and Tsingshan Group are the Controlling Shareholders of the Company.
FINANCIAL INFORMATION
– 402 –


--- page 412 ---
Y ongqing Technology
As of December 31, 2020, we had balance of loans of RMB583.0 million, which were
interest-free. As of December 31, 2021, we had balance of loans and interests payables of
RMB1,073.1 million, including loans of RMB76.0 million that were interest free, loans of
RMB990.0 million that bore an interest rate of 6.36%, and the interest payable of RMB7.1
million. As of December 31, 2022, we had balance of interests payable of RMB2.6 million,
with principal of the loans due to Yongqing Technology being fully paid. As of February 28,
2023, we had fully paid the outstanding balance of related interests due to Yongqing
Technology.
Tsingshan Group
As of December 31, 2020, we had balance of loans of RMB55.9 million that were
interest-free. As of December 31, 2021, we had balance of loans and interests payable of
RMB1,503.4 million, including loans of RMB1,500.0 million that bore an interest rate of
6.36%, and the interests payable of RMB3.4 million. As of December 31, 2022, we had fully
paid the outstanding balance of principal and interest due to Tsingshan Group.
Those loans are unsecured and repayable on demand. As of the Latest Practicable Date,
all loans and interests due to related parties have been repaid in full. See note 38 to “Appendix
I – Accountants’ Report.”
Lease Liabilities
As of December 31,
As of
June 30,
As of
October 31,
2020 2021 2022 2023 2023
(in RMB thousands)
(unaudited)
Current
Lease liabilities .......................... 6,464 8,760 9,616 11,239 10,239
Non-current
Lease liabilities .......................... 37,615 32,825 25,828 21,737 19,264
Total........................................... 44,079 41,585 35,444 32,976 29,503
FINANCIAL INFORMATION
– 403 –


--- page 413 ---
As of December 31, 2020, 2021 and 2022, June 30 and October 31, 2023, we recorded
lease liabilities of RMB44.1 million, RMB41.6 million, RMB35.4 million, RMB33.0 million
and RMB29.5 million, respectively. Such decrease was primarily due to our repayment of rent.
Our Directors confirmed that there has not been any material increase in our indebtedness
since October 31, 2023 to the date of this prospectus. As of the Latest Practicable Date, there
was no material restrictive covenant in our indebtedness which could significantly limit our
ability to obtain future financing, nor was there any material default on our indebtedness or
breach of covenant during the Track Record Period and up to the Latest Practicable Date. As
of the Latest Practicable Date, except for bank loans, we did not have plans for other material
external debt financing.
Contingent Liabilities
As of December 31, 2020, 2021 and 2022 and June 30 and October 31, 2023, and up to
the Latest Practicable Date, we did not have any contingent liabilities.
CAPITAL EXPENDITURE AND COMMITMENTS
Capital Expenditure
Our principal capital expenditures during the Track Record Period primarily relate to
purchases of property, plant and equipment and purchases of intangible assets. The table below
sets forth our capital expenditure for the periods indicated.
Y ear Ended December 31,
Six
Months
Ended
June 30,
2020 2021 2022 2023
(in RMB thousands)
Purchases of property, plant
and equipment ................... 727,815 2,362,742 3,713,042 3,615,029
Purchases of intangible
assets .................................. 6,948 6,283 25,198 10,739
Purchase of right-of-use
assets ................................. – 154,615 245,142 256,124
Total capital expenditure .... 734,763 2,523,640 3,983,382 3,881,892
Our capital expenditure was RMB734.8 million, RMB2,523.6 million, RMB3,983.4
million and RMB3,881.9 million in 2020, 2021 and 2022 and the six months ended June 30,
2023, respectively, primarily including the purchase of property, plant and equipment due to
the construction of production facilities. See “Business – Production – Existing Production
Facilities,” and “– Planned Production Facilities.”
FINANCIAL INFORMATION
– 404 –


--- page 414 ---
We plan to finance our capital expenditure with the proceeds from the Pre-IPO
Investments, net proceeds from the Global Offering and banking facilities. See “Business –
Production – Planned Production Facilities.”
Capital Commitments
Our capital commitments are related to the construction of plants which had been
contracted but not yet paid for. As of December 31, 2020, 2021 and 2022, and June 30, 2023,
our capital commitments were RMB643.4 million, RMB3,679.6 million, RMB5,461.7 million
and RMB5,104.2 million, respectively.
The table below sets forth our capital commitments as of the dates indicated.
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in RMB thousands)
Contracted, but not provided for:
Purchase of items of
property, plant and
equipment ....................... 643,398 3,679,610 5,461,749 5,104,152
KEY FINANCIAL RATIOS
Y ear Ended/As of December 31,
Six
Months
Ended/
As of
June 30,
2020 2021 2022 2023
Return on assets (1) .......................... (2.0)% (8.9)% (1.7)% (3.2)%
Return on equity (2) ......................... (16.2)% (35.9)% (3.9)% (8.7)%
Gearing ratio (3) ............................... 293.0% 142.5% 40.9% 67.6%
Current ratio (4) ............................... 0.5 0.6 1.6 1.3
Quick ratio (5) .................................. 0.4 0.5 1.3 1.0
Notes:
(1) Return on assets is calculated based on the total profit/(loss) for the relevant year/period divided by the ending
balance of total assets and multiplied by 100%.
(2) Return on equity is calculated based on the total profit/(loss) for the relevant year/period divided by the ending
balance of total equity and multiplied by 100%.
(3) Gearing ratio is calculated based on the interest-bearing bank borrowings, lease liabilities and loans and related
interests due to related parties divided by the ending balance of total equity and multiplied by 100%.
(4) Current ratio is calculated based on the total current assets divided by the total current liabilities as at the end
of the respective year/period.
(5) Quick ratio is calculated as total current assets less inventories divided by the total current liabilities as at the
end of the respective year/period.
FINANCIAL INFORMATION
– 405 –


--- page 415 ---
Gearing Ratio
Our gearing ratio increased from 40.9% as of December 31, 2022 to 67.6% as of June 30,
2023, primarily due to (i) an increase in our interest-bearing bank borrowings of RMB2,483.7
million, and (ii) a decrease in our total equity of RMB842.6 million mainly attributable to our
loss for the period of RMB919.7 million.
Our gearing ratio decreased from 142.5% as of December 31, 2021 to 40.9% as of
December 31, 2022, primarily due to a significant increase in our total equity of RMB9,208.7
million, mainly attributable to the proceeds of an aggregate amount of approximately RMB8.5
billion from the Pre-IPO Investments by November 2022. See “History and Development –
Establishment and Development of the Company – Pre-IPO Investments.”
Our gearing ratio decreased from 293.0% as of December 31, 2020 to 142.5% as of
December 31, 2021, primarily due to a significant increase in our total equity of RMB1,913.8
million, mainly attributable to the capital increase in 2021. See “History and Development –
Establishment and Development of the Company - Subscription in the Company’s Register
Capital by the Employee Shareholding Platforms in August 2021” and “History and
Development – Establishment and Development of the Company – Capital Increase in
November 2021.”
Current Ratio
Our current ratio decreased from 1.6 as of December 31, 2022 to 1.3 as of June 30, 2023,
primarily due to the decrease in current assets, including (i) a decrease in the trade and bills
receivables of RMB640.9 million, (ii) a decrease in the amount due from related parties of
RMB641.6 million, and (iii) a decrease in cash and cash equivalents of RMB879.6 million.
Our current ratio increased from 0.6 as of December 31, 2021 to 1.6 as of December 31,
2022, primarily due to (i) an increase in inventories of RMB2,525.0 million, (ii) an increase
in trade and bills receivables of RMB3,140.5 million, (iii) an increase in due from related
parties of RMB1,364.3 million, (iv) an increase in restricted cash of RMB1,026.2 million, (v)
an increase in cash and cash equivalent of RMB4,320.6 million, and (vi) a decrease in amounts
due to related parties of RMB2,912.2 million, which was partially offset by an increase in trade
and bills payables of RMB5,113.0 million.
Our current ratio increased from 0.5 as of December 31, 2020 to 0.6 as of December 31,
2021, primarily due to (i) an increase in inventories of RMB476.1 million, (ii) an increase in
trade and bills receivables of RMB441.7 million, and (iii) an increase in restricted cash of
RMB776.5 million.
Quick Ratio
Our quick ratio increased from 0.4 as of December 31, 2020 to 0.5 as of December 31,
2021, and further to 1.3 as of December 31, 2022. Our quick ratio decreased to 1.0 as of June
30, 2023. The trend of our quick ratio was generally in line with the current ratio as disclosed
above.
FINANCIAL INFORMATION
– 406 –


--- page 416 ---
DISCLOSURE ABOUT FINANCIAL RISK
We are exposed to various types of risks, including interest rate risk, foreign currency
risk, credit risk, liquidity risk.
Interest Rate Risk
We are exposed to risk of changes in fair value relates primarily to our bank borrowings
with a floating interest rate. See note 42 to “Appendix I – Accountants’ Report.”
Foreign Currency Risk
Foreign currency risk is the risk of loss resulting from changes in foreign currency
exchange rates. Fluctuations in exchange rates between RMB and other currencies in which we
conduct business may affect our financial condition and results of operations. We seek to limit
our exposure to foreign currency risk by minimizing our net foreign currency position. See note
42 to “Appendix I – Accountants’ Report.” We also engaged in foreign exchange hedging
activities to address our exposure to foreign currency risk.
Credit Risk
We trade only with recognized and creditworthy third parties and there is no requirement
for collateral. It is our policy that all customers who wish to trade on credit terms are subject
to credit verification procedures. In addition, receivable balances are monitored on an ongoing
basis. Concentrations of credit risk are managed by customer/counterparty and by industry
section. See note 42 to “Appendix I – Accountants’ Report.”
Liquidity Risk
We monitor our exposure to liquidity risk by monitoring the current ratio. See “– Key
Financial Ratios.” The liquidity of us is primarily dependent on its ability to maintain adequate
cash inflows from operations to meet its debt obligations as they fall due, and its ability to
obtain external financing to meet its committed future capital expenditure. See note 42 to
“Appendix I – Accountants’ Report.”
FINANCIAL INFORMATION
– 407 –


--- page 417 ---
The table below sets out the maturity profile of our financial liabilities as of
December 31, 2020, 2021 and 2022 and June 30, 2023, based on the contractual undiscounted
payments.
On
demand
Less than
one year
One to
five years Total
(in RMB thousands)
As of December 31, 2020
Lease liabilities ...................... – 8,281 39,880 48,161
Interest-bearing bank
borrowings.......................... – 185,048 117,602 302,650
Trade and bills payables ........ – 586,609 – 586,609
Financial liabilities included
in other payables and
accruals .............................. – 35,468 – 35,468
Due to related parties............. 1,132,459 – – 1,132,459
Total ...................................... 1,132,459 815,406 157,482 2,105,347
On
demand
Less than
one year
One to
five years Total
(in RMB thousands)
As of December 31, 2021
Lease liabilities ...................... – 10,411 35,896 46,307
Interest-bearing bank
borrowings.......................... – 387,742 225,304 613,046
Trade and bills payables ........ – 1,660,312 – 1,660,312
Financial liabilities included
in other payables and
accruals .............................. – 165,472 – 165,472
Due to related parties............. 3,145,107 – – 3,145,107
Total ...................................... 3,145,107 2,223,937 261,200 5,630,244
FINANCIAL INFORMATION
– 408 –


--- page 418 ---
On
demand
Less than
one year
One to
five years
Over
five years Total
(in RMB thousands)
As of December 31,
2022
Lease liabilities ............. – 11,070 27,838 – 38,908
Interest-bearing bank
borrowings ................. – 659,434 3,058,489 1,714,306 5,432,229
Trade and bills
payables ..................... – 6,773,324 – – 6,773,324
Financial liabilities
included in other
payables and
accruals...................... – 197,895 – – 197,895
Due to related parties .... 117,38 3––– 1 17,383
Total.............................. 117,383 7,641,723 3,086,327 1,714,306 12,559,739
On
demand
Less than
one year
One to
five years
Over
five years Total
(in RMB thousands)
As of June 30, 2023
Lease liabilities ............. – 12,246 22,599 – 34,845
Interest-bearing bank
borrowings ................. – 742,712 5,135,739 1,819,916 7,698,367
Trade and bills
payables ..................... – 5,902,947 – – 5,902,947
Financial liabilities
included in other
payables and
accruals...................... – 145,537 – – 145,537
Due to related parties .... 55,184 – – 36,000 91,184
Total.............................. 55,184 6,803,442 5,158,338 1,855,916 13,872,880
FINANCIAL INFORMATION
– 409 –


--- page 419 ---
OFF-BALANCE SHEET ARRANGEMENTS
We have not entered into, nor do we expect to enter into, any off-balance sheet
arrangements. We also have not entered into any financial guarantees or other commitments to
guarantee the payment obligations of manufacturing partners. In addition, we have not entered
into any derivative contracts that are indexed to our equity interests and classified as owners’
equity. We do not have any variable interest in any unconsolidated entity that provides
financing, liquidity, market risk or credit support to us or engages in leasing or hedging or
R&D services with us.
DIVIDEND
As confirmed by our PRC Legal Advisor, according to relevant PRC laws, any future net
profit that we make will have to be first applied to make up for our historically accumulated
losses, after which we will be obliged to allocate 10% of our net profit to our statutory common
reserve fund. We will, therefore, only be able to declare dividends after: (i) all our historically
accumulated losses have been made up for; and (ii) we have allocated sufficient net profit to
our statutory common reserve fund as described above. We may stop allocate the net profit
when the aggregate balance of the statutory common reserve fund has reached more than 50%
of our registered capital.
Since inception, we have not declared or paid any dividends on our shares. We do not
have any present plan to declare or pay any dividends on our Shares in the foreseeable future.
Any future plan to pay dividends will be made at the discretion of our Board of Directors
subject to approval of our Shareholders. Any declaration as well as the amount of such
declaration and payment will be subject to our Articles of Association and the relevant laws.
Even if we decide to pay dividends, the form, frequency and amount may be based on a number
of factors, including our future operations and earnings, capital requirements and surplus,
general financial condition, contractual restrictions and other factors that the Board of
Directors may deem relevant.
DISTRIBUTABLE RESERVE
As of June 30, 2023, the Company did not have any distributable reserves.
DISCLOSURE REQUIRED UNDER RULES 13.13 to 13.19 OF THE LISTING RULES
Our Directors confirm that, as of the Latest Practicable Date, they were not aware of any
circumstances that would give rise to a disclosure requirement under Rules 13.13 to Rules
13.19 of the Listing Rules.
RELATED-PARTY TRANSACTIONS
Related party transactions are set out in note 38 to “Appendix I – Accountants’ Report.”
Our Directors confirm that these transactions were conducted in the ordinary and usual course
of business and at arm’s length basis.
FINANCIAL INFORMATION
– 410 –


--- page 420 ---
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma statement of adjusted consolidated net tangible assets
prepared in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities
on the Stock Exchange of Hong Kong Limited and with reference to Accounting Guideline 7
Preparation of Pro Forma Financial Information for inclusion in Investment Circulars issued by
the Hong Kong Institute of Certified Public Accountants for illustration purposes only, and is
set out here to illustrate the effects of the Global Offering on the consolidated net tangible
assets attributable to ordinary shareholders of the Company as of June 30, 2023 as if the Global
Offering had taken place on June 30, 2023.
The unaudited pro forma statement of adjusted consolidated net tangible assets has been
prepared for illustrative purpose only and, because of its hypothetical nature, it may not give
a true picture of the consolidated net tangible assets attributable to ordinary shareholders of the
Company had the Global Offering been completed as of June 30, 2023 or as at any future dates.
The unaudited pro forma statement of adjusted consolidated net tangible assets is
prepared based on the consolidated net tangible assets attributable to ordinary shareholders of
the Company as of June 30, 2023, as extracted from the Company’s Accountants’ Report
included in Appendix I to the prospectus and is adjusted for the effects described below.
Consolidated
net tangible
assets of the
Group
attributable to
owners of the
Company as of
June 30, 2023
Estimated net
Proceeds from
the Global
Offering
Unaudited pro
forma adjusted
consolidated net
tangible assets
attributable to
owners of the
Company as of
June 30, 2023
Unaudited pro forma adjusted
consolidated net tangible assets
per Share as of
June 30, 2023
RMB’000 RMB’000 RMB’000 RMB HK$
(Note 1) (Note 2) (Note 3) (Note 4)
Based on an Offer Price of
HK$18.20 per Share 10,081,033 1,823,407 11,904,440 5.23 5.75
Based on an Offer Price of
HK$19.40 per Share 10,081,033 1,946,947 12,027,980 5.28 5.81
Based on an Offer Price of
HK$20.60 per Share 10,081,033 2,070,488 12,151,521 5.34 5.87
Notes:
1. The consolidated net tangible assets of the Group attributable to owners of the Company as of June 30, 2023
is arrived at after deducting other intangible assets of RMB34,826,000 as of June 30, 2023 from the
consolidated equity attributable to owners of the Company of RMB10,115,859,000 as of June 30, 2023 set out
in the Accountants’ Report in Appendix I to this prospectus.
2. The estimated net proceeds from the Global Offering are based on estimated low end, mid-point and high end
offer prices of HK$18.20, HK$19.40 and HK$20.60 per Share after deduction of underwriting fees and
commissions and other related expenses payable by the Company.
FINANCIAL INFORMATION
–4 1 1–


--- page 421 ---
3. The unaudited pro forma adjusted consolidated net tangible assets attributable to Shareholders of the Company
per Share is arrived at by dividing the unaudited pro forma adjusted net tangible assets by 2,276,874,050
shares, being the number of shares in issue assuming that the Global Offering had been completed on June 30,
2023.
4. For the purpose of this unaudited pro forma statement of adjusted net tangible assets, the balances stated in
RMB are converted into HK$ at the rate of RMB1.0000 to HK$1.0992.
5. No other adjustment has been made to the unaudited pro forma adjusted consolidated net tangible asset of the
Group to reflect any trading result or other transactions entered into subsequent to June 30, 2023.
LISTING EXPENSES
Listing expenses represent professional fees, underwriting commission and fees incurred
in connection with the Listing and the Global Offering. Our listing expenses are estimated to
be approximately RMB121.0 million (including underwriting commission) accounted for 5.9%
of the gross proceeds of the Global Offering, assuming that an Offer Price of HK$19.40 per
Share (being the mid-point of the Offer Price range stated in this prospectus), among which,
approximately RMB93.6 million is directly attributable to the issuance of Shares and will be
charged to equity upon completion of the Listing, and approximately RMB27.4 million has
been or will be charged to our consolidated statement of comprehensive income. The listing
expenses we incurred in the Track Record Period and expect to incur would consist of
approximately RMB51.4 million underwriting related expenses and fees (including
underwriting commissions, SFC transaction levy, Stock Exchange trading fee and AFRC
transaction levy), approximately RMB55.4 million non-underwriting-related expenses and fees
including fees for the Joint Sponsors, legal advisors and reporting accountant and
approximately RMB14.2 million for other non-underwriting-related fees and expenses. During
the Track Record Period, we incurred RMB42.2 million of listing expenses, among which,
RMB22.8 million was included in deposits and other receivables and will be subsequently
charged to our equity upon completion of the Listing and RMB19.4 million was charged to our
consolidated statement of comprehensive income.
The listing expenses above are the latest practicable estimate for reference only, and the
actual amount may differ from this estimate.
NO MATERIAL ADVERSE CHANGE
Our Directors confirmed that, up to the date of this prospectus, there has been no material
adverse change in our financial or trading position or prospects since June 30, 2023, and there
has been no event since June 30, 2023 that would materially affect the information as set out
in the Accountants’ Report in Appendix I to this prospectus.
FINANCIAL INFORMATION
– 412 –


--- page 422 ---
SHARE CAPITAL
Immediately before the Global Offering
As of the Latest Practicable Date, the registered share capital of the Company was
RMB2,160,803,850, comprising 2,160,803,850 Domestic Unlisted Shares with a nominal value
of RMB1.00 each.
Upon the Completion of the Global Offering
Immediately after completion of the Global Offering, the share capital of the Company
will be as follows.
Description of Shares
Number of
Shares
Approximate %
of the enlarged
issued share
capital after the
Global Offering
Domestic Unlisted Shares in issue ....................................... 1,969,495,912 86.50%
H Shares to be converted from Domestic Unlisted Shares... 191,307,938 (1) 8.40%
H Shares to be issued pursuant to the Global Offering........ 116,070,200 5.10%
Total .................................................................................... 2,276,874,050 100%
Note:
(1) See “– Conversion of Domestic Unlisted Shares into H Shares.”
OUR SHARES
The H Shares in issue following the completion of the Global Offering and the Domestic
Unlisted Shares are ordinary Shares in the share capital of the Company, and are considered
as one class of Shares. However, H Shares may only be subscribed for and traded in Hong Kong
dollars.
Apart from certain qualified domestic institutional investors in the PRC, the qualified
PRC investors under the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong
Stock Connect and other persons who are entitled to hold the H Shares pursuant to relevant
PRC laws and regulations or upon approvals of any competent authorities, H Shares generally
cannot be subscribed for by or traded between legal or natural PRC persons. Domestic Unlisted
Shares can be subscribed for by and traded between legal or natural PRC persons, qualified
foreign institutional investors and foreign strategic investors.
SHARE CAPITAL
– 413 –


--- page 423 ---
The Domestic Unlisted Shares and the H Shares of the Company are regarded as one class
of Shares under the Articles of Association and will rank pari passu with each other in all
respects and, in particular, will rank equally for all dividends or distributions declared, paid or
made after the date of this prospectus. All dividends for H Shares will be paid in Hong Kong
dollars or in the form of additional H Shares whereas all dividends for Domestic Unlisted
Shares will be paid in Renminbi. However, the transfer of Domestic Unlisted Shares is subject
to such restrictions as PRC laws may impose from time to time. Save for the Global Offering
and otherwise disclosed in the prospectus, the Company does not propose to carry out any
public or private issue or to place securities simultaneously with the Global Offering or within
the next six months from the Listing Date. The Company has not approved any share issue plan
other than the Global Offering.
CONVERSION OF DOMESTIC UNLISTED SHARES INTO H SHARES
The Domestic Unlisted Shares are currently not listed or traded on any stock exchange.
According to the stipulations by the State Council’s securities regulatory authority and the
Articles of Association, the Domestic Unlisted Shares may be converted into H Shares, and
such converted H Shares may be listed or traded on an overseas stock exchange, provided that
prior to the conversion and trading of such converted shares any requisite internal approval
processes shall have been duly completed. In addition, such conversion, trading and listing
shall in all respects comply with the regulations prescribed by the State Council’s securities
regulatory authorities and the regulations, requirements and procedures prescribed by the
relevant overseas stock exchange and complete the filing process procedure with CSRC.
Approval of the Stock Exchange is required if any of the Domestic Unlisted Shares are
to be converted into and traded as H Shares on the Stock Exchange. Based on the methodology
and procedures for the conversion of the Domestic Unlisted Shares into H Shares as described
in this section, the Company can apply for the listing of all or any portion of its Domestic
Unlisted Shares on the Stock Exchange as H Shares in advance of any proposed conversion to
ensure that the conversion process can be completed promptly upon notice to the Stock
Exchange and delivery of shares for entry on the H Share register. As any listing of additional
shares after the initial listing of the Company on the Stock Exchange is ordinarily considered
by the Stock Exchange to be a purely administrative matter, it does not require such prior
application for listing at the time of its initial listing in Hong Kong.
Approval of Shareholders at a general meeting is not required for the listing and trading
of the converted shares on an overseas stock exchange. Any application for listing of the
converted shares on the Stock Exchange after the initial listing of the Company is subject to
prior notification by way of announcement to inform the Shareholders and the public of any
proposed conversion.
SHARE CAPITAL
– 414 –


--- page 424 ---
After all the requisite approvals have been obtained, the following procedure will need to
be completed in order to effect the conversion: the relevant Domestic Unlisted Shares will be
withdrawn from the domestic share register and the Company will re-register such Shares on
its H Share register maintained in Hong Kong and instruct its H Share Registrar to issue H
Share certificates. Registration on the H Share Register will be conditional on (a) its H Share
Registrar lodging with the Stock Exchange a letter confirming the proper entry of the relevant
H Shares on the H Share register and the due dispatch of H Share certificates and (b) the
admission of the H Shares to trade on the Stock Exchange in compliance with the Listing
Rules, the General Rules of HKSCC and the HKSCC Operational Procedures in force from
time to time. Until the converted shares are re-registered on the H Share Register, such Shares
would not be listed as H Shares.
Following the completion of the Global Offering and filing procedure with the CSRC on
October 19, 2023, the Domestic Unlisted Shares held by the following Shareholders will be
converted into H Shares on a one-for-one basis and listed on Stock Exchange for trading:
Shareholder
Description of
Shares held as of the
Latest Practicable Date
Number of
Shares to be
Converted to
H Shares
(1)
Tianjin Hexie Haihe ................................. Domestic Unlisted
Shares
21,337,214
Pingan Investment .................................... Domestic Unlisted
Shares
21,337,214
Foshan Manufacturing Transformation &
Development Fund................................
Domestic Unlisted
Shares
21,194,965
Wenzhou Chengyuan ................................ Domestic Unlisted
Shares
18,442,465
Zhongyuan Hejia ...................................... Domestic Unlisted
Shares
9,957,366
Jiaxing Yuzhi............................................ Domestic Unlisted
Shares
6,578,974
Guangdong Guangxin Private Equity ....... Domestic Unlisted
Shares
3,627,326
Wenzhou Zhenxu ...................................... Domestic Unlisted
Shares
11,059,789
SCGC ....................................................... Domestic Unlisted
Shares
10,668,607
Suzhou NewMargin .................................. Domestic Unlisted
Shares
10,064,052
Guangdong Jiarui ..................................... Domestic Unlisted
Shares
4,267,442
Jiaxing Rongpu......................................... Domestic Unlisted
Shares
7,112,404
Jiaxing Aohao........................................... Domestic Unlisted
Shares
5,049,807
SHARE CAPITAL
– 415 –


--- page 425 ---
Shareholder
Description of
Shares held as of the
Latest Practicable Date
Number of
Shares to be
Converted to
H Shares
(1)
Zibo Junci ................................................ Domestic Unlisted
Shares
7,112,404
Mr. Zhang Xiangkang............................... Domestic Unlisted
Shares
3,556,202
Huzhou Lianjie......................................... Domestic Unlisted
Shares
2,133,721
Qingdao Heaven-Sent ............................... Domestic Unlisted
Shares
2,844,962
Lishui Xiangxi.......................................... Domestic Unlisted
Shares
5,689,924
Silver Saddle Fund ................................... Domestic Unlisted
Shares
2,489,342
Hangzhou Longqi ..................................... Domestic Unlisted
Shares
1,920,348
Xiamen Fuxinrui....................................... Domestic Unlisted
Shares
1,173,546
Guangdong Guangxin Equity Investment . Domestic Unlisted
Shares
3,200,582
Zhejiang University Education
Foundation ............................................
Domestic Unlisted
Shares
711,241
3W Global I ............................................. Domestic Unlisted
Shares
9,778,041
Note:
(1) As each of the Shareholders above will hold less than 10% of the Shares of the Company upon Listing
and is not accustomed to take instructions from core connected persons in relation to the acquisition,
disposal, voting or other disposition of their Shares and their acquisition of Shares were not financed
directly or indirectly by core connected persons, they will not be the core connected persons of the
Company upon Listing, and the H Shares held by them will be counted towards the public float for the
purpose of Rule 8.08 of the Listing Rules after the Listing.
As far as we are aware, save for the Shareholders listed above, none of the other
Shareholders currently proposes to convert any of their Domestic Unlisted Shares into
H Shares.
SHARE CAPITAL
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--- page 426 ---
TRANSFER OF SHARES ISSUED PRIOR TO THE GLOBAL OFFERING
According to the PRC Company Law, the Shares issued by the Company prior to the
Global Offering are restricted from trading within one year from the Listing Date.
RESTRICTIONS OF SHARE TRANSFER BY DIRECTORS, SUPERVISORS AND
SENIOR MANAGEMENT
The Directors, Supervisors and members of senior management shall declare their
shareholdings in the Company and any changes in their shareholdings. Shares transferred by
the Directors, Supervisors and members of the senior management each year during their term
of office shall not exceed 25% of their total respective shareholdings in the Company. The
Shares that the aforementioned persons held in the Company cannot be transferred within one
year from the date on which the shares are listed and traded, nor within half a year after they
leave their positions in the Company. The Articles of Association may contain other restrictions
on the transfer of our Shares held by our Directors, Supervisors and members of senior
management.
REGISTRATION OF SHARES NOT LISTED ON AN OVERSEAS STOCK EXCHANGE
According to the Notice of Centralized Registration and Deposit of Non-overseas Listed
Shares of Companies Listed on an Overseas Stock Exchange (ྤ̮ɪ̹
) issued by the CSRC, an overseas listed company is
required to register its shares that are not listed on the overseas stock exchange with China
Securities Depository and Clearing Corporation Limited within 15 Business Days after listing
and provide a written report to the CSRC regarding the centralized registration and deposit of
its non-overseas listed shares as well as the current offering and listing of shares.
SHAREHOLDERS’ APPROV AL FOR THE GLOBAL OFFERING
Approval from holders of the Shares is required for the Company to issue H Shares and
seek the listing of H Shares on the Hong Kong Stock Exchange. The Company has obtained
such approval at the Shareholders’ general meeting held on November 11, 2022.
SHAREHOLDERS’ GENERAL MEETINGS
For details of circumstances under which the Shareholders’ general meeting is required,
see “Appendix V – Summary of the Articles of Association” and “Appendix IV – Summary of
Principal Legal and Regulatory Provisions.”
SHARE CAPITAL
– 417 –


--- page 427 ---
So far as is known to the Directors as at the Latest Practicable Date, immediately
following the completion of the Global Offering, each of following persons will have an
interest and/or short position (as applicable) in the Shares or underlying Shares which would
fall to be disclosed to the Company and the Hong Kong Stock Exchange under the provisions
of Divisions 2 and 3 of Part XV of the SFO, or will be, directly or indirectly, interested in 10%
or more of the Shares, once the Shares are listed on the Hong Kong Stock Exchange:
As of the Latest Practicable
Date
Immediately following the Completion of the
Global Offering
Name of
Shareholder
Nature of
Interest
Description
of Shares
Number of
Shares Held
or Interested
Approximate
Percentage of
Shareholding
Number of
Shares Held
or Interested
Approximate
Percentage of
Shareholding
in the
Domestic
Unlisted
Shares
Approximate
Percentage of
Shareholding
in the Total
Issued Share
Capital
(%) (%)
Wenzhou Jingli Beneficial owner Domestic
Unlisted
Shares
264,000,000 12.22% 264,000,000 13.40% 11.59%
Yongqing
Technology
(1)
Beneficial owner Domestic
Unlisted
Shares
1,089,419,482 50.42% 1,089,419,482 55.31% 47.85%
Interest in
controlled
corporations
Domestic
Unlisted
Shares
264,000,000 12.22% 264,000,000 13.40% 11.59%
Ruitu Energy
(1) Interest in
controlled
corporations
Domestic
Unlisted
Shares
264,000,000 12.22% 264,000,000 13.40% 11.59%
Shanghai Fuqin
(1) Interest in
controlled
corporations
Domestic
Unlisted
Shares
264,000,000 12.22% 264,000,000 13.40% 11.59%
Tsingshan Group
(2) Interest in
controlled
corporations
Domestic
Unlisted
Shares
1,353,419,482 62.64% 1,353,419,482 68.72% 59.44%
Shanghai Decent
(2) Interest in
controlled
corporations
Domestic
Unlisted
Shares
1,353,419,482 62.64% 1,353,419,482 68.72% 59.44%
Mr. Xiang
(3) Interest in
controlled
corporations
Domestic
Unlisted
Shares
1,353,419,482 62.64% 1,353,419,482 68.72% 59.44%
Dr. Cao Hui
(1)(4) Interest in
controlled
corporations
Domestic
Unlisted
Shares
360,000,000 16.66% 360,000,000 18.28% 15.81%
Jiaxing SAIC Beneficial owner Domestic
Unlisted
Shares
187,828,067 8.69% 187,828,067 9.54% 8.25%
SUBSTANTIAL SHAREHOLDERS
– 418 –


--- page 428 ---
As of the Latest Practicable
Date
Immediately following the Completion of the
Global Offering
Name of
Shareholder
Nature of
Interest
Description
of Shares
Number of
Shares Held
or Interested
Approximate
Percentage of
Shareholding
Number of
Shares Held
or Interested
Approximate
Percentage of
Shareholding
in the
Domestic
Unlisted
Shares
Approximate
Percentage of
Shareholding
in the Total
Issued Share
Capital
(%) (%)
Qingdao SAIC (5) Beneficial owner Domestic
Unlisted
Shares
56,285,178 2.60% 56,285,178 2.86% 2.47%
Interest in
controlled
corporations
Domestic
Unlisted
Shares
187,828,067 8.69% 187,828,067 9.54% 8.25%
Notes:
(1) As of the Latest Practicable Date, Yongqing Technology held 100% equity interests in Ruitu Energy, which was
the general partner of Wenzhou Jingli. Shanghai Fuqin held approximately 72.7% limited partnership interests
in Wenzhou Jingli. Ruitu Energy was the general partner of Shanghai Fuqin and Dr. Cao Hui held
approximately 41.1% limited partnership interests in Shanghai Fuqin. Therefore, each of Yongqing
Technology, Ruitu Energy, Shanghai Fuqin and Dr. Cao Hui was deemed to be interested in the 264,000,000
Shares held by Wenzhou Jingli under the SFO.
(2) As of the Latest Practicable Date, Tsingshan Group and Shanghai Decent held 51% and 43.5% equity interests
in Yongqing Technology, respectively. Therefore, each of Tsingshan Group and Shanghai Decent was deemed
to be interested in the 1,089,419,482 and 264,000,000 Shares directly held by Yongqing Technology and
Wenzhou Jingli, respectively, under the SFO.
(3) See “History and Development – Corporate Structure Immediately Prior to the Global Offering.” As of the
Latest Practicable Date, Mr. Xiang directly held approximately 22.3% equity interests in Tsingshan Group. Mr.
Xiang also held indirect equity interests in Tsingshan Group through (a) Shanghai Decent, of which Mr. Xiang
was an approximately 71.5%-shareholder, which directly held approximately 23.7% equity interests in
Tsingshan Group and (b) Zhejiang Tsingshan, of which Mr. Xiang was an approximately 80%-shareholder,
which directly held approximately 11.5% equity interests in Tsingshan Group. Therefore, Mr. Xiang directly
and indirectly controlled approximately 57.5% equity interests in Tsingshan Group and was deemed to be
interested in the 1,089,419,482 and 264,000,000 Shares directly held by Yongqing Technology and Wenzhou
Jingli, respectively, under the SFO.
(4) As of the Latest Practicable Date, Dr. Cao Hui was the general partner of Wenzhou Ruili. Therefore, Dr. Cao
Hui was deemed to be interested in the 96,000,000 Shares held by Wenzhou Ruili under the SFO.
(5) See “History and Development – Background of the Pre-IPO Investors.” As of the Latest Practicable Date,
Qingdao SAIC held 49.95% limited partnership interests in Jiaxing SAIC. Therefore, Qingdao SAIC was
deemed to be interested in the 187,828,067 Shares held by Jiaxing SAIC under the SFO. As of the Latest
Practicable Date, Shangqi Capital was the general partner and fund manager of Jiaxing SAIC and was also one
of the general partners and the fund manager of Qingdao SAIC; Shanghai Qiyuan is the general partner of
Shangqi Capital; and Mr. Feng Ji ( ඹౘ) held 80% equity interests in Shanghai Qiyuan. SAIC Hengxu is the
other general partner of Qingdao SAIC. SAIC Motor ( ɪӛණྠ) directly held approximately 99.63% limited
partnership interests in Qingdao SAIC. Therefore, each of Shangqi Capital, Shanghai Qiyuan, Mr. Feng Ji,
SAIC Hengxu and SAIC Motor was deemed to be interested in the 187,828,067 Shares directly held by Jiaxing
SAIC, and the 56,285,178 Shares directly held by Qingdao SAIC under the SFO.
SUBSTANTIAL SHAREHOLDERS
– 419 –


--- page 429 ---
OVERVIEW
As at the Latest Practicable Date, Yongqing Technology was interested in approximately
62.6% of the total issued Shares, comprising approximately 50.4% direct interest and
approximately 12.2% indirect interest through Wenzhou Jingli, whose general partner is Ruitu
Energy, a wholly-owned subsidiary of Yongqing Technology. Yongqing Technology is owned
by Tsingshan Group as to 51% of its equity interests, and Tsingshan Group is ultimately
controlled by Mr. Xiang directly and indirectly through Shanghai Decent and Zhejiang
Tsingshan as to 57.5% of its equity interests. See “History and Development” for the corporate
structure of the Group.
Immediately following the completion of the Global Offering, Yongqing Technology will
hold approximately 59.4% of the total issued Shares, comprising approximately 47.8% direct
interest and approximately 11.6% indirect interest through Wenzhou Jingli. Mr. Xiang, through
Tsingshan Group, who is a 51% shareholder of Yongqing Technology, will control the exercise
of the approximately 59.4% voting rights in the Company. Accordingly, Mr. Xiang, Zhejiang
Tsingshan, Shanghai Decent, Tsingshan Group, Yongqing Technology, Ruitu Energy and
Wenzhou Jingli are a group of Controlling Shareholders.
DELINEATION OF BUSINESS BETWEEN US AND THE CONTROLLING
SHAREHOLDERS
Principal Business of the Group
The principal business of the Group includes R&D, manufacturing and sales of
lithium-ion EV battery products and ESS battery products. Our EV battery products are LFP
battery products and ternary lithium battery products used in various types of passenger
vehicles, commercial vehicles, and special vehicles. Our ESS battery products are LFP battery
products used in different energy storage scenarios, including household energy storage,
large-scale commercial and industrial energy storage scenarios as well as smaller commercial
energy storage scenarios. For details, see “Business – Our Products and Customers.”
Principal Business of the Controlling Shareholders
The ultimate Controlling Shareholder, Mr. Xiang, is an entrepreneur with more than 20
years’ experience in the stainless steel sector and more than 10 years’ experience in nickel
mining and refining industry. Mr. Xiang is the founder of Tsingshan Group.
Tsingshan Group was incorporated in the PRC in June 2003. Tsingshan Group and its
affiliates primarily engage in nickel and stainless steel businesses. Tsingshan Group has
strategically set foot in various areas along the lithium-ion battery industry value chain
including the mining and refining of nickel, lithium and cobalt, and the production of cathode
materials, anode materials, separators and electrolytes. In 2022, Tsingshan Group ranked the
238th in the Fortune Global 500 in terms of revenue. Yongqing Technology is mainly an
investment holding subsidiary of Tsingshan Group.
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
– 420 –


--- page 430 ---
Shanghai Decent primarily engages in management of overseas investment project,
import of bulk raw materials, and export of electromechanical products and construction
equipment. Shanghai Decent has formed its stainless steel production and supply chain which
covers upstream raw material development and investment, global procurement, shipping
logistics, stainless steel product processing, and international trade, as well as a production
services system supporting it. Shanghai Decent ranked 43rd in “Shanghai Top 100 Enterprises”
in 2022. Zhejiang Tsingshan primarily engages in marketing planning for steel companies,
corporate image planning, enterprise management consulting and investment holding. Ruitu
Energy is mainly an investment holding platform. Wenzhou Jingli is mainly an employee
shareholding platform of the Company.
The Group is the only business entity engaging in battery manufacturing controlled by the
Controlling Shareholders.
COMPETING INTEREST
Each of the Controlling Shareholders confirms that he/it does not have any interest in a
business, apart from the business of the Group, which competes or is likely to compete
(directly or indirectly) with our principal business and would require disclosure under Rule
8.10 of the Listing Rules.
NON-COMPETITION UNDERTAKING
Mr. Xiang, Zhejiang Tsingshan, Shanghai Decent, Tsingshan Group, Yongqing
Technology, Ruitu Energy and Wenzhou Jingli (each being our Controlling Shareholder)
entered into a non-competition undertaking in favor of the Company on December 4, 2023 (the
“Non-competition Undertaking ”), pursuant to which each of the Controlling Shareholders has
irrevocably and unconditionally undertaken that during the term of the Non-competition
Undertaking, he/it, shall not, and shall procure his/its subsidiaries and controlled entities
(excluding the Group) not to, operate any business in the PRC that competes with the principal
business of the Group, i.e., R&D, manufacturing and sales of lithium-ion EV battery products
and ESS battery products (the “ Restricted Business ”), or directly or indirectly hold any equity
interests in any Restricted Business, or directly or indirectly participate in or acquire any rights
or interests in any Restricted Business by other means.
The Non-competition Undertaking does not apply to circumstances where the Controlling
Shareholders or his/its subsidiaries (excluding the Group) hold equity interests in a company
engaged in the Restricted Business other than any member of the Group, or participate in or
acquire any rights or interests in any Restricted Business by other means, provided that:
(i) according to the latest consolidated audited accounts of such company, the revenue
contribution of the Restricted Business in which such company (and its related
assets) is engaged accounts for less than 30% of the consolidated revenue of such
company; or
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
– 421 –


--- page 431 ---
(ii) the Controlling Shareholders and his/its subsidiaries (excluding the Group) directly
and indirectly hold less than 50% equity or other interests in such company, and the
Controlling Shareholders and his/its subsidiaries (excluding the Group) have no
right to appoint a majority of the directors of the board of such company.
Pursuant to the Non-competition Undertaking, the above restrictions shall remain in full
effect so long as: (i) the Shares remain listed on the Hong Kong Stock Exchange; (ii) the Group
still operates the Restricted Business in the PRC; and (iii) the Controlling Shareholders remain
as our Controlling Shareholders.
New Business Opportunities
The Controlling Shareholders undertaken in the Non-competition Undertaking that if any
of them or his/its subsidiaries (excluding the Group) are recommended or provided with new
business opportunities which compete with the Restricted Business (the “ New Business
Opportunities ”) in the PRC during the term of the Non-competition Undertaking, the New
Business Opportunities should be recommended or introduced to the Group following the
procedures set out below:
(i) the Controlling Shareholders or his/its subsidiaries (excluding the Group) shall
provide the Group with a written notification (the “ Offer Notice ”) which includes
all reasonable and necessary information known to such Controlling Shareholder or
his/its subsidiary relating to the New Business Opportunities for the Group to
consider (a) whether the New Business Opportunities compete with the Restricted
Business; and (b) whether engaging in such New Business Opportunities would be
in the interests of the Group;
(ii) the Controlling Shareholders or his/its subsidiaries (excluding the Group) will have
the right to participate in the New Business Opportunities provided that: (a) they
have received a written rejection of the New Business Opportunities from the
Group; or (b) they have not received any written response regarding the acceptance
of the New Business Opportunities within ten (10) Business Days upon receipt of the
Offer Notice by the Group. The major terms of the New Business Opportunities
finally accepted by such Controlling Shareholder or his/its subsidiary shall not be
more favorable than those offered to the Group; and
(iii) if the Group decides to take up the New Business Opportunities, the Controlling
Shareholders or his/its subsidiaries (excluding the Group) will be obligated to
provide the New Business Opportunities to the Group.
If any of the Controlling Shareholders or his/its subsidiaries (excluding the Group) is
aware of any material changes in the conditions of the New Business Opportunities they
recommended, such Controlling Shareholder or his/its subsidiary (as the case maybe) shall
notify the Group of such changes in the manner as set out above.
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
– 422 –


--- page 432 ---
INDEPENDENCE OF THE GROUP FROM THE CONTROLLING SHAREHOLDERS
Taking into consideration the following factors, the Directors are of the view that the
Group is able to carry on its business independently from the Controlling Shareholders and
their respective close associates after the completion of the Global Offering.
(a) Operational Independence
The Group operates independently from the Controlling Shareholders and their respective
close associates.
The Group holds and enjoys the benefits of all relevant licenses necessary to carry out its
business in all material respects. The Group has obtained, among other things, all material
qualifications and authorization, operational equipment, premises, intellectual properties and
domain names that are needed for its business.
The Group also has a full-time management team and team of staff to carry out its
operation and administration independently from the Controlling Shareholders. The Group has
established a complete organizational structure, comprising various separate departments each
charged with specific responsibilities. The support functions comprising accounting,
administration, corporate secretarial, compliance and human resource management will also
continue to be handled by a team of staff employed directly by us and are separated from the
Controlling Shareholders, despite that the Group has entered into certain continuing connected
transactions with the Controlling Shareholders and their associates on normal commercial
terms as disclosed under “Connected Transactions” which will not impact the Group’s
independent operation of business. The Group has also established a set of internal control
procedures and adopted corporate governance practices to facilitate the independent and
effective operation of our business. For details, please refer to “– Corporate Governance
Measures” in this section.
Based on the above, our Directors are satisfied that the Group is able to operate
independently from the Controlling Shareholders and their respective close associates.
(b) Financial Independence
The Group is able to operate independently from the Controlling Shareholders and their
respective close associates from the financial perspective.
During the Track Record Period, the Group primarily financed our business operation
through banking facilities, equity fund raised and cash generated from operations. As of
October 31, 2023, the Group had sufficient funds to carry on its operations and we had
approximately RMB13,420.5 million of unutilized and unrestricted banking facilities granted
by several commercial banks which are all independent third parties. Any outstanding loans
and related interests due to related parties has been settled in full as of the Latest Practicable
Date. As at the Latest Practicable Date, there were no other loans or guarantees provided by
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
– 423 –


--- page 433 ---
the Controlling Shareholders or any of their close associates to or for the benefit of the Group.
Based on the foregoing, the Directors are of the view that the Group is capable of obtaining
financing from external sources independently and without reliance on the Controlling
Shareholders and their respective close associates upon the Listing.
The Group has established its own finance department responsible for the financial
management, accounting, and taxation in the ordinary and usual course of business of the
Company. The Group also has its own risk management and internal control system,
independent accounting and financial management system and independent management for
cash receipts and payments. Our accounting and finance function are independent from the
Controlling Shareholder and their close associates.
Based on the above, the Directors are of the view that the Group is financially
independent from the Controlling Shareholders and their respective close associates.
(c) Management Independence
The Board consists of twelve Directors, including three executive Directors, five
non-executive Directors and four independent non-executive Directors. For further details, see
“Directors, Supervisors and Senior Management.”
The Directors are of the view that the Board and the senior management of the Group are
able to function independently from the Controlling Shareholders and their respective close
associates for the following reasons:
(i) each of the Directors is aware of and understand their fiduciary duties which, among
other things, requiring them to act in the best interests of the Company and the
Shareholders as a whole;
(ii) the executive Directors, who have extensive experience in the industry that the
Group is engaged in and are responsible for the day-to-day management of the
Group’s business, do not hold any positions with the Controlling Shareholders;
(iii) notwithstanding that Mr. Hu Xiaodong and Mr. Wang Haijun, our non-executive
Directors, hold positions with the Controlling Shareholders (Mr. Hu Xiaodong
currently serves as a director of Ruitu Energy and the chairman of Yongqing
Technology, and Mr. Wang Haijun currently serves as a director and the president of
Shanghai Decent), they are responsible for advising on business plans, major
decisions and investment activities of the Group, supervising senior management,
and are mainly participating in our Company’s management through attending board
meetings, and are not responsible for the day-to-day management and operation of
our Company;
(iv) none of the members of the senior management of the Company have any ongoing
management role with the Controlling Shareholders;
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
– 424 –


--- page 434 ---
(v) the decision-making mechanism of the Board as specified in the Articles of
Association has set out relevant provisions to avoid conflicts of interests, including
requiring a Director to abstain from voting on any resolution approving any contract,
transaction or arrangement in which such Director or any of his/her close associates
have a material interest;
(vi) the Company will adopt corporate governance policies, including but not limited to,
rules relating to the procedure for board meetings and decision-making protocols on
connected transactions, setting out circumstances that require the relevant Directors,
who hold roles with Controlling Shareholders, to abstain from voting on the relevant
board resolutions;
(vii) the Controlling Shareholders have provided a Non-Competition Undertaking in
favor of the Group, and will notify the Group of New Business Opportunities. See
“– Non-Competition Undertaking” for further details; and
(viii) the Company has four independent non-executive Directors who have extensive
experience in different professions. They have been appointed pursuant to the
requirements under the Listing Rules to ensure that the decisions of the Board are
made only after due consideration of independent and impartial opinions. Our
Directors believe that the presence of our independent non-executive Directors from
different backgrounds provides a balance of views and opinions.
DIRECTORS’ INTEREST IN COMPETING BUSINESS
As at the Latest Practicable Date, none of the Directors is interested in any business apart
from the Group’s business which competes or is likely to compete, directly or indirectly, with
the Group’s business.
CORPORATE GOVERNANCE MEASURES
In order to further safeguard the interests of the Shareholders, the Company will adopt the
following corporate governance measures to manage any potential conflicts of interest with the
Controlling Shareholders and their respective close associates:
(i) as part of the preparation for the Global Offering, the Company has amended the
Articles of Association to comply with the Listing Rules which will become
effective upon the Listing. In particular, the Articles of Association will provide that,
a Director shall abstain from voting on any resolution approving any contract,
transaction or arrangement in which such Director or any of his/her close associates
has a material interest nor shall such Director be counted in the quorum present at
the Board meeting;
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
– 425 –


--- page 435 ---
(ii) the Company has established internal control mechanisms to identify connected
transactions. Upon the Listing, if the Company enters into connected transactions
with the Controlling Shareholders or any of their associates, the Company will
comply with the applicable requirements under the Listing Rules;
(iii) the Company is committed that the Board shall include a balanced composition of
executive Directors and non-executive Directors (including independent non-
executive Directors). The Company has appointed four independent non-executive
Directors, and believes that the independent non-executive Directors (i) possess
sufficient experiences, (ii) are free of any business or other relationship which could
interfere in any material manner with the exercise of their independent judgment,
and (iii) will be able to provide an impartial and external opinion to protect the
interests of the Shareholders as a whole. For details of the independent non-
executive Directors, see “Directors, Supervisors and Senior Management”; and
(iv) the Company has appointed Red Solar Capital Limited as its compliance advisor,
which will provide advice and guidance to the Company in respect of compliance
with the applicable laws and the Listing Rules including various requirements
relating to directors’ duties and corporate governance.
The Directors consider that the above corporate governance measures are sufficient to
manage potential conflict of interests between the Controlling Shareholders and their
respective close associates and the Group and to protect the interests of the Shareholders, in
particular, the minority Shareholders.
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
– 426 –


--- page 436 ---
OVERVIEW
As at the Latest Practicable Date, Yongqing Technology held approximately 62.6%
interest in our share capital, including approximately 50.4% direct interest and approximately
12.2% indirect interest through Wenzhou Jingli, whose general partner is Ruitu Energy, a
wholly-owned subsidiary of Yongqing Technology.
Yongqing Technology is owned by Tsingshan Group as to 51% of its equity interests, and
Tsingshan Group is ultimately controlled by Mr. Xiang. Immediately following the completion
of the Global Offering, Yongqing Technology will hold approximately 59.4% interest in our
share capital, including approximately 47.8% direct interest and approximately 11.6% indirect
interest through Wenzhou Jingli. Mr. Xiang, Yongqing Technology and Tsingshan Group will
remain as our substantial shareholders upon the Listing and therefore, Mr. Xiang, Yongqing
Technology and Tsingshan Group and their respective associates will become our connected
persons upon the Listing.
SUMMARY OF THE CONNECTED PERSONS
The table below sets forth certain entities which will become connected persons of the
Company upon the Listing and have entered into certain transactions with the Group which will
constitute continuing connected transactions under Chapter 14A of the Listing Rules upon the
Listing.
Name Connected Relationship
Tsingshan Stainless Steel Co., Ltd.
(ʮ̡,“ Tsingshan
Stainless Steel ”)
a wholly owned subsidiary and an associate
of Tsingshan Group
Tsingshan Group Our Controlling Shareholder
Yongqing Technology Our Controlling Shareholder
CONNECTED TRANSACTIONS
– 427 –


--- page 437 ---
SUMMARY OF THE CONTINUING CONNECTED TRANSACTIONS
The Group has entered into the following transactions that will constitute continuing
connected transactions under Rule 14A.31 of the Listing Rules upon Listing:
No.
Nature of
Transactions
Connected
Party
Relevant Listing
Rules Waiver Sought
Proposed Annual Caps
For the year ending December 31,
2023 2024 2025
RMB
(million)
RMB
(million)
RMB
(million)
Fully Exempt Continuing Connected Transaction
1 Lease of properties
from our Group
to Tsingshan
Stainless Steel
Tsingshan
Stainless
Steel
14A.76(1) N/A N/A N/A N/A
Non-Exempt Continuing Connected Transactions
2 Product Sales
Framework
Agreement
Tsingshan
Group
14A.35, 14A.36,
14A.52, and
14A.53
Waiver from
announcement and
independent
shareholders’ approval
requirements
4,299.00 195.00 195.00
3 Materials
Purchasing
Framework
Agreement
Yongqing
Technology
14A.35, 14A.36,
14A.52, and
14A.53
Waiver from
announcement and
independent
shareholders’ approval
requirements
3,825.00 11,125.00 16,642.00
FULLY EXEMPT CONTINUING CONNECTED TRANSACTION
Lease of properties from our Group to Tsingshan Stainless Steel
During the Track Record Period, the Company entered into lease agreements with
Tsingshan Stainless Steel, an associate of Tsingshan Group, pursuant to which the Company
leased certain properties to Tsingshan Stainless Steel. The rental and related fees were
determined by the parties at arm’s length negotiations with reference to the historical rental
price and the prevailing market rental and related fees of similar properties located in similar
areas.
The aforementioned transaction is made in the ordinary and usual course of our business
and is expected to continue after the Listing, therefore constituting continuing connected
transactions of our Company under Chapter 14A of the Listing Rules. As the highest applicable
percentage ratios for the aforementioned transaction for the purpose of Chapter 14A of the
Listing Rules will be less than 0.1% on an annual basis, such transaction will constitute a de
minimis continuing connected transaction of our Company that will be fully exempt from
reporting, annual review, announcement and independent shareholders’ approval requirements
pursuant to Rule 14A.76(1) of the Listing Rules upon Listing.
CONNECTED TRANSACTIONS
– 428 –


--- page 438 ---
NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS
I. Products Sales Framework Agreement
On December 4, 2023, the Company entered into a product sales framework agreement
(the “ Product Sales Framework Agreement ”) with Tsingshan Group, pursuant to which, the
Group has agreed to sell, and Tsingshan Group and its associates have agreed to purchase
battery products including but not limited to energy storage systems, ESS battery pack, battery
modules accessories, and battery components (collectively, the “ Battery Products ”) with a
term commencing from the Listing Date to December 31, 2025. The Product Sales Framework
Agreement will be renewable subject to the negotiation between the parties to the agreement
and compliance with the requirements of the Listing Rules.
Subject to terms of the Product Sales Framework Agreement, Tsingshan Group and its
associates will enter into specific agreements or place purchase orders with the Group to set
out specific terms and conditions in respect of the purchase of the Battery Products. The
commercial terms of the agreements or orders are similar to the commercial terms with other
independent third parties. The consideration payable by Tsingshan Group and its associates
under the Product Sales Framework Agreement will be paid at the time and according to the
method to be agreed in specific agreements or purchase orders.
Reasons and benefits for the transactions
It is in our ordinary and usual course of business to sell the Battery Products. Tsingshan
Group and its associates need the Battery Products mainly for their power grid energy storage
and power grid frequency adjustment control systems, and also for sales to an EV manufacturer
as described below.
The Directors consider the Product Sales Framework Agreement to be consistent with the
business and commercial objectives of the Group, as the long-term collaboration with
Tsingshan Group and its associates enables us to further explore the lithium battery market and
improve our brand reputation.
Pricing basis
The price of the Battery Products to be sold by the Group under the Product Sales
Framework Agreement shall be determined on an arm’s length basis with reference to prices
provided to independent third parties by the Group, and in any event shall not be lower than
the prices provided to independent third parties by the Group if under similar conditions.
CONNECTED TRANSACTIONS
– 429 –


--- page 439 ---
Historical figures and annual caps
The historical transaction amounts in respect of the Battery Products sold by the Group
to Tsingshan Group and its associates were approximately RMB1.3 million, RMB15.3 million,
RMB860.0 million and RMB832.7 million for the years ended December 31, 2020, 2021 and
2022 and the six months ended June 30, 2023, respectively. The fluctuations in transaction
amount during the Track Record Period were due to:
(i) the fluctuation of demand of power grid energy storage and power grid frequency
adjustment control systems of associates of Tsingshan Group in Indonesia. Such
demand was mainly affected by the construction progress of the industrial park
under construction of associates of Tsingshan Group in Indonesia, as it was only
when the relevant associates of Tsingshan Group in Indonesia complete a phase of
construction would the power grid energy storage and power grid frequency
adjustment control systems be required; and
(ii) the arrangements between the Group and Tsingshan Group and/or its associates in
relation to provision of certain battery components to Tsingshan Group and/or its
associates in 2022 and 2023 for their supplying to a U.S. EV manufacturer, which
led to the significant increase in the transaction amount in 2022 and the first quarter
of 2023.
(1)
Notes:
(1) The Group negotiated the terms for product supply, including product specifications, pricing terms, and
payment terms, with the U.S. EV manufacturer directly in 2021. However, the U.S. EV manufacturer requested
that the signing entity of the agreement should be the Group’s Controlling Shareholder Yongqing Technology,
considering its internal requirement for suppliers in respect of size and track record of operations. As such,
Yongqing Technology and the U.S. EV manufacturer entered into an agreement in relation to the supply of
battery components in December 2021, which specifically required that the relevant products shall be produced
by the Group and will expire in December 2023, and BatteroTech Jiashan entered into an agreement with
Yongqing Technology to provide the same. The Group is currently negotiating with the U.S. EV manufacturer
and plans to enter into the supply agreement directly with the U.S. EV manufacturer or its subsidiaries after
the expiry of the agreement between Yongqing Technology and the U.S. EV manufacturer as the Group is able
to meet the supplier requirements from the U.S. EV manufacturer independently.
The U.S. EV manufacturer issues purchase orders to Yongqing Technology for battery components periodically
which Yongqing Technology will pass through to the Group immediately. Upon receipt of such purchase
orders, the Group will be informed of the quantities and time of delivery as specified in the purchase orders
and arrange the delivery of goods to the U.S. EV manufacturer directly.
The price charged by the Group to Yongqing Technology (tax exclusive) has been slightly lower than the price
charged by Yongqing Technology to the U.S. EV manufacturer (tax exclusive), and the difference is
approximately 0.01% of the total purchase amount since March 2023. The difference in amount is the
reimbursement provided by the Group to Yongqing Technology for services provided by relevant employees
of Yongqing Technology, including foreign exchange settlement and communication and coordination services.
Such reimbursement is solely for the purpose of covering necessary costs of Yongqing Technology incurred as
a result of the transaction between the U.S. EV manufacturer and the Group.
The U.S. EV manufacturer settles payment with Yongqing Technology monthly after the Group has finished
delivery of battery components to the U.S. EV manufacturer for such month. The Group also enters into supply
contracts with Yongqing Technology in each month, which sets out the quantities of battery components to be
delivered by the Group, and the sales price per unit, which is determined based on the latest available monthly
settlement price per unit between the U.S. EV manufacturer and Yongqing Technology, and adjusted (if
needed) by the difference between the actual total settlement price between the U.S. EV manufacturer and
Yongqing Technology for last month and the sales price between the Group and Yongqing Technology for last
month. This method of determination of sales price is due to that the U.S. EV manufacturer would not be able
to determine the sales price for a particular month until the Group has finished delivery of battery components
to the U.S. EV manufacturer for such month. Without taking into account the difference resulted from the
reimbursement as described above, the total revenue recognized by the Group in respect of the sales of battery
components, taken as a whole, equals to the total amount paid to Yongqing Technology by the U.S. EV
manufacturer in respect of the sales of battery components, taken as a whole.
CONNECTED TRANSACTIONS
– 430 –


--- page 440 ---
It’s expected that the total transaction amount of the battery components supplied to
Tsingshan Group and/or its associates for their supplying to the U.S. EV manufacturer for the
year ending December 31, 2023 would be not more than RMB4,104.0 million.
(2)
The proposed annual caps in respect of the Battery Products to be sold by the Group to
Tsingshan Group and its associates under the Product Sales Framework Agreement for the
years ending December 31, 2023, 2024 and 2025 are RMB4,299.00 million, RMB195.00
million and RMB195.00 million, respectively. The decrease in the annual caps is due to the fact
that the Group plans to enter into the supply agreement directly with the U.S. EV manufacturer
or its subsidiaries after the expiry of the agreement between Yongqing Technology and the U.S.
EV manufacturer.
Basis of the annual caps
In arriving at the above annual caps, the Directors have considered, among other things,
the following factors: (i) the historical transaction amounts during the Track Record Period; (ii)
the expected selling price of the Battery Products, which is expected to remain at the same level
as compared to the market price of the Battery Products sold by the Group during the Track
Record Period; (iii) the expected maximum future demand of Tsingshan Group and its
associates for the Battery Products of approximately 150MWh for each of the three years
ending December 31, 2025, which is estimated based on their budget and estimated capacity
in the future, including the estimation of the ESS batteries demand from Tsingshan Group
and/or its associates based on the needs of relevant industrial parks under construction of
associates of Tsingshan Group in Indonesia; (iv) as disclosed above, the demand from
Tsingshan Group and/or its associates in 2023 for the battery components estimated based on
the maximum production volume of the Group, which leads to the significant increase in the
proposed annual cap for the year ending December 31, 2023; and (v) the estimated supply
capability of the Group of the Battery Products.
Listing Rule Implications
The transactions contemplated under the Products Sales Framework Agreement are
conducted in the ordinary and usual course of business on normal commercial terms or better.
As one or more of the applicable percentage ratios in respect of the proposed annual caps of
the transactions contemplated under the Products Sales Framework Agreement will be more
than 5%, the Products Sales Framework Agreement and the transactions contemplated
thereunder will be subject to the reporting, annual review, announcement and independent
shareholders’ approval requirements under Chapter 14A of the Listing Rules upon Listing.
(2) For avoidance of doubt, the expected maximum total transaction amount of the battery components referred
to herein is the Company’s best estimates of the maximum transaction amount of the battery components for
the year ending December 31, 2023 based on the maximum production rate of the production lines dedicated
to the production of the relevant battery components, and does not represent the Company’s estimates for the
actual transaction amount for the year ending December 31, 2023 as at the Latest Practicable Date.
CONNECTED TRANSACTIONS
– 431 –


--- page 441 ---
II. Materials Purchasing Framework Agreement
On December 12, 2022, the Company entered into a strategic cooperation agreement in
relation to material procurement (as modified by a supplemental agreement) (the “ Materials
Purchasing Framework Agreement ”) with Yongqing Technology, pursuant to which,
Yongqing Technology and its associates have agreed to sell, and the Group has agreed to
purchase raw materials (including but not limited to lithium compounds, ternary precursors,
separators and graphite), with a term of three years commencing from January 1, 2023 for
producing battery products. The Materials Purchasing Framework Agreement will be
renewable subject to the negotiation between the parties to the agreement and compliance with
the requirements of the Listing Rules.
Subject to terms of the Materials Purchasing Framework Agreement, the Group will enter
into specific agreements or place purchase orders with Yongqing Technology and its associates
to set out specific terms and conditions in respect of the supply of raw materials. The
consideration payable by the Group under the Materials Purchasing Framework Agreement for
purchasing raw materials will be paid at the time and according to the method to be agreed in
specific agreements or purchase orders.
Reasons and benefits for the transactions
The main objective of the Group’s sourcing strategy is to ensure stable supply and cost
competitiveness. The Group generally selects its suppliers based on various criteria including
the reliability of delivery time, pricing of the materials and location of the suppliers’ facilities.
Yongqing Technology and its associates are not the sole and exclusive suppliers for the raw
materials required by our Group for its business, and the Group also sources raw materials from
selected suppliers which are independent third parties. Yongqing Technology and its associates
also supplies similar raw materials to independent third parties. As the Group has been
procuring raw materials from Yongqing Technology and its associates during the Track Record
Period and given (i) the pricing basis below, (ii) the high quality of the products supplied by
Yongqing Technology and its associates and the (iii) stability of raw materials supply by
Yongqing Technology and its associates, our Directors consider that it is in the interest of the
Company and our Shareholders for the Group to continue to purchase the required raw
materials from Yongqing Technology and its associates going forward provided that the prices
offered by Yongqing Technology and its associates are fair and reasonable as compared to
market rates.
Pricing basis
The price of raw materials to be purchased by the Group under the Materials Purchasing
Framework Agreement shall be determined on an arm’s length basis with reference to traded
prices on such raw material listed on the website of the Shanghai Metal Market (“ SMM”), and
if under similar conditions of purchase, shall not be less favorable than (i) then trade price of
such raw material listed on the website of the SMM; (ii) price of such raw material provided
to independent third parties by Yongqing Technology and its associates during relevant time;
and (iii) quotation of such raw material obtained by the Group from independent third parties
during relevant time (if available).
CONNECTED TRANSACTIONS
– 432 –


--- page 442 ---
Historical figures and annual caps
The historical transaction amounts in respect of the raw materials purchased by the Group
from Yongqing Technology and its associates were approximately RMB16.2 million,
RMB212.2 million, RMB61.0 million and RMB1.6 million for the years ended December 31,
2020, 2021, and 2022 and the six months ended June 30, 2023, respectively. The increase in
historical transaction amount from 2020 to 2021 is mainly due to the increase in the business
scale of the Group, leading to a corresponding increase in Group’s demand for raw materials.
The decrease in historical transaction amount from 2021 to 2022 and the six months ended June
30, 2023 is mainly due to the Group’s growing capabilities to establish direct contractual
relationship with suppliers independently without contracting with Tsingshan Group, an
associate of Yongqing Technology, as a middleman for sourcing raw materials along with the
continuous increase in the business scale of the Group. In addition, the relatively low
transaction amount for the six months ended June 30, 2023 is also due to the delay in the
construction and trial production of upstream raw material projects that Yongqing Technology
and its associates invested in, limiting supply capabilities of such companies during such
period. Such projects have gradually started trial production since the fourth quarter of 2023
and are expected to start mass production in 2024.
The proposed annual caps in respect of the raw materials to be purchased by the Group
from Yongqing Technology and its associates contemplated under the Materials Purchasing
Framework Agreement for the years ending December 31, 2023, 2024 and 2025 are RMB480
million, RMB4,590 million and RMB8,917 million, respectively.
Basis of the annual caps
In arriving at the above annual caps, the Directors have considered, among other things,
the following factors: (i) the prevailing market price or brokers’ price forecast of the raw
materials; (ii) the estimated sales volume of the Group’s battery products and the
corresponding demand for the relevant raw materials based on the Group’s expansion plan of
production capacity till 2025: as of June 30, 2023, the designed annual production capacity of
the Group was 35.2GWh, and the Group plans to increase its production capacity to 62GWh
by the end of 2023, and targets to reach over 150GWh by the end of 2025; and (iii) the expected
maximum quantity of raw materials supplies as set out in the Materials Purchasing Framework
Agreement, which was determined by taking into consideration of the increasing supply
capability of Yongqing Technology and its associates based on their estimated capacity, which
will be gradually released from 2023 to 2025 based on their expansion plan and production
program, as well as the raw materials demand of the Company based on its capacity expansion
plans as disclosed above, leading to the increase in the proposed annual caps for the years
ending December 31, 2023 to 2025.
CONNECTED TRANSACTIONS
– 433 –


--- page 443 ---
The following table sets forth details of the expected maximum purchase quantity under
the Materials Purchasing Framework Agreement and as a percentage of the total expected
procurement volume:
For the years ending December 31,
2023 2024 2025
Expected
maximum
quantity (1)
As a
percentage of
the total
expected
procurement
volume (2)
Expected
maximum
quantity (1)
As a
percentage of
the total
expected
procurement
volume (2)
Expected
maximum
quantity (1)
As a
percentage of
the total
expected
procurement
volume (2)
Lithium
compounds
(in LCE
tons) .............. 3,000 less than 25% 20,000 less than 70% 40,000 less than 90%
Ternary
precursor
(tons) ............. N/A N/A 5,000 less than 35% 8,000 less than 40%
Separator (m
2) . N/A N/A 200 million less than 30% 500 million less than 45%
Graphite (tons) . N/A N/A 20,800 less than 40% 33,600 less than 40%
Notes:
(1) Such quantity is based on the supply capabilities of the projects owned by Yongqing Technology and its
associates as well as the raw materials demand of the Group.
(2) The increasing trend of expected maximum quantity as a percentage of the total expected procurement
volume from 2023 to 2025 is mainly due to the increasing supply capability of Yongqing Technology
and its associates based on their estimated capacity, which will be gradually released from 2023 to 2025
based on their expansion plan and production program. We may further adjust the total expected
procurement volume of those raw materials for the corresponding periods from time to time according
to our production plans and based on the dynamic market demands for our products. In addition, for the
avoidance of doubt, there are sufficient alternative raw material suppliers that are independent third
parties for the Company to source relevant raw materials.
The following table sets forth details of the estimated purchase prices of raw materials
supplies under the Materials Purchasing Framework Agreement:
For the years ending December 31,
2023 2024 2025
Estimated Purchase Prices
Lithium Compounds (RMB/ton) (1).......... 160,000 150,000 150,000
Ternary Precursors (RMB/ton) (2) ............ N/A 80,000 80,000
Separators (RMB/m 2)(3) .......................... N/A 2 2
Graphite (RMB/ton) (4) ............................ N/A 38,000 38,000
Notes:
(1) Such purchase prices are based on latest average trading prices for 2024 lithium carbonate future
contracts of approximately RMB140,000 per ton as of October 31, 2023 pursuant to price quotes from
Guangzhou Futures Exchange.
CONNECTED TRANSACTIONS
– 434 –


--- page 444 ---
(2) Such purchase prices are based on the average market prices for the last six months ended October 31,
2023 of RMB80,586 per ton pursuant to price quotes from the SMM.
(3) As the selling prices for the separators were relatively stable historically, the prices of separators are
based on the average market prices for the last six months ended October 31, 2023 of RMB1.85 per m 2
pursuant to price quotes from the SMM.
(4) As the selling prices for the graphite were relatively stable historically, the prices of graphite are based
on average market prices for the last six months ended October 31, 2023 of RMB36,813 per ton pursuant
to price quotes from the SMM.
The annual caps of the transactions under the Materials Purchasing Framework
Agreement are expected to account for less than 5% for the year ending December 31, 2023,
and less than 30% for the years ending December 31, 2024 and 2025, respectively, of the
Group’s total cost of sales. The increase in the proposed annual caps in respect of the
transactions under the Materials Purchasing Framework Agreement for the years ending
December 31, 2023, 2024, and 2025 as compared to the historical transaction figures during the
Track Record Period is mainly due to (i) the expected significant increase in the production
capacity of the Group, leading to a corresponding increase in Group’s demand for raw
materials; and (ii) upstream raw material projects that Yongqing Technology and its associates
invested in gradually started trial production since the fourth quarter of 2023 and are expected
to start mass production in 2024, enhancing supply capabilities of Yongqing Technology and
its associates and providing opportunities for the Group to expand raw materials sourcing
channels.
The estimated amount of total expected procurement volume of the raw materials required
to achieve the expected production capacity is based on the estimated average amount of raw
materials required per GWh according to the past operation experiences. As disclosed above,
for lithium compounds, ternary precursors, separators and graphite, such estimated volume
required exceeds the expected maximum volume under the Materials Purchasing Framework
Agreement. As such, we will also purchase raw materials from independent third parties.
Listing Rule Implications
The transactions contemplated under the Materials Purchase Framework Agreement are
conducted in the ordinary and usual course of business on normal commercial terms or better.
As one or more of the applicable percentage ratios in respect of the proposed annual caps of
the transactions contemplated under the Materials Purchase Framework Agreement will be
more than 5%, the Products Sales Framework Agreement and the transactions contemplated
thereunder will be subject to the reporting, annual review, announcement and independent
shareholders’ approval requirements under Chapter 14A of the Listing Rules upon Listing.
MEASURES TO SAFEGUARD THE INTERESTS OF OUR SHAREHOLDERS
To safeguard the interests of the Company and Shareholders as a whole, including the
minority Shareholders, the Company will put in place certain internal approval and monitoring
procedures relating to the proposed connected transactions contemplated under the agreements
mentioned above, which include the following:
 we will formulate internal guidelines according to the Listing Rules, which provide
approval procedures for connected transactions based on their nature and amounts;
CONNECTED TRANSACTIONS
– 435 –


--- page 445 ---
 if under similar conditions of purchase, the commercial terms and pricing of the
connected transactions should be no less favorable than the terms and prices
provided by independent third parties or provided to independent third parties in
respect of similar products or services;
 the Company shall collect the transaction amount information regularly and conduct
analysis of the data to manage the connected transactions;
 the independent non-executive Directors and auditors will conduct annual review of
the non-exempt continuing connected transactions mentioned above and provide
annual confirmations in accordance with the Listing Rules that the non-exempt
continuing connected transactions are conducted in accordance with terms of the
relevant agreements, on normal commercial terms and in accordance with the
pricing policy and do not exceed the proposed applicable annual caps;
 in respect of the connected transactions not governed by the existing framework
agreements (if any), the relevant operating entities shall communicate with the
headquarters in advance and provide necessary documents to facilitate related
decision-making and disclosure process; and
 additional approvals are required for transactions exceeding the proposed annual
caps (if applicable).
W AIVER APPLICATION FOR NON-EXEMPT CONTINUING CONNECTED
TRANSACTIONS
The abovementioned non-exempt continuing connected transactions will be subject to the
reporting, annual review, announcement and independent shareholders’ approval requirements
under Chapter 14A of the Listing Rules.
As the above non-exempt continuing connected transactions are expected to continue on
a recurring and continuing basis, our Directors consider that compliance with the above
announcement and independent shareholders’ approval requirements will be impractical, will
incur unnecessary administrative costs for us, and will be unduly burdensome to us.
Accordingly, we have applied to the Hong Kong Stock Exchange for, and the Hong Kong
Stock Exchange has granted a waiver to us under Rule 14A.105 of the Listing Rules from
compliance with the announcement and independent shareholders’ approval requirements in
respect of the above non-exempt continuing connected transactions.
The waiver granted by the Hong Kong Stock Exchange for the non-exempt continuing
connected transactions under the Products Sales Framework Agreement and the Materials
Purchasing Framework Agreement will expire on December 31, 2025, respectively.
CONNECTED TRANSACTIONS
– 436 –


--- page 446 ---
CONFIRMATIONS FROM THE DIRECTORS AND THE COMPANY
The Directors (including the independent non-executive Directors) are of the view that
the non-exempt continuing connected transactions as set out above have been and will be
entered into in our ordinary and usual course of business and on normal commercial terms or
better to the Company, and are fair and reasonable and in the interests of the Company and the
Shareholders as a whole, and the proposed annual caps for those transactions are fair and
reasonable and in the interests of the Company and the Shareholders as a whole.
The Company confirms that it will comply with the applicable requirements under the
Listing Rules and will immediately inform the Hong Kong Stock Exchange if any of the
proposed annual caps for its non-exempt continuing connected transactions as set out above is
exceeded, or when there is a material change in the terms of these transactions.
CONFIRMATION FROM THE JOINT SPONSORS
Based on the information and representation provided by the Company and participation
in the due diligence and discussion with the Company, the Joint Sponsors are of the view that
the non-exempt continuing connected transactions as set out above have been or will be entered
into in the ordinary and usual course of business of the Company on normal commercial terms
or better to the Company which are fair and reasonable, and in the interests of the Company
and the Shareholders as a whole, and the proposed annual caps for those non-exempt
continuing connected transactions are fair and reasonable and in the interests of the Company
and the Shareholders as a whole.
CONNECTED TRANSACTIONS
– 437 –


--- page 447 ---
OVERVIEW
The Board currently consists of twelve Directors, including three executive Directors,
five non-executive Directors and four independent non-executive Directors. The Board is
responsible for and has the general power over the management and operation of the business
of the Company, including determining business strategies and investment plans, implementing
resolutions passed at the general meetings, and exercising other powers, functions and duties
as conferred by the Articles of Association. The Board also assumes the responsibilities for
developing and reviewing the policies and practices of the Company on internal control and
compliance with legal and regulatory requirements.
The Supervisory Committee currently consists of three Supervisors, including one
employee representative Supervisor and two shareholder representative Supervisors. The
Supervisory Committee is responsible for supervising the performance of duty of the Board
and the senior management of the Company and overseeing the operations, financial activities,
internal control and risk conditions of the Group. The employee representative Supervisor is
elected by our employees, while shareholder representative Supervisors are elected at the
Shareholders’ general meetings.
The senior management is currently comprised of six members who are responsible for
the day-to-day management and operation of the Company.
None of the Directors, Supervisors or members of the senior management of the Company
is related to any other Directors, Supervisors and members of the senior management.
DIRECTORS
The following table sets forth the key information about the Directors as at the Latest
Practicable Date.
Name Age Position Responsibilities
Date of first
appointment
Date of joining
the Group
Dr. Cao Hui
(૎ሾ)
45 Chairman of the
Board, executive
Director and
president
Formulation of the
strategic direction and
the day-to-day
management of the
Group
Appointed on October
25, 2017 as the
chairman of the Board
and president, on
March 31, 2022 as a
Director, and
re-designated as an
executive Director on
November 11, 2022
October 8, 2017
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 448 ---
Name Age Position Responsibilities
Date of first
appointment
Date of joining
the Group
Dr. Wu Yanjun
(ࠏ)
49 Executive Director,
Board secretary
and one of the
joint company
secretaries
Formulation of corporate
development strategies
as well as external
cooperation, financing
and investment of the
Group
Appointed on March 31,
2022 as a Director and
the board secretary,
re-designated as an
executive Director and
appointed as one of
the joint company
secretaries on
November 11, 2022
February 8, 2022
Ms. Huang Jiehua
(රᆎശ)
42 Executive Director
and chief
financial officer
Responsible for the
accounting and
financial management
of the Group
Appointed on August 1,
2021 as the chief
financial officer, and
on August 4, 2022 as
a Director, and
re-designated as an
executive Director on
November 11, 2022
August 1, 2021
Mr. Hu Xiaodong
(؇)
50 Non-executive
Director
Advising on business
plans, major decisions
and investment
activities of the Group
Appointed on June 12,
2020 as a Director,
and re-designated as a
non-executive Director
on November 11, 2022
June 12, 2020
Mr. Wang Haijun
(ࠏ)
55 Non-executive
Director
Advising on business
plans, major decisions
and investment
activities of the Group
Appointed on March 31,
2022 as a Director,
and re-designated as a
non-executive Director
on November 11, 2022
March 31, 2022
Ms. Xiang
Yangyang
(ධජජ)
34 Non-executive
Director
Advising on business
plans, major decisions
and investment
activities of the Group
Appointed on March 31,
2022 as a Director,
and re-designated as a
non-executive Director
on November 11, 2022
March 31, 2022
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 449 ---
Name Age Position Responsibilities
Date of first
appointment
Date of joining
the Group
Mr. Wei Yong
(ۇ)
51 Non-executive
Director
Advising on business
plans, major decisions
and investment
activities of the Group
Appointed on April 11,
2022 as a Director,
and re-designated as a
non-executive Director
on November 11, 2022
April 11, 2022
Mr. Yu Xinhua
(ശ)
49 Non-executive
Director
Advising on business
plans, major decisions
and investment
activities of the Group
Appointed on August 4,
2022 as a Director,
and re-designated as a
non-executive Director
on November 11, 2022
August 4, 2022
Ms. Wong Sze
Wing ( ර౶጑)
45 Independent non-
executive
Director
Supervising and
providing independent
judgment to the Board
November 11, 2022 Listing Date
Dr. Wang Zhenbo
(تࣈ)
50 Independent non-
executive
Director
Supervising and
providing independent
judgment to the Board
November 11, 2022 Listing Date
Dr. Ren Shenggang
(΂௷፻)
48 Independent non-
executive
Director
Supervising and
providing independent
judgment to the Board
November 11, 2022 Listing Date
Dr. Simon Chen 64 Independent non-
executive
Director
Supervising and
providing independent
judgment to the Board
November 11, 2022 Listing Date
Executive Directors
Dr. Cao Hui ( ૎ሾ), aged 45, was appointed as the chairman of the Board and the
president of the Company on October 25, 2017, as a Director on March 31, 2022, and was
re-designated as an executive Director on November 11, 2022. Dr. Cao is responsible for the
formulation of the strategic direction of the Group and the day-to-day management of the
Company. He has also served as a director of Guangdong REPT BATTERO since October
2017, a director of REPT SAIC since April 2022, a director of Chongqing REPT BATTERO
since March 2023, and the general partner of Wenzhou Ruili since August 2021.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 450 ---
Dr. Cao has over 20 years of experience in lithium-ion battery industry. Prior to joining
the Company in October 2017, Dr. Cao successively served as a senior engineer at Shanghai
Institute of Space Power-Sources (הfrom March 2006 to February 2009,
and a vice general manager of Shanghai Aerospace Power Technology Co., Ltd. ( ɪऎঘ˂ཥ
ப΂ʮ̡) from February 2009 to October 2017.
Dr. Cao obtained a bachelor’s degree and a master’s degree in metallurgy of non-ferrous
metals from Central South University (ɽኪ) in July 2000 and June 2003, respectively, and
a doctoral degree in materials physics and chemistry from the Shanghai Institute of
Microsystem and Information Technology, Chinese Academy of Sciences (ኪ৫ɪऎฆ
הin March 2006. He was recognized as a researcher (ࡰb yt h e
Professional and Technical Position Evaluation Committee of Shanghai Aerospace Bureau ( ɪ
ึ) in August 2014.
Dr. Cao has received multiple awards for his achievements, including the third prize of
the “Shanghai Science and Technology Award” (ኪҦஔᆤ) by the People’s
Government of Shanghai in November 2015; “Shanghai Youth May Fourth Medal” (ڡ
ϋʞ̬ᆤ௝) by the Shanghai Committee of the Communist Youth League and the Shanghai
Municipal Human Resources and Social Security Bureau in April 2016; “Shanghai Pioneer in
Outstanding Technologies” ( ɪऎ̹ᎴӸҦஔ੭᎘ɛ) by the Shanghai Science and Technology
Committee in April 2017; and an “Outstanding Talent in ‘Special Support Plan for High-level
Talents of Wenzhou City” ( ๝ψ̹“ྌ”௫̈ɛʑ) by the Office of the
Leading Group for Talent Work, Wenzhou City Committee of the Communist Party of China
in December 2019.
Dr. Wu Y anjun (ࠏ)aged 49, was appointed as a Director and the Board secretary
on March 31, 2022, and was re-designated as an executive Director and appointed as one of the
joint company secretaries on November 11, 2022. Dr. Wu is responsible for the formulation of
corporate development strategies as well as the external cooperation, financing and investment
of the Group. He has served as a director of REPT SAIC since April 2022, and a director of
Chongqing REPT BATTERO since March 2023. He has also served as a director of XCMG
Tsingshan (Xuzhou) New Energy Vehicle Co., Ltd. (ʆ(ψ)ʮ̡),
an associate of Mr. Xiang, since May 2021.
Prior to joining the Group in February 2022, Dr. Wu successively served as a marketing
manager at Canadian Inco Metals (Shanghai) Co., Ltd. (᙮(ɪऎ)ʮ̡) from
April 2005 to July 2009, a marketing manager for Vale Minerals China Co., Ltd. (ߵ
᙮(ɪऎ)ʮ̡) from March 2009 to February 2010, and a nickel and stainless steel
industry consultant for Shanghai Jinyan Business Consulting Firm (General Partnership) ( ɪऎ
ה(౷ஷΥྫ)) from February 2010 to October 2010. Dr. Wu then served as
a deputy general manager of Shanghai Dingtang Metals Co., Ltd. (ʮ̡)
from October 2010 to June 2011, a deputy general manager of Yangjiang Century Tsingshan
Nickel Industry Co., Ltd. (ʮ̡) (currently known as Guangdong
Century Tsingshan Nickel Industry Co., Ltd. (ʮ̡)) from June 2011 to
March 2013, vice president of Tsingtuo Industrial Group Co., Ltd. (ʮ̡)
(currently known as Tsingtuo Group Co., Ltd. (ʮ̡)) from March 2013 to
February 2014, and the general manager of Shanghai Tsingshan Trading Co., Ltd. (ʆ
ʮ̡) from March 2014 to February 2022.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 451 ---
Dr. Wu obtained a bachelor’s degree in metal materials and heat treatment from Central
South University of Technology (ʈุɽኪ) (now known as Central South University) in
July 1998, a master’s degree in materials science from Central South University in June 2001,
and a doctoral degree in microelectronics and solid state electronics from Shanghai Jiao Tong
University ( ɪऎʹஷɽኪ) in March 2005. Dr. Wu obtained the qualification of intermediate
economist (ࢪissued by the Ministry of Human Resources and Social Security of the
PRC in November 2022.
Ms. Huang Jiehua ( රᆎശ), aged 42, was appointed as the chief financial officer of the
Company on August 1, 2021, as a Director on August 4, 2022, and was re-designated as an
executive Director on November 11, 2022. Ms. Huang is responsible for the accounting and
financial management of the Group. She has served as a supervisor of Zhejiang Ruiyuan since
May 2022, and a supervisor of REPT SAIC since April 2022.
Prior to joining the Group in August 2021, Ms. Huang served in REPT Technology Group
Co., Ltd. (ʮ̡) consecutively as a deputy general manager of finance
department from August 2011 to April 2016, and the general manager of finance department
from May 2016 to July 2021.
Ms. Huang obtained an associate degree in accounting, through long-distance education,
from Zhejiang Institute of Economics and Trade ( एϪ຾൱ᔖุҦஔኪ৫) in February 2008.
Non-executive Directors
Mr. Hu Xiaodong (؇)with former name as Hu Dong (̆)), aged 50, was
appointed as a Director on June 12, 2020 and re-designated as a non-executive Director on
November 11, 2022. He has also served as a director and vice chairman of the board of
BatteroTech Shanghai since July 2020 and July 2022, respectively, a director of BatteroTech
Jiashan since December 2020, a director of BatteroTech Wuhan since January 2021, a director
of Zhejiang Ruiyuan since June 2022, a director of Guangdong REPT BATTERO since July
2021, and a director of BatteroTech Jiaxing since April 2023.
Mr. Hu has served as the chairman of the board of Yongqing Technology since September
2019. He has served as a director of Ruitu Energy since November 2022. He has also served
as a director of Zhejiang Yongtuo New Material Technology Co., Ltd. (ҦϞ
ʮ̡) since September 2021, a director of Zhejiang Qingmowan Energy Technology Co.,
Ltd. (ʮ̡) since October 2021, a director of Ruizhou Energy Co.,
Ltd. (ʮ̡) since June 2020, a director of Wenzhou Xinyongtuo New Materials
Co., Ltd. (ʮ̡) since January 2022, and a director of Zhejiang
Weiming Shengqing Energy New Materials Co., Ltd. (ʮ̡)
since August 2022.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 452 ---
Mr. Hu served in various positions as the deputy secretary of the Communist Party of
China committee of Taishun County of Wenzhou City and the district mayor of Lucheng
District of Wenzhou City from September 1997 to April 2019; and the general manager of
Wenzhou Mingcheng Construction Investment Group Co., Ltd. (ࠢ
ʮ̡) from April 2019 to September 2019.
Mr. Hu obtained an associate degree in Chinese secretary of the department of
administration from Wenzhou University ( ๝ψɽኪ) in July 1994; a bachelor’s degree in law,
through long-distance education, from Peking University ( ̏ԯɽኪ) in July 2005; and a
master’s degree in economics and management, through long-distance education, from the
Central Party School of the Communist Party of China (ࣧin July 2012.
Mr. Wang Haijun (ࠏ)aged 55, was appointed as a Director on March 31, 2022 and
re-designated as a non-executive Director on November 11, 2022.
Mr. Wang has served as a director and the president of Shanghai Decent since February
2007 and April 2007, respectively. Prior to that, he served as the general manager of Zhejiang
Tsingshan Iron & Steel Co., Ltd. (ʮ̡) from March 2004 to March 2005,
and the chairman of the board of Tsingshan Holding Group Shanghai International Trading Co.,
Ltd. (ʮ̡) from January 2005 to March 2007. From June
1992 to August 1995, Mr. Wang served as a deputy director of the liquid hydrogen and liquid
oxygen rocket engine research laboratory at Beijing Aerospace Propulsion Institute ( ̏ԯঘ˂
הFrom August 1995 to March 2004, he served in multiple positions in Danieli
Beijing Representative Office (ஈ), with his last positions as a
deputy chief representative of Beijing Representative Office, and simultaneously, the chief
representative of Shanghai Representative Office.
Mr. Wang obtained a master’s degree in aerospace propulsion from the First Research
Institute of the Ministry of Astronautics Industry (Ӻ৫, currently
known as China Academy of Launch Vehicle Technology (Ӻ৫)) in
August 1992.
Ms. Xiang Y angyang ( ධජජ), aged 34, was appointed as a Director on March 31, 2022
and re-designated as a non-executive Director on November 11, 2022.
Ms. Xiang has served as the general manager of the strategic investment department of
Shanghai Decent since July 2018. She served in multiple positions in Citibank N.A.,
Singapore, including a management associate from July 2013 to August 2016. From December
2016 to July 2018, Ms. Xiang served in Golden Harbor International Pte Ltd as a deputy
general manager.
Ms. Xiang obtained a bachelor’s degree in economics and business from Brandeis
University in May 2013. Ms. Xiang has been a candidate of the Finance CEOs Program of PBC
School of Finance, Tsinghua University since 2019. Ms. Xiang Yangyang is the daughter of Mr.
Xiang Guangda, our Controlling Shareholder.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 453 ---
Mr. Wei Y ong (ۇ)aged 51, was appointed as a Director on April 11, 2022 and
re-designated as a non-executive Director on November 11, 2022.
Mr. Wei has served as the acting chief financial officer and vice president of SAIC Motor
(ɪӛණྠ) (a company listed on the Shanghai Stock Exchange, stock code: 600104) since
September 2016 and July 2019, respectively. He has also served as the general manager of
SAIC HK Investment Co., Ltd. (ʮ̡) since September 2016. Prior to
that, Mr. Wei served as a special officer of the strategic committee of the board of Shanghai
Automotive Industry Corporation (Group) ( ɪऎӛԓʈุ(ණྠ)ᐼʮ̡) (currently known as
Shanghai Automotive Industry Corporation (Group) ( ɪऎӛԓʈุ(ණྠ)ʮ̡)) from
October 2003 to December 2004. Mr. Wei held various positions in SAIC Motor ( ɪӛණྠ),
including (i) the deputy head of the president office from December 2004 to April 2011; (ii)
an executive director of capital operation department from April 2011 to August 2015; (iii) a
securities business representative from March 2012 to July 2019; (iv) the head of office of the
board from June 2014 to March 2017; (v) an executive director of securities business
department from August 2015 to September 2016; (vi) the general manager of both securities
business department and financial business department from September 2016 to August 2019;
and (vii) the board secretary from May 2018 to July 2019. From September 2016 to September
2021, he served as the general manager of SAIC Investment Management Co., Ltd. ( ɪऎӛԓ
ʮ̡).
Mr. Wei successively served in the comprehensive affairs division of the research office
of Shanghai Committee of the Communist Party of China as (i) a senior staff member from
December 1996 to April 2000, (ii) a principal staff member from April 2000 to February 2001,
and (iii) deputy division researcher from February 2001 to January 2002, and in the economy
division of the research office of Shanghai Committee of the Communist Party of China as a
deputy division director from January 2002 to October 2003.
Mr. Wei obtained a bachelor’s degree in economics from School of Finance majoring in
insurance, and a master’s degree in economics majoring in monetary banking from Shanghai
University of Finance and Economics ( ɪऎৌ຾ɽኪ) in June 1993 and December 1995,
respectively.
Mr. Yu Xinhua (ശ), aged 49, was appointed as a Director on August 4, 2022 and
re-designated as a non-executive Director on November 11, 2022.
Mr. Yu joined IDG Capital in October 2005, and currently serves as a partner, primarily
responsible for investments in advanced technology and smart manufacturing sectors.
Mr. Yu obtained a bachelor’s degree in thermal processing technology and equipment
from Zhejiang University ( एϪɽኪ) in June 1997. Mr. Yu was recognized multiple times as
one of the top investors in China by the list of “Forbes China Top 100 Venture Capitalists” ( ၅
̺౶ʕ਷௴ҳɛરБ࿮Top 100) in 2021 and the list of “China Venture Top 100 Best Venture
Capitalists in China” ( ҳʕʕ਷௰Գ௴ุҳ༟ɛTop 100) in 2020.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 454 ---
Independent Non-executive Directors
Ms. Wong Sze Wing ( ර౶጑), aged 45, was appointed as our independent non-executive
director on November 11, 2022 with effect from the Listing Date.
Ms. Wong served as a manager at PricewaterhouseCoopers from September 2001 to
October 2006. She then successively served as the chief financial officer of Orange Sky
Entertainment Group (International) Holding Company Limited (ᆀණྠ(਷ყ)ࠢ
ʮ̡) from August 2007 to July 2008. She served as the joint company secretary of Yingde
Gases Group Company Limited (ʮ̡) from February 2009 to March 2017
and has served as its chief financial officer since July 2010. She has been an independent
non-executive director of Orange Sky Golden Harvest Entertainment (Holdings) Limited (a
company listed on the Hong Kong Stock Exchange, stock code: 1132) since April 2010, an
independent non-executive director of Rici Healthcare Holdings Limited (a company listed on
the Hong Kong Stock Exchange, stock code: 1526) since June 2016, an independent
non-executive director of Wangsu Science and Technology Co., Ltd. (ʮ̡,
a company listed on the Shanghai Stock Exchange, stock code: 300017) since April 2017,
an independent non-executive director of Ganfeng Lithium Co., Ltd. (ࠢ
ʮ̡, a company listed on the Hong Kong Stock Exchange, stock code: 1772, and listed on the
Shenzhen Stock Exchange, stock code: 002460) since July 2018, and an independent
non-executive director of Giant Biogene Holding Co., Ltd (a company listed on the Hong Kong
Stock Exchange, stock code: 2367) since April 2022. She also served as an independent
director of Zhejiang Dahua Technology Co., Ltd. (ʮ̡, a company
listed on the Shenzhen Stock Exchange, stock code: 002236) from May 2017 to August 2020
and an independent non-executive director of Xinjiang La Chapelle Fashion Co., Ltd. (ז
ʮ̡, a company listed on the Hong Kong Stock Exchange, stock code:
06116) from January 2021 to June 2021.
Ms. Wong obtained a bachelor’s degree in business administration from University of
Hong Kong in November 2001. She also obtained an executive master of business
administration degree from China Europe International Business School in July 2012. Ms.
Wong became a chartered member and then a fellow of the Hong Kong Institute of Certified
Public Accountants.
Dr. Wang Zhenbo (تࣈ)aged 50, was appointed as our independent non-executive
director on November 11, 2022 with effect from the Listing Date.
Dr. Wang has served in Harbin Institute of Technology (ဧᏵʈุɽኪ) since July 1998,
consecutively held positions as a lecturer, and an associate researcher, and currently serves as
a professor and doctoral supervisor since December 2013 and April 2011, respectively, with his
researches mainly focusing on advanced chemical power supplies, hydrogen fuel cells,
electrocatalysis, and nanoelectrode materials. He served as the head of department of
electrochemical engineering of Harbin Institute of Technology from May 2019 to May 2021.
He has also served as a distinguished professor at Shenzhen University ( ଉέɽኪ) since
September 2020.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 455 ---
Dr. Wang obtained a bachelor’s degree in electrochemical production process in July
1998, a master’s degree in applied chemistry in January 2003, and a doctoral degree in applied
chemistry in December 2005 from Harbin Institute of Technology.
Dr. Wang was selected as a member of Young and Middle-Aged Industrial Leaders of
Science and Technology by Ministry of Science and Technology of the PRC (߅
ɛʑ) in October 2018, as a member of National High-Level Personnel (ॴ৷
ᄴϣɛʑ) in February 2019, as a member of Industry Leading Talent of Taishan, Shandong
Province (ɛʑ) in December 2017, as a member of Program of Innovative
and Entrepreneurial Talent of Jiangsu Province (ᕐ௴ɛʑ) in July 2019, and was
elected in the Longjiang Scholars Program of Heilongjiang Province ()
as a distinguished professor in October 2017. He was awarded the Highly Cited Chinese
Researchers by Elsevier for eight consecutive years from 2014 to 2021. He won the First Prize
of Natural Science in Heilongjiang Province (ኪɓഃᆤ) twice in July 2008 and
December 2018, respectively, the Second Prize of Zhejiang Province Achievement
Transformation Award (ᔷʷɚഃᆤ) in 2012, and the First Prize of Harbin
Institute of Technology Teaching Achievement Award (ɓഃᆤ)i n
December 2019.
Dr. Ren Shenggang ( ΂௷፻), aged 48, was appointed as our independent non-executive
director on November 11, 2022 with effect from the Listing Date.
Dr. Ren has served in Central South University (ɽኪ) since July 2004, and is
currently serving as a professor since October 2010, the secretary of Party Committee since
January 2019 and a doctoral supervisor since July 2012 at business school, the director of the
center for research on national governance policy and business organization since December
2019, and the deputy executive director of the collaborative innovation center of building a
resource-conserving, environment-friendly society and ecological civilization, which was
approved as a “2011 Collaborative Innovation Center” of Hunan Province, since September
2018.
Dr. Ren obtained a doctoral degree in management in June 2004 from Fudan University.
He was selected into the “Program for New Century Excellent Talents in University” of the
Ministry of Education (ྌ) in December 2012.
Dr. Simon Chen , aged 64, was appointed as our independent non-executive director on
November 11, 2022 with effect from the Listing Date.
Dr. Chen has served as an independent director in TSP Canada Towers Inc. since
November 2014. Prior to that, he served in the faculty of civil engineering (currently known
as the college of civil engineering and architecture) of Zhejiang University ( एϪɽኪ)a sa
lecturer from August 1985 to December 1988. After that, he served as a postdoctoral researcher
in the University of Alberta from August 1993 to October 1994, and the chief engineer in
Waiward Construction Management Inc. from October 1994 to March 1997. He then served in
Atomic Energy of Canada Ltd from May 1997 to July 2006. He then served as the SCM
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 456 ---
strategic manager in Suncor Energy Inc. from 2007 to 2008, an onshore manager in
Westinghouse-Shaw Consortium from 2008 to 2011, a technical advisor in China General
Nuclear Power Corporation (ʮ̡) in April 2014, and a senior manager in
TC Energy Corporation from April 2014 to October 2020.
Dr. Chen obtained a bachelor’s degree in civil engineering and a master’s degree in
structural engineering from the faculty of civil engineering of Zhejiang University in July 1982
and July 1985, respectively. He then obtained a doctoral degree in structural engineering from
the University of Alberta in November 1993.
SUPERVISORS
The following table sets forth the key information about the Supervisors as at the Latest
Practicable Date.
Name Age Position Responsibilities
Date of first
appointment
as Supervisor
Date of
joining the
Group
Mr. Qu Enci
(ฉ)
40 Shareholder
representative
Supervisor and
Chairman of
the Supervisory
Committee
Overseeing the
operations, financial
activities, internal
control and risk
conditions of the
Group
March 31,
2022
March 31,
2022
Mr. Fang Yihui
(⥙ฯ)
35 Shareholder
representative
Supervisor
Overseeing the
operations, financial
activities, internal
control and risk
conditions of the
Group
August 4,
2022
August 4,
2022
Ms. Jin Shanyan
(ዲ)
51 Employee
representative
Supervisor and
financial
manager
Overseeing the
operations, financial
activities, internal
control and risk
conditions of the
Group
March 31,
2022
January 1,
2018
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 457 ---
Mr. Qu Enci (ฉ), aged 40, was appointed as a shareholder representative Supervisor
and the chairman of the Supervisory Committee of the Company on March 31, 2022. He has
also served as a supervisor of Guangdong REPT BATTERO since January 2022, and a
supervisor of BatteroTech Jiaxing since April 2023.
Mr. Qu has held various positions in relation to financial management in subsidiaries of
Tsingshan Group since February 2011. He has served as the deputy general manager of finance
from November 2019 to January 2022 and the general manager of finance of Yongqing
Technology since January 2022. Mr. Qu used to serve as the accountant in charge of Zhejiang
Tsingshan Iron & Steel Co., Ltd. (ʮ̡) from February 2006 to April 2007,
and the financial director of Gihooo Group Industry Co., Ltd. (ʮ̡) from April
2007 to January 2011.
Mr. Qu obtained an associate degree in financial accounting from Zhejiang Forestry
Institution (ኪ৫) (now known as Zhejiang A&F University (ɽኪ)) in June
2004 and a bachelor’s degree, through long-distance education, in business administration from
Shanghai Jiao Tong University in January 2007. He obtained the senior accountant
qualification from the Human Resources and Social Security Department of Fujian Province in
September 2019.
Mr. Fang Yihui (⥙ฯ), aged 35, was appointed as a shareholder representative
Supervisor of the Company on August 4, 2022.
Mr. Fang has served as a deputy general manager of Beijing Wenming Investment Fund
Management Co., Ltd. (ʮ̡) since September 2019. Prior to that,
he served as a manager of institutions department of China Securities Co., Ltd. Beijing Anli
Road Business Department (ʮ̡̏ԯτͭ༩ᗇՎᐄุ௅) (currently
known as China Securities Co., Ltd. Beijing Chaoyang Branch,ʮ̡̏
ԯಃජʱʮ̡) from September 2015 to July 2018.
Mr. Fang obtained a master of business administration degree from Oklahoma City
University in July 2015. He obtained securities practice qualification from the Securities
Association of China in March 2016, and fund practice qualification from the Asset
Management Association of China in November 2021.
Ms. Jin Shanyan (ዲ), aged 51, was appointed as an employee representative
Supervisor of the Company on March 31, 2022. She has also served as a supervisor of
Chongqing REPT BATTERO since March 2023.
Ms. Jin joined the Company in January 2018 and has served as a financial manager of the
Company since then. Prior to joining our Group, from May 2012 to December 2018, Ms. Jin
served in multiple positions in Tsingshan Group, with her last positions as the director of
accounting department and an assistant to the general manager of finance.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 458 ---
Ms. Jin obtained an associate degree in accounting, through long-distance education, from
Zhejiang Finance and Economics Institution ( एϪৌ຾ኪ৫) (now known as Zhejiang
University of Finance and Economics ( एϪৌ຾ɽኪ)) in June 2005, and a bachelor’s degree
in accounting, through long-distance education, from Lanzhou University ( ᚆψɽኪ) in July
2013. She obtained the intermediate accountant qualification from the Wenzhou Municipal
Human Resources and Social Security Bureau in May 2011.
SENIOR MANAGEMENT
The following table sets forth the key information about the senior management as at the
Latest Practicable Date.
Name Age Position Responsibilities
Date of first
appointment
Date of
joining the
Group
Dr. Cao Hui
(૎ሾ)
45 Chairman of the
Board,
executive
Director and
president
Formulation of the
strategic direction and
the day-to-day
management of the
Group
Appointed on October
25, 2017 as the
chairman of the
Board and president,
on March 31, 2022 as
a Director, and
re-designated as an
executive Director on
November 11, 2022
October 8,
2017
Dr. Wu Yanjun
(ࠏ)
49 Executive
Director, Board
secretary and
one of the joint
company
secretaries
Formulation of
corporate
development
strategies as well as
external cooperation,
financing and
investment of the
Group
Appointed on March 31,
2022 as a Director
and the board
secretary, re-
designated as an
executive Director
and appointed as one
of the joint company
secretaries on
November 11, 2022
February 8,
2022
Ms. Huang Jiehua
(රᆎശ)
42 Executive
Director and
chief financial
officer
Responsible for the
accounting and
financial management
of the Group
Appointed on August 1,
2021 as the chief
financial officer, and
on August 4, 2022 as
a Director, and
re-designated as an
executive Director on
November 11, 2022
August 1,
2021
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Name Age Position Responsibilities
Date of first
appointment
Date of
joining the
Group
Dr. Hou Min
(ઽ)
47 Vice president R&D of cell, module
and system
technology and test
and trial production
platform management
of the Group
November 1, 2017 November 1,
2017
Mr. Yu Zhaoyu
(ρ)
45 Vice president Construction of
production facilities
and production
operations of the
Group
October 8, 2017 October 8,
2017
Mr. Cao Kai
(૎ฺ)
41 Vice president R&D of passenger car
pack and BMS
technology in the
technology center of
the Group, and
system manufacturing
management of the
Group
Appointed on February
1, 2018 as the
director of system
technology and on
April 20, 2022 as a
vice president
January 22,
2018
For the biographical details of Dr. Cao Hui, Dr. Wu Yanjun and Ms. Huang Jiehua, please
refer to “– Executive Directors.”
Dr. Hou Min (ઽ), aged 47, was appointed as a vice president of the Company on
November 1, 2017 and is responsible for the R&D of cell, module and system technology and
test and trial production platform management of the Group. Dr. Hou has also served as the
general manager of REPT Qingchuang since November 2017.
Prior to joining the Group in November 2017, Dr. Hou served as an assistant researcher
in Chengdu Institute of Organic Chemistry, Chinese Academy of Sciences (ኪ৫ϓேϞ
הfrom 2003 to 2005, and consecutively as a R&D engineer and the director of
R&D of Shanghai Nandu Energy Technology Co., Ltd. (ʮ̡) from
2006 to 2009. She then served as the manager of technology center of Shanghai Aerospace
Power Technology Co., Ltd. (ப΂ʮ̡) from 2009 to 2017.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Dr. Hou obtained a bachelor’s degree in chemical engineering and technology, and a
master’s degree in applied chemistry from Harbin Institute of Technology in July 2000 and July
2003, respectively. She obtained a doctoral degree in chemical engineering and technology
from Harbin Institute of Technology in January 2022. She was recognized as a senior engineer
by the Professional and Technical Position Evaluation Committee of Shanghai Aerospace
Bureau (ึ) in August 2013, and a chief senior engineer by
the Shanghai Natural Science Research Series Senior Professional and Technical Title
Qualification Evaluation Committee (൙
ึ) in December 2020.
Dr. Hou has also received multiple honors for her achievements in battery industry,
including the second prize of “Technology Innovation Individual Award” by Shanghai
Academy of Spaceflight Technology in February 2015; the third prize of “Science and
Technology Invention Award” by the China Aerospace Science and Technology Corporation in
April 2015; the third prize of “Shanghai Science and Technology Award” by Shanghai
Municipal People’s Government in November 2015; the honorary title of “Star of Effectiveness
and Excellence” (݋׼by Shanghai Academy of Spaceflight Technology in January
2017; and the honorary title of “Red-Flag Bearer on March 8th” (࿩˓) by Shanghai
Academy of Spaceflight Technology in March 2017, and she was selected as a Leading Talent
for Scientific and Technological Innovation in “Special Support Plan for High-level Talents”
of Wenzhou City by the Leading Group for Talent Work of Wenzhou Municipal Committee of
the Communist Party of China in October 2020. She was appointed as an expert of Wenzhou
Science and Technological Innovation Think Tank (࢕in October
2021. Dr. Hou has participated in the development of more than 100 patents, and has published
several academic papers.
Mr. Yu Zhaoyu (ρ), aged 45, was appointed as a vice president of the Company on
October 8, 2017 and is responsible for the construction of production facilities and production
operations of the Group. He has also served as the chairman of the Board of REPT Qingchuang
since January 2018, a director and the general manager of Zhejiang Ruixu since December
2019, the chairman of the board and general manager of REPT SAIC since April 2022, a
director of Wenzhou Xinke Technology Co., Ltd. (ʮ̡), since April 2022,
and the chairman and manager of Chongqing REPT BATTERO since March 2023. He has also
served as the executive director and general manager of Liuzhou Qingyu Information
Technology Services Co., Ltd. (ʮ̡) since April 2022.
Prior to joining the Group in October 2017, Mr. Yu worked as a director of process
engineering department in Zhejiang Narada Power Source Co., Ltd. (΅Ϟ
ʮ̡) (a company listed on the Shenzhen Stock Exchange, stock code: 300068) from
February 2009 to February 2011, and manager of manufacturing center of Shanghai Aerospace
Power Technology Co., Ltd. (ப΂ʮ̡) from March 2015 to September
2017.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Mr. Yu obtained a bachelor’s degree in metallurgical engineering from Central South
University in June 2003. He was recognized as a senior engineer by China Aerospace Science
and Technology Corporation in August 2014.
Mr. Yu has received the honorary title of “Star of Effectiveness and Excellence” (௴
݋׼by Shanghai Academy of Spaceflight Technology in February 2015, and was
recognized as a leading talent in scientific and technological innovation of “Luofeng Leading
Goose Plan” (ྌ) of Wenzhou City in July 2020.
Mr. Cao Kai ( ૎ฺ), aged 41, was appointed as the director of system technology of the
Company on February 1, 2018, and as a vice president of the Company on April 20, 2022. He
is responsible for the R&D of passenger car pack and BMS technology in the technology center
of the Group, and system manufacturing management of the Group. He has also served as a
director of SAIC REPT EV Battery System Co., Ltd. (ʮ̡) since
April 2022.
Prior to joining the Group in February 2018, Mr. Cao worked in Raintree Scientific
Instruments (Shanghai) Co., Ltd. (ኪᄃኜ(ɪऎ)ʮ̡) from January 2006 to
December 2006. He then held a professional technical position in Pan Asia Technical
Automotive Center Co., Ltd. (ʮ̡) from December 2009 to April 2016.
He served in several positions in Changzhou Durui Lianxing Investment Management Co., Ltd.
(ʮ̡), including an assistant chief engineer for EV batteries from
April 2016 to August 2016 and a counsel from August 2016 to February 2018.
Mr. Cao obtained a bachelor’s degree in automotive engineering from Tsinghua
University in July 2002, and a master’s degree in optical engineering from Shanghai Institute
of Optics and Fine Mechanics, Chinese Academy of Sciences in July 2005.
Save as disclosed in this section, none of the Directors, Supervisors or senior management
has held any directorship in any public company the securities of which are listed on any
securities market in Hong Kong or overseas during the three years immediately preceding the
Latest Practicable Date.
As at the Latest Practicable Date:
(i) none of the Directors had any interests in any business, which competes or is likely
to compete, either directly or indirectly, with our business;
(ii) none of the Directors, Supervisors or members of the senior management of the
Company is related to any other Directors, Supervisors and members of the senior
management;
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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(iii) save as disclosed in the section headed “Statutory and General Information,” none
of the Directors, Supervisors or members of the senior management holds any
interest in the Shares which would be required to be disclosed pursuant to Part XV
of the Securities and Futures Ordinance; and
(iv) there is no additional matter with respect to the appointment of the Directors or
Supervisors that needs to be brought to the attention of the Shareholders, and there
is no additional information relating to the Directors or Supervisors that is required
to be disclosed pursuant to Rule 13.51(2) of the Listing Rules.
JOINT COMPANY SECRETARIES
Dr. Wu Y anjun (ࠏ)is one of our joint company secretaries. For the biographical
details of Dr. Wu, please refer to “– Executive Directors.”
Ms. Zhang Xiao ( ੵᖋ) is one of our joint company secretaries. Ms. Zhang is an assistant
vice president of SWCS Corporate Services Group (Hong Kong) Limited, a professional
services provider specializing in corporate services, and has over ten years of experience in the
corporate secretarial field. Ms. Zhang has been admitted as an associate member of both The
Hong Kong Chartered Governance Institute and The Chartered Governance Institute in the
United Kingdom in 2019.
Ms. Zhang obtained a bachelor’s degree in computer science from The Chinese University
of Hong Kong in 2010 and a master’s degree in corporate governance from The Open
University of Hong Kong (currently known as Hong Kong Metropolitan University) in 2018.
BOARD COMMITTEES
The Company has established three Board committees, namely the Audit Committee, the
Remuneration and Appraisal Committee and the Nomination Committee.
Audit Committee
The Audit Committee consists of three Directors, namely Ms. Wong Sze Wing, Dr. Simon
Chen and Dr. Ren Shenggang, with Ms. Wong Sze Wing currently serving as the chairlady.
Ms. Wong Sze Wing has the appropriate professional experiences as required under Rules
3.10(2) and 3.21 of the Listing Rules. The Audit Committee is mainly responsible for
reviewing and overseeing the financial reporting procedure and internal control system of the
Group.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Remuneration and Appraisal Committee
The Remuneration and Appraisal Committee consists of three Directors, namely Dr. Wang
Zhenbo, Dr. Cao Hui and Ms. Wong Sze Wing, with Dr. Wang Zhenbo currently serving as the
chairman. The Remuneration and Appraisal Committee is mainly responsible for evaluating the
remuneration policies for Directors and senior management of the Group and making
recommendations thereon to the Board.
Nomination Committee
The Nomination Committee consists of three Directors, namely Dr. Cao Hui, Dr. Wang
Zhenbo and Dr. Ren Shenggang, with Dr. Cao Hui currently serving as the chairman. The
Nomination Committee is mainly responsible for identifying, screening and recommending to
the Board qualified candidates to serve as the Directors and monitoring the procedures for
evaluating the performance of the Board.
DIVERSITY
The Company has adopted the board diversity policy which sets out the objective and
approach for achieving and maintaining diversity of the Board in order to enhance its
effectiveness. In accordance with the board diversity policy, the Company seeks to achieve
board diversity by taking into account a number of factors, including but not limited to gender,
age, cultural and educational background, professional experience, skills, knowledge and/or
length of service.
The Board currently consists of nine male and three female members, with three executive
Directors, five non-executive Directors and four independent non-executive Directors, of ages
ranging from 33 to 63 with diversified backgrounds and experience. We consider that our
Board has a balanced mix of skill-set, experience, expertise, and diversity which enhances
decision-making capability and the overall effectiveness of the Board in achieving sustainable
business operation and enhancing shareholder value. In recognition of the importance of
gender diversity, the Company has taken, and will continue to take steps to promote gender
diversity in the Board. The Company will continue to consider increasing the proportion of
female Board members over time when selecting suitable new or additional candidates for
appointments to the Board so as to ensure that appropriate gender diversity is achieved.
Upon the Listing, the Nomination Committee will from time to time (i) discuss and agree
on expected goals to ensure board diversity, and (ii) review and, where necessary, update the
board diversity policy to ensure that the policy remains effective. The Company will (i)
disclose the biographical details of each Director and (ii) report on the implementation of the
board diversity policy (including whether the Company has achieved board diversity) in its
annual corporate governance report.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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CODE PROVISION C.2.1 OF THE CORPORATE GOVERNANCE CODE
Dr. Cao Hui is the chairman of the Board and the president of the Company. In view of
Dr. Cao’s experience, personal profile and his roles in the Company as mentioned above, the
Board considers it beneficial to the business prospects and operational efficiency of the
Company that Dr. Cao, in addition to acting as the chairman of the Board, continues to act as
the president of the Company after the Listing.
While this will constitute a deviation from Code Provision C.2.1 of the Corporate
Governance Code as set out in Appendix 14 to the Listing Rules, the Board believes that this
structure will not impair the balance of power and authority between the Board and the
management of the Company, given that:
(i) there is sufficient check and balance in the Board as the decision to be made by the
Board requires approval by at least a majority of the Directors and our Board has
five non-executive director as well as four independent non-executive Directors out
of the twelve Directors, which is in compliance with the Listing Rules;
(ii) Dr. Cao and the other Directors are aware of and undertake to fulfill their fiduciary
duties as Directors, which require, among other things, that they act for the benefit
and in the best interest of the Company and make decisions for the Company
accordingly;
(iii) the balance of power and authority is ensured by the operations of the Board which
comprises experienced and high caliber individuals who meet regularly to discuss
issues affecting the operations of the Company; and
(iv) the overall strategic and other key business, financial, and operational policies of the
Company are made collectively after thorough discussion at both Board and senior
management levels. The Board will continue to review the effectiveness of the
corporate governance structure of the Company in order to assess whether
separation of the roles of the chairman of the Board and the president of the
Company is necessary.
Save as disclosed above, we are in compliance with the requirements under all Code
Provisions of the Corporate Governance Code as set out in Appendix 14 of the Listing Rules.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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DIRECTORS’ AND SUPERVISORS’ REMUNERATION AND REMUNERATION OF
FIVE HIGHEST PAID INDIVIDUALS
The Directors, Supervisors and senior management members who receive remuneration
from the Company are paid in forms of salaries, allowances, discretionary bonuses, share
award scheme and other benefits in kind. The remuneration of the Directors, Supervisors and
senior management members is determined with reference to the remuneration paid by relevant
companies in the same industry and the achievement of major operating indicators of the
Company.
The aggregate amount of remuneration (including salaries, allowances, contribution to
pension schemes, share award scheme and discretionary bonuses) and other benefits in kind
paid to the Directors for each of the years ended December 31, 2020, 2021 and 2022 and the
six months ended June 30, 2023 amounted to RMB0.55 million, RMB16.13 million, RMB50.30
million and RMB25.98 million, respectively. The aggregate amount of remuneration (including
salaries, allowances, share award scheme and discretionary bonuses) and other benefits in kind
paid to the five highest paid individuals (including the Directors) for each of the years ended
December 31, 2020, 2021 and 2022 and the six months ended June 30, 2023 amounted to
RMB3.38 million, RMB36.88 million, RMB105.13 million and RMB52.76 million,
respectively.
Under the arrangement currently in force, the Company estimates that the aggregate fixed
remuneration (before tax) payable to the Directors and Supervisors for the year ending
December 31, 2023 is approximately RMB2.32 million.
During the Track Record Period, no fees were paid by the Company to any of the
Directors (or former Directors) or the five highest paid individuals as an inducement to join the
Company or as compensation for loss of office. None of the Directors or Supervisors waived
their remuneration during the Track Record Period.
Information on the service contracts entered into between the Company and the Directors
is set out in “Appendix VI – Statutory and General Information.”
SHARE INCENTIVE SCHEMES
In order to incentivize employees for their contribution to the Group and to attract and
retain suitable personnel to the Group, the Company adopted the 2021 Share Incentive Scheme,
the 2022 Share Incentive Scheme and the Share Incentive Scheme of BatteroTech Shanghai.
For further details, see “Appendix VI – Statutory and General Information – The Share
Incentive Schemes.”
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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COMPLIANCE ADVISOR
The Company has appointed Red Solar Capital Limited as our compliance advisor in
compliance with Rules 3A.19 and 19A.05 of the Listing Rules. The material terms of the
compliance advisor’s agreement are as follows:
(i) Red Solar Capital Limited shall act as our compliance advisor for the purpose of
Rules 3A.19 and 19A.05 of the Listing Rules for a period commencing on the
Listing Date and ending on the date on which we comply with Rule 13.46 of the
Listing Rules in respect of our financial results for the first full financial year
commencing after the Listing Date, or until the agreement is terminated, whichever
is earlier;
(ii) the compliance advisor will provide us with certain services, including proper
guidance and advice as to compliance with the requirements under the Listing Rules
and applicable laws, regulations and rules;
(iii) the compliance advisor will, as soon as reasonably practicable, inform us of any
amendment or supplement to the Listing Rules announced by the Hong Kong Stock
Exchange from time to time, and of any amendment or supplement to the applicable
laws, regulations and rules; and
(iv) the compliance advisor will act as one of the key channels of communication of the
Company with the Hong Kong Stock Exchange.
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FUTURE PLANS AND PROSPECTS
See “Business – Development Strategies” for a detailed description of our future plans.
USE OF PROCEEDS
We estimate that we will receive net proceeds from the Global Offering of approximately
HK$2,118.8 million, after deducting underwriting commissions, fees and estimated expenses
payable by us in connection with the Global Offering, assuming an Offer Price of HK$19.4 per
Share, being the mid-point of the indicative Offer Price range stated in this prospectus.
We currently intend to apply these net proceeds for the following intended purposes in the
amounts set forth below:
1. approximately 80.0%, or HK$1,695.0 million (equivalent to approximately
RMB1,542.1 million), will be used for the expansion of our production capacity,
which is one of our key development strategies as detailed in “Business –
Development Strategies” and “Business – Production – Planned Production
Facilities.” As of the June 30, 2023, our designed annual production capacity
reached 35.2GWh. In response to the growing downstream demands, we will further
expand our production capacity. In particular:
(i) approximately 30.5%, or HK$646.2 million (equivalent to approximately
RMB587.9 million), will be used to pay part of the expenses for the
construction of production facility in Wenzhou, Zhejiang province (“ Wenzhou
Facility III ”), with a designed annual production capacity of approximately
24.0GWh, to expand our production capacity of both EV and ESS battery
products. In particular:
(a) approximately 17.4%, or HK$368.7 million (equivalent to approximately
RMB335.4 million), will be used for the payment of construction costs of
(1) two main plants, both of which are compatible with production of both
EV and ESS battery products, and (2) ancillary infrastructures, such as
warehouses, employee dormitories and dining halls; and
(b) approximately 13.1%, or HK$277.6 million (equivalent to approximately
RMB252.5 million), will be used for the purchase and installation of
equipment for manufacturing and testing of battery products.
The construction of Wenzhou Facility III commenced in July 2023. We expect
to put it into production by the end of 2025.
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(ii) approximately 11.8%, or HK$250.0 million (equivalent to approximately
RMB227.5 million), will be used to pay part of the expenses for the
construction of production facility in Foshan, Guangdong province (“ Foshan
Facility I ”), with a designed annual production capacity of approximately
16.0GWh, to expand our production capacity of both EV and ESS battery
products. In particular:
(a) approximately 0.7%, or HK$14.8 million (equivalent to approximately
RMB13.5 million), will be used for the payment of part of construction
costs of (1) two main plants, which are compatible with production of
both EV and ESS battery products, and (2) ancillary infrastructures, such
as warehouses, employee dormitories and dining halls; and
(b) approximately 11.1%, or HK$235.2 million (equivalent to approximately
RMB214.0 million), will be used for the purchase and installation of
equipment for manufacturing and testing of battery products.
The construction of Foshan Facility I commenced in June 2022, and is
expected to be put into production in the first half of 2024.
(iii) approximately 37.7%, or HK$798.8 million (equivalent to approximately
RMB726.7 million), will be used to pay part of the expenses for the
construction of production facility in Chongqing (“ Chongqing Facility ”), with
a designed annual production capacity of approximately 30.0GWh, to expand
our production capacity of both EV and ESS battery products. In particular:
(a) approximately 20.2%, or HK$428.0 million (equivalent to approximately
RMB389.4 million), will be used for the payment of construction costs of
(1) four main plants, which are compatible with production of both EV
and ESS battery products, and (2) ancillary infrastructures, such as
warehouses, employee dormitories and dining halls; and
(b) approximately 17.5%, or HK$370.8 million (equivalent to approximately
RMB337.3 million), will be used for the purchase and installation of
equipment for manufacturing and testing of battery products.
The construction of Chongqing Facility is expected to be commenced in the
first half of 2024. We expect to put it into production by the end of 2025.
FUTURE PLANS AND USE OF PROCEEDS
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The allocation of the net proceeds from the Global Offering for the construction of
plants and ancillary infrastructures, and the purchase and installation of equipment for
manufacturing and testing of battery products for our production facilities as disclosed
above, was mainly determined based on (i) the scale and number of plants and the
ancillary infrastructures needed to support our production activities, (ii) the types and
number of equipment required to design and produce our battery products, (iii) the
schedule of construction and production, and (iv) the availability in amount and time of
other finance resources for our expansion plans.
We made large prepayments to independent third parties for machinery and
equipment procurement for our production facilities, in preparation for commercial
production in the second half of 2023, which resulted in the increase of prepayments for
property, plant and equipment from RMB547.1 million as of December 31, 2022 to
RMB1,487.8 million as of 30 June 2023. We estimate that the total investment amount of
the above three production facilities under construction will be RMB15,297.4 million, of
which RMB1,542.1 million will be the net proceeds from the Global Offering, and
RMB13,755.3 million will be raised from other sources, including banking facilities and
cash on hand. The estimated total investment amount of above production facilities is
determined based on the feasibility study reports issued by third parties, which takes into
consideration of, among other factors, the planned production capacity, the size of lands,
number and scale of plants and ancillary infrastructures and the equipment needed for
production. Such investment amounts will mainly be used for civil engineering,
construction of plants and ancillary infrastructures, purchase and installation of
equipment and preparation of production. The table below sets forth our proposed
allocation of net proceeds for the expansion of our production capacity:
Project
Total
investment
amount of
the Project
Investment
made as of
June 30, 2023
Net proceeds to be used in
this project
(in RMB
million)
(in RMB
million)
(in RMB million)
2023 2024 2025
Wenzhou Facility III ... 5,293.4 132.1 – 587.9 –
Foshan Facility I ......... 4,230.0 1,101.1 – 227.5 –
Chongqing Facility ...... 5,774.0 – – 726.7 –
Total ............................. 15,297.4 1,233.2 – 1,542.1 –
FUTURE PLANS AND USE OF PROCEEDS
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The table below sets forth our expected designed annual production capacity as of
December 31, 2023, 2024 and 2025, if our production expansion plan is executed as we
planned. See “Business – Production – Planned Production Facilities.”
Designed annual production capacity as of December 31,
2023 2024 2025
(in GWh)
Total ................................ 62 94 over 150
As all of our existing and planned production lines are designed to be compatible with the
production of different battery products, we may allocate and adjust above designed annual
production capacity between EV and ESS battery products from time to time based on the
actual market demands for our products in the future.
2. approximately 10.0%, or HK$211.9 million (equivalent to approximately RMB192.8
million), will be used for R&D, which is one of our key development strategies.
Such amount will be used to fund the R&D of core technologies for advanced
lithium-ion batteries, advanced materials and optimized manufacturing processes.
The net proceeds allocated below are mainly determined based on (i) the types and
amount of equipment, experimental materials and consumables needed for our R&D
activities and also our verification platform, (ii) the schedule of our R&D activities
and the construction of our verification platform, and (iii) the availability in amount
and time of other finance resources for our R&D activities. In particular:
(i) approximately 3.0%, or HK$63.6 million (equivalent to approximately
RMB57.8 million), will be used to develop the next-generation battery
products and core technologies, including ultra-long cycle life ESS batteries
and ultra-fast charging EV batteries. For ESSs, ESS battery products with long
cycle life are favored by the markets as the batteries can operate for longer,
which potentially reduce the replacement costs. As part of our development
strategies, we plan to further increase the cycle life of our ESS battery
products. For EVs, fast charging is one of the most important factors
consumers would take into account when purchasing EVs, which in turn is one
of the factors our EV battery customers would consider when purchasing our
EV battery products. To meet such fast charging needs, we devoted our efforts
and plan to further shorten the charging time of our EV battery products. We
believe such increased cycle life of ESS battery products and shortened
charging time of EV battery products would help us maintain our technological
advantages for the future competition;
FUTURE PLANS AND USE OF PROCEEDS
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(ii) approximately 3.0%, or HK$63.6 million (equivalent to approximately
RMB57.8 million), will be used to develop the high-energy density semi-solid
state, quasi-solid state and solid state batteries, and sodium-ion batteries and
technologies, and establish a comprehensive analysis and verification
platform. Compared to liquid batteries, solid state batteries have many
competitive advantages such as higher energy density, enhanced reliability and
high charging efficiency, which is generally considered as the development
trend of the next generation battery in the lithium-ion battery industry,
according to the F&S Report. See “Business – Development Strategies –
Devote to R&D.” To maintain our technological advantages, we devoted our
efforts to develop technologies to decrease the proportion of liquid materials in
our batteries by developing the semi-solid batteries and quasi-solid batteries,
and aim to develop the solid batteries in the future. We also plan to establish
a comprehensive analysis and verification platform for our battery products in
Wenzhou, which will have functions such as researching and verifying new
battery cells, modules and packs, and also testing of environmental
applicability and durability of battery cells, modules and packs. We plan to
commence the construction of such platform in January 2024, and put it into
operation from June 2024.
(iii) approximately 2.5%, or HK$53.0 million (equivalent to approximately
RMB48.2 million), will be used to develop the EV and ESS battery systems
that focus on high energy density, high safety, ultra-long cycle life and
multi-application scenarios, such as passenger vehicles, commercial vehicles,
specialty vehicles and household and commercial ESSs. Battery systems
integrate systems such as BMS, EMS and PCS, which are expected to be of
high safety and able to bring advantages to EV battery systems advantages
such as long driving range and high system integration efficiency, and
advantages to ESS battery systems such as long cycle life and intelligent
remote monitoring management. We believe our battery systems with above
features could help us maintain our technological advantages; and
(iv) approximately 1.5%, or HK$31.8 million (equivalent to approximately
RMB28.9 million), will be used to develop the environment-friendly EV
batteries and renewable materials technologies with lower costs. We plan to
produce environment-friendly EV batteries through the use of renewable
materials, improving the design of electrodes and optimizing the
manufacturing processes. Such environment-friendly EV batteries are expected
to be able to satisfy the national safety and performance requirements of EV
batteries, and at the same time save costs and reduce carbon emission. We plan
to devote our time and efforts to make breakthrough in renewable materials
technologies in fields such as recycling of cathode materials and refined use of
recycled materials in multi-application scenarios. Currently, the environment-
friendly EV batteries and renewable materials are emerging technologies and
potential market for competition, according to the F&S Report. Therefore, if
we could seize the opportunities and achieve breakthrough in this area before
our competitors, we believe this could help maintain our technological
advantages.
FUTURE PLANS AND USE OF PROCEEDS
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We believe our R&D plans above could be well supported by our sufficient R&D
expertise and experience by taking into consideration of our strong R&D capabilities and the
fruitful R&D activities in the past few years since our establishment in 2017. We have R&D
centers in Shanghai and Wenzhou and another one in Jiashan which is under construction, with
2,120 R&D personnel involved in R&D functions as of June 30, 2023. Led by Dr. Cao Hui, the
chairman of the board and president of the Company, who is an expert with more than 20 years
of experience in lithium-ion industry, our R&D team have made breakthrough in a series of
technologies in the industry. Since established in 2017, we have successfully developed and
commercialized many cutting-edge technologies, such as WenDing technology, Easy-for-Tera
cells, versatile power station and semi-solid prismatic batteries. See “Business – Overview –
Our R&D Capabilities,” and “Directors, Supervisors and Senior Management – Directors –
Executive Directors.”
3. approximately 10.0%, or HK$211.9 million (equivalent to approximately RMB192.8
million), will be used for working capital and other general corporate purposes.
If the Offer Price is set at HK$20.60 per Share, being the high end of the indicative Offer
Price range, the net proceeds from the Global Offering will increase to approximately
HK$2,254.6 million. If the Offer Price is set at HK$18.20 per Share, being the low end of the
indicative Offer Price range, the net proceeds from the Global Offering will decrease to
approximately HK$1,983.0 million. The above allocation of the net proceeds from the Global
Offering will be adjusted on a pro rata basis in the event that the Offer Price is fixed at a higher
or lower level compared to the mid-point of the indicative Offer Price range stated in this
prospectus.
To the extent that our net proceeds are not sufficient to fund our development plan, we
intend to fund the shortfall through a variety of means, including proceeds from Pre-IPO
Investments, banking facilities and cash on hand.
If the net proceeds of the Global Offering are not immediately applied to the above
purposes, we will only deposit those net proceeds into short-term interest-bearing accounts at
licensed commercial banks and/or other authorized financial institutions (as defined under the
SFO, the Law of the People’s Republic of China on Commercial Banks ( ʕശɛ͏΍ձ਷ਠ
) and other relevant laws in the PRC). If we urgently need the funds for the above
purposes, but cannot immediately obtain the net proceeds from the Global Offering, we will use
self-raised funds to meet the relevant funding requirements and replace these self-raised funds
with the net proceeds from the Global Offering when the proceeds become available to us.
We will issue an appropriate announcement if there is any material change to the above
proposed use of proceeds.
FUTURE PLANS AND USE OF PROCEEDS
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In preparation of the Global Offering, the Company has sought the following waivers
from strict compliance with the relevant provisions of the Listing Rules:
MANAGEMENT PRESENCE IN HONG KONG
Rule 8.12 of the Listing Rules provides that a new applicant for listing on the Hong Kong
Stock Exchange must have a sufficient management presence in Hong Kong and, under normal
circumstances, at least two of the new applicant’s executive directors must be ordinarily
resident in Hong Kong. Rule 19A.15 of the Listing Rules further provides that the requirement
in Rule 8.12 may be waived by having regard to, among other considerations, the applicant’s
arrangements for maintaining regular communication with the Stock Exchange.
The Company’s business operations are mostly located in the PRC and most of the
Company’s assets are located in the PRC. The Company’s executive Directors are based in the
PRC as the Board believes it would be more effective and efficient for its executive Directors
to be based in a location where the Company’s operations are located. Therefore, no executive
Directors will, in the foreseeable future be ordinarily resident in Hong Kong for the purpose
of satisfying the requirements under Rule 8.12 and Rule 19A.15 of the Listing Rules.
Accordingly, pursuant to Rule 19A.15 of the Listing Rules, the Company has applied to
the Stock Exchange for, and the Stock Exchange has granted the Company, a waiver from strict
compliance with the requirements under Rule 8.12 and Rule 19A.15 of the Listing Rules,
provided that the Company implements the following arrangements, which are in line with
Guidance Letter HKEX-GL9-09 of the Stock Exchange:
(i) the Company has appointed Dr. Wu Yanjun (ࠏ“() Dr. Wu ”), an executive
Director and Ms. Zhang Xiao ( ੵᖋ)( “ Ms. Zhang ”), one of the joint company
secretaries of the Company, as the authorized representatives of the Company (the
“Authorized Representatives ”) for the purpose of Rule 3.05 of the Listing Rules.
The Authorized Representatives will serve as the Company’s principal channel of
communication with the Stock Exchange. They can be readily contactable by phone,
fax and email to deal promptly with enquiries from the Stock Exchange and will also
be available to meet with the Stock Exchange to discuss any matters on short notice.
The contact details of our authorized representatives have been provided to the
Stock Exchange.
(ii) all the Directors who are not ordinarily resident in Hong Kong possess or can apply
for valid travel documents to visit Hong Kong and can meet with the Stock
Exchange within a reasonable period. In addition, each Director has provided (if
available) his/her contact details, including mobile phone numbers, office phone
numbers, email addresses and fax numbers, to the Authorized Representatives and
to the Stock Exchange. The Directors have also provided the contact information of
their emergency contacts to the Authorized Representatives, so that each of the
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Authorized Representatives would be able to contact all the Directors (including the
independent non-executive Directors) promptly at all times if and when the Stock
Exchange wishes to contact the Directors.
(iii) the Company has appointed Red Solar Capital Limited as its compliance advisor for
the period commencing on the Listing Date and ending on the date on which the
Company complies with Rule 13.46 of the Listing Rules in respect of the Company’s
financial results for the first full financial year commencing after the Listing Date,
or until the agreement is terminated, whichever is earlier. The Company’s
compliance advisor will act as the Company’s additional and alternative channel of
communication with the Stock Exchange, and its representatives will be readily
available to answer enquiries from the Stock Exchange.
JOINT COMPANY SECRETARIES
Pursuant to Rules 3.28 and 8.17 of the Listing Rules, the Company must appoint a
company secretary who possesses the necessary academic or professional qualifications or
relevant experience and is therefore capable to discharge the functions of the company
secretary.
Note 1 to Rule 3.28 of the Listing Rules provides that the Hong Kong Stock Exchange
considers the following academic or professional qualifications to be acceptable:
(i) a member of The Hong Kong Chartered Governance Institute;
(ii) a solicitor or barrister (as defined in the Legal Practitioners Ordinance); and
(iii) a certified public accountant (as defined in the Professional Accountants
Ordinance).
In addition, Note 2 to Rule 3.28 of the Listing Rules provides that in assessing “relevant
experience,” the Hong Kong Stock Exchange will consider the individual’s:
(i) length of employment with the issuer and other issuers and the roles he played;
(ii) familiarity with the Listing Rules and other relevant law and regulations including
the Securities and Futures Ordinance, Companies Ordinance, Companies (Winding
Up and Miscellaneous Provisions) Ordinance, and the Takeovers Code;
(iii) relevant training taken and/or to be taken in addition to the minimum requirement
under Rule 3.29 of the Listing Rules; and
(iv) professional qualifications in other jurisdictions.
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The Company has appointed Dr. Wu and Ms. Zhang, as the joint company secretaries of
the Company to jointly discharge the duties and responsibilities of company secretary of the
Company with reference to their work experience and qualifications. Dr. Wu is currently an
executive Director and the Board secretary. He joined the Company in February 2022. For
further biographical details of Dr. Wu, see “Directors, Supervisors and Senior Management –
Executive Directors.” Although Dr. Wu does not possess the qualifications set out in Rule 3.28
of the Listing Rules, the Company has appointed him as one of the joint company secretaries
of the Company due to his experience in corporate governance matters, investment and
financing related matters, information disclosure, investor relationship and corporate
secretarial affairs. Ms. Zhang has been appointed as the other joint company secretary of the
Company with effect from the Listing Date to assist Dr. Wu in discharging the duties of a
company secretary of the Company. Ms. Zhang is an associate member of The Hong Kong
Chartered Governance Institute and The Chartered Governance Institute in the United
Kingdom and is therefore qualified under Rule 3.28 of the Listing Rules to act as a joint
company secretary of the Company. For further biographical details of Ms. Zhang, see
“Directors, Supervisors and Senior Management – Joint Company Secretaries.”
The following arrangements have been, or will be, put in place to assist Dr. Wu in
acquiring the qualifications and experience required under Rule 3.28 of the Listing Rules:
(i) In preparation of the application of the Listing, Dr. Wu has attended training on the
respective obligations of the Directors, supervisors, senior managements and the
Company under the relevant Hong Kong laws and the Listing Rules organized by the
Hong Kong legal advisers to the Company.
(ii) Ms. Zhang will work closely with Dr. Wu to jointly discharge the duties and
responsibilities as the joint company secretaries of the Company and to assist Dr.
Wu to acquire the relevant experience as required under the Listing Rules for an
initial period of three years from the date of the Listing, a period which should be
sufficient for Dr. Wu to acquire the relevant experience as required under the Listing
Rules.
(iii) The Company will ensure that Dr. Wu continues to have access to the relevant
training and support in relation to the Listing Rules and the duties required for a
company secretary of an issuer listed on the Hong Kong Stock Exchange.
Furthermore, both Dr. Wu and Ms. Zhang will seek advice from the Company’s
Hong Kong legal and other professional advisers as and when required. Dr. Wu also
undertakes to take no less than 15 hours of relevant professional training in each
financial year of the Company.
(iv) Before the end of the three-year period, the qualifications and experience of Dr. Wu
and the need for on-going assistance of Ms. Zhang will be further evaluated by the
Company. The Company will then endeavor to demonstrate to the Hong Kong Stock
Exchange’s satisfaction that Dr. Wu, having had the benefit of the assistance of Ms.
Zhang for the immediately preceding three years, has acquired the relevant experience
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(within the meaning of Note 2 to Rule 3.28 of the Listing Rules) such that a further
waiver from Rules 3.28 and 8.17 of the Listing Rules will not be necessary. The
Company understands that the waiver will be revoked by the Hong Kong Stock
Exchange if Ms. Zhang ceases to provide assistance to Dr. Wu during the three-year
period or where there are material breaches of the Listing Rules by the Company.
The Company have applied to the Stock Exchange for, and the Stock Exchange has
granted the Company, a waiver from strict compliance with the requirements of Rules 3.28 and
8.17 of the Listing Rules. Prior to the expiry of the three-year period, the Company will liaise
with the Stock Exchange to enable it to assess whether Dr. Wu has acquired the relevant
experience within the meaning of Note 2 to Rule 3.28 of the Listing Rules.
CONTINUING CONNECTED TRANSACTIONS
Pursuant to Chapter 14A of the Listing Rules, a new applicant must, after listing, comply
with the announcement, circular and shareholders’ approval requirements (as applicable) for
continuing connected transactions entered into by the new applicant or its subsidiaries.
The Company has conducted, and is expected to continue after the Listing, certain
connected transactions which will constitute continuing connected transactions of the
Company under the Listing Rules upon the Listing.
Accordingly, pursuant to Rule 14A.105 of the Listing Rules, the Company has applied to
the Stock Exchange for, and the Stock Exchange has granted, a waiver from strict compliance
with certain requirements under Chapter 14A of the Listing Rules. See “Connected
Transactions.”
PUBLIC FLOAT
Pursuant to Rule 8.08 of the Listing Rules, there must be an open market in the securities
for which listing is sought and a sufficient public float of an issuer’s listed securities shall be
maintained. This normally means that at least 25% of the issuer’s total issued share capital
must at all times be held by public. However, Rule 8.08(1)(d) of the Listing Rules provides that
the Hong Kong Stock Exchange may, at its discretion, accept a lower percentage of between
15% and 25%, if a new applicant meets the following requirements under Rule 8.08(1)(d) of
the Listing Rules:
(a) the issuer shall have an expected market capitalization at the time of listing of over
HK$10 billion;
(b) the number of securities concerned and the extent of their distribution would enable
the market to operate properly with a lower percentage;
(c) the issuer will make appropriate disclosure of the lower prescribed percentage of
public float in the initial listing document;
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(d) the issuer will confirm the sufficiency of the public float in annual reports after
listing; and
(e) a sufficient portion (to be agreed in advance with the Hong Kong Stock Exchange)
of any securities intended to be marketed contemporaneously within and outside
Hong Kong must normally be offered in Hong Kong.
It is currently expected that our Company will have a market capitalization of over
HK$10.0 billion at the time of the Listing (after completion of the Global Offering).
We have applied to the Hong Kong Stock Exchange to exercise its discretion under Rule
8.08(1)(d) of the Listing Rules to grant, and the Hong Kong Stock Exchange has granted, a
waiver from strict compliance with Rule 8.08(1) of the Listing Rules so that the minimum
percentage of our Shares from time to time held by the public will be 13.5% of the enlarged
issued share capital of the Company upon the completion of the Global Offering, subject to the
conditions that we:
(a) will make appropriate disclosure of the lower percentage of the public float in this
prospectus;
(b) will ensure an open market in the H Shares, and the number of H Shares to be held
by the public and their distribution would enable the market to operate properly with
a lower percentage;
(c) will confirm the sufficiency of its public float in successive annual reports after the
completion of the Listing; and
(d) will implement appropriate measures and mechanisms to ensure continual
maintenance of the minimum 13.5% public float of H Shares.
We undertake that we will increase the public float percentage to not less than 15.0%
through further H-share capital issuance plans, failing which the Company will procure one or
more its current Shareholders to apply for H share full circulation to convert certain Domestic
Unlisted Shares they own into H shares, completion of which is subject to CSRC’s approval,
within a period of three years from the Listing Date and make appropriate announcement
and/or disclosure after the Listing pursuant to the Listing Rules in respect of such conversion
of Domestic Unlisted Shares into H Shares.
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Further, in order to ensure continual compliance with the Company’s obligations under
the Listing Rules in relation to the minimum public float, the Company will implement
appropriate measures and mechanisms, including monitoring its H Share register, relevant
disclosures made under Part XV of the Securities and Futures Ordinance and other relevant
sources of information available to the Company. In the event that the public float percentage
falls below the minimum percentage prescribed by the Hong Kong Stock Exchange, the
Directors and the Controlling Shareholders will take appropriate steps, which may include:
(a) a further issue of equity; and/or
(b) the Controlling Shareholders placing a portion of their shares to independent third
parties,
to ensure that the minimum percentage of public float prescribed by the Hong Kong Stock
Exchange is complied with.
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OVERALL COORDINATORS AND JOINT GLOBAL COORDINATORS
Morgan Stanley Asia Limited
CLSA Limited
HONG KONG UNDERWRITERS
Morgan Stanley Asia Limited
CLSA Limited
The Hongkong and Shanghai Banking Corporation Limited
China Galaxy International Securities (Hong Kong) Co., Limited
DBS Asia Capital Limited
China International Capital Corporation Hong Kong Securities Limited
Guotai Junan Securities (Hong Kong) Limited
CMB International Capital Limited
BOCI Asia Limited
ABCI Securities Company Limited
Tiger Brokers (HK) Global Limited
Futu Securities International (Hong Kong) Limited
Valuable Capital Limited
UNDERWRITING ARRANGEMENTS AND EXPENSES
Hong Kong Public Offering
Hong Kong Underwriting Agreement
Pursuant to the Hong Kong Underwriting Agreement, the Company is offering initially
11,607,200 Hong Kong Offer Shares for subscription by the public in Hong Kong on and
subject to the terms and conditions of this prospectus.
Subject to (a) the Listing Committee granting listing of, and permission to deal in, the H
Shares to be issued and sold pursuant to the Global Offering as mentioned herein and (b) to
certain other conditions set out in the Hong Kong Underwriting Agreement, the Hong Kong
Underwriters have agreed severally and not jointly to subscribe or procure subscribers for their
respective applicable proportions of the Hong Kong Offer Shares now being offered which are
not taken up under the Hong Kong Public Offering on and subject to the terms and conditions
of this prospectus and the Hong Kong Underwriting Agreement.
The Hong Kong Underwriting Agreement is conditional upon and subject to, among other
things, the International Underwriting Agreement having been signed and becoming
unconditional and not having been terminated in accordance with its terms.
UNDERWRITING
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Grounds for Termination
The obligations of the Hong Kong Underwriters to subscribe or procure subscribers for
the Hong Kong Offer Shares under the Hong Kong Underwriting Agreement are subject to
termination. If at any time prior to 8:00 a.m. on the day that trading in the H Shares commences
on the Stock Exchange:
(a) there develops, occurs, exists or comes into force:
(i) any new law or regulation or any change or development involving a
prospective change in existing law or regulation, or any change or development
involving a prospective change in the interpretation or application thereof by
any court or other competent authority in or affecting Hong Kong, the PRC,
Singapore, the United States, the United Kingdom, the European Union (or any
member thereof), Japan or any other jurisdiction relevant to the Group (each a
“Relevant Jurisdiction ”); or
(ii) any change or any development involving a prospective change, or any event
or series of events likely to result in or representing a change or development,
or any prospective change, in local, national, regional or international
financial, political, military, industrial, economic, currency market, fiscal or
regulatory or market conditions or any monetary or trading settlement system
(including, without limitation, conditions in stock and bond markets, money
and foreign exchange markets and inter-bank markets, and credit markets) in
or affecting any Relevant Jurisdiction; or
(iii) any event or series of events or circumstances in the nature of force majeure
(including, without limitation, acts of government, strikes, lock-outs, fire,
explosion, earthquake, flooding, tsunami, volcanic eruption, civil commotion,
riots, rebellion, public disorder, acts of war (whether declared or undeclared),
acts of terrorism (whether or not responsibility has been claimed), acts of God,
outbreak, escalation, mutation or aggravation of diseases, epidemics or
pandemics including, without limitation, SARS, swine or avian flu, H5N1,
H1N1, H1N7, H7N9, Ebola virus, Middle East respiratory syndrome (MERS),
COVID-19 and such related/mutated forms, economic sanction, any local,
national, regional or international outbreak or escalation of hostilities (whether
or not war is or has been declared) or other state of emergency or calamity or
crisis in whatever form) political change, paralysis of government operations
in or affecting any Relevant Jurisdiction; or
UNDERWRITING
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(iv) the imposition of any moratorium, suspension or restriction (including, without
limitation, any imposition of or requirement for any minimum or maximum
price limit or price range) in or on trading in securities of generally on the
Stock Exchange, the New York Stock Exchange, the NASDAQ Global Market,
the London Stock Exchange, the Tokyo Stock Exchange, the Singapore Stock
Exchange, the Beijing Stock Exchange, the Shanghai Stock Exchange or the
Shenzhen Stock Exchange; or
(v) the imposition of any general moratorium on commercial banking activities in
Hong Kong (imposed by the Financial Secretary or the Hong Kong Monetary
Authority or other competent Governmental Authority), New York (imposed at
Federal or New York State level or other competent Governmental Authority),
London, Singapore, the PRC, the European Union (or any member thereof),
Japan or any Relevant Jurisdiction or any disruption in commercial banking or
foreign exchange trading or securities settlement or clearance services,
procedures or matters in any Relevant Jurisdiction; or
(vi) any (A) change or prospective change in exchange controls, currency exchange
rates or foreign investment regulations (including, without limitation, a change
of the Hong Kong dollars or RMB against any foreign currencies, a change in
the system under which the value of the Hong Kong dollars is linked to that of
the United States dollars or RMB is linked to any foreign currency or
currencies), or (B) any change or prospective change in Taxation (as defined
in the Hong Kong Underwriting Agreement) in any Relevant Jurisdiction
adversely affecting an investment in the H Shares; or
(vii) the issue or requirement to issue by the Company of a supplemental or
amendment to this prospectus, Preliminary Offering Circular (as defined in the
Hong Kong Underwriting Agreement) or Offering Circular (as defined in the
Hong Kong Underwriting Agreement) or other documents in connection with
the offer and sale of the H Shares pursuant to the Companies Ordinance, the
Companies (Winding Up and Miscellaneous Provisions) Ordinance, the Listing
Rules, or the relevant CSRC rules or upon any requirement or request of the
Stock Exchange, the SFC or the CSRC; or
(viii) any change or development involving a prospective change which has the
effect of materialisation of any of the risks set out in the section headed “Risk
Factors” in this prospectus; or
(ix) any litigation, dispute, legal action or claim of any third party or regulatory,
administrative investigation or action being threatened or instigated against
any member of the Group or any of the chairman, the president, the directors,
supervisors and controlling shareholders of the Company, or any of the
aforesaid being charged with an indictable offence or prohibited by operation
of law or otherwise disqualified from taking part in the management of a
company; or
UNDERWRITING
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(x) save as disclosed in this prospectus, any contravention by any of the members
of the Group, the Directors, and the Supervisors of the Companies Ordinance,
the PRC Company Law, the Listing Rules or any other applicable laws; or
(xi) the chairman, any executive Directors, the president or the chief financial
officer of the Company vacating his or her office; or
(xii) a Governmental Authority or a regulatory body or organisation in any Relevant
Jurisdiction commencing any investigation or other action or proceedings, or
announcing an intention to investigate or take other action or proceedings,
against any member of the Group or any of the chairman, the president, the
Directors or the Supervisors of the Company; or
(xiii) any adverse change or prospective adverse change in the assets, business,
prospects, management, shareholder’s equity, earnings, profits, losses,
properties, results of operations, in the position or condition (financial or
otherwise) or prospects of any member of the Group (including any litigation
or claim of any third party being threatened or instigated against any member
of the Group); or
(xiv) any order or petition for, or any valid demand by creditors for repayment of
indebtedness or a petition being presented for the winding-up or liquidation of
any member of the Group, or any member of the Group making any
composition or arrangement with its creditors or entering into a scheme of
arrangement or any resolution being passed for the winding-up of any member
of the Group or a provisional liquidator, receiver or manager being appointed
over all or part of the assets or undertaking of any member of the Group or
anything analogous thereto occurs in respect of any member of the Group; or
(xv) a prohibition by any Governmental Authority (as defined in the Hong Kong
Underwriting Agreement) on the Company for whatever reason from allotting,
issuing or selling the Offer Shares pursuant to the terms of the Global Offering;
or
(xvi) the imposition of economic sanctions, in whatever form, directly or indirectly,
by, or for, any Relevant Jurisdiction on the Company or any member of the
Group,
which, in any such case individually or in the aggregate, in the sole and absolute
opinion of the Joint Sponsors and the Overall Coordinators (for themselves and on
behalf of the Hong Kong Underwriters): (A) is or will be or may be materially
adverse to, or materially and prejudicially affects, the assets, liabilities, business,
management, shareholder’s equity, profit, losses, results of operations, position or
condition (financial or otherwise), or prospects of the Company or the Group as a
whole; or (B) has or will have or may have a material adverse effect on the success
UNDERWRITING
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of the Global Offering or the level of Offer Shares being applied for or accepted or
subscribed for or purchased or the distribution of Offer Shares and/or has made or
is likely to make or may make it impracticable or inadvisable or incapable for any
material part of the Hong Kong Underwriting Agreement, the Hong Kong Public
Offering or the Global Offering to be performed or implemented as envisaged; or
(C) makes or will make it or is likely to make it impracticable or inadvisable or
incapable to proceed with the Hong Kong Public Offering and/or the Global
Offering or the delivery of the Offer Shares on the terms and in the manner
contemplated by this prospectus, the Formal Notice (as defined in the Hong Kong
Underwriting Agreement), the Preliminary Offering Circular (as defined in the Hong
Kong Underwriting Agreement) or the Offering Circular (as defined in the Hong
Kong Underwriting Agreement); or (D) would have or may have the effect of
making a part of the Hong Kong Underwriting Agreement (including underwriting)
incapable of performance in accordance with its terms or which prevents the
processing of applications and/or payments pursuant to the Global Offering or
pursuant to the underwriting thereof; or
(b) there has come to the notice of the Joint Sponsors and the Overall Coordinators (for
themselves and on behalf of the Hong Kong Underwriters):
(i) that any statement contained in, among other things, this prospectus and/or any
notices, announcements, advertisements, communications issued or used by or
on behalf of the Company in connection with the Global Offering (including
any supplement or amendment thereto) was or has become untrue, incorrect in
any material respect or misleading or any forecasts, estimate, expressions of
opinion, intention or expectation expressed in, among other things, this
prospectus and/or any notices, announcements, advertisements,
communications so issued or used by or on behalf of the Company in
connection with the Global Offering are not fair and honest and made on
reasonable grounds or, where appropriate, based on reasonable assumptions,
when taken as a whole; or
(ii) material non-compliance of this prospectus, the relevant CSRC filings or any
other documents used in connection with the contemplated subscription and
sale of the Offer Shares or any aspect of the Global Offering with any
applicable laws (including, without limitation, the Companies Ordinance, the
Companies (Winding Up and Miscellaneous Provisions) Ordinance, the
Securities and Futures Ordinance, the Listing Rules and the relevant CSRC
rules); or
(iii) any matter has arisen or has been discovered which would, had it arisen or been
discovered immediately before the date of this prospectus, not having been
disclosed in, among other things, this prospectus, constitutes a material
omission therefrom; or
UNDERWRITING
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(iv) either (i) there has been a material breach of any of the representations,
warranties, undertakings or provisions of either the Hong Kong Underwriting
Agreement or the International Underwriting Agreement by any of the
Warrantors or (ii) any of the representations, warranties and undertakings
given by the Company and Yongqing Technology in the Hong Kong
Underwriting Agreement or the International Underwriting Agreement, as
applicable, is (or would when repeated be) untrue, or incorrect in any material
respect, or misleading; or
(v) any material breach of any of the obligations of the Company and Yongqing
Technology under the Hong Kong Underwriting Agreement or the International
Underwriting Agreement; or
(vi) a significant portion of the orders in the bookbuilding process at the time of the
International Underwriting Agreement is entered into, has been withdrawn,
terminated or cancelled; or
(vii) any expert, whose consent is required for the issue of this prospectus with the
inclusion of its reports, letters or opinions and references to its name included
in the form and context in which it respectively appears, has withdrawn its
consent (other than the Joint Sponsors) prior to the issue of this prospectus; or
(viii) the grant or agreement to grant by the Listing Committee of the Stock
Exchange of the listing of the Main Board of, and permission to deal in, the H
Shares on the Main Board is refused or not granted, other than subject to
customary conditions, on or before the Listing Date, or if granted, such grant
or agreement to grant is subsequently withdrawn, cancelled, qualified (other
than by customary conditions), revoked or withheld; or
(ix) the Company has withdrawn, among other things, this prospectus (and/or any
other documents issued or used in connection with the Global Offering) or the
Global Offering,
then the Joint Sponsors and the Overall Coordinators may (for themselves and on behalf of the
Hong Kong Underwriters), in their sole and absolute discretion and upon giving notice in
writing to the Company, terminate the Hong Kong Underwriting Agreement with immediate
effect.
UNDERWRITING
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Undertakings to the Stock Exchange pursuant to the Listing Rules
Undertakings by the Company
Pursuant to Rule 10.08 of the Listing Rules, the Company has undertaken to the Stock
Exchange that, no further shares or securities convertible into equity securities of the Company
(whether or not of a class already listed) may be issued or form the subject of any agreement
to such an issue within six months from the Listing Date (whether or not such issue of Shares
or securities will be completed within six months from the Listing Date), except under any of
the circumstances provided under Rule 10.08 of the Listing Rules.
Undertakings by the Controlling Shareholders
Pursuant to Rule 10.07 of the Listing Rules, each of our Controlling Shareholders has
undertaken to us and to the Stock Exchange that except pursuant to the Global Offering, it/he
will not, and will procure that the relevant registered holder(s) will not, without the prior
written consent of the Stock Exchange or unless otherwise in compliance with the applicable
requirements of the Listing Rules:
(a) in the period commencing on the date by reference to which disclosure of its
shareholdings in the Company is made in this prospectus and ending on the date
which is six months from the Listing Date, either directly or indirectly, dispose of,
nor enter into any agreement to dispose of or otherwise create any options, rights,
interests or encumbrances in respect of, any of our securities that it/he is shown to
beneficially own in this prospectus (the “ Relevant Shares ”); or
(b) in the period of a further six months commencing on the date on which the period
referred to in paragraph (a) above, either directly or indirectly, expires, dispose of,
nor enter into any agreement to dispose of or otherwise create any options, rights,
interests or encumbrances in respect of, any of the Relevant Shares if, immediately
following such disposal or upon the exercise or enforcement of such options, rights,
interests or encumbrances, it/he will cease to be a controlling shareholder (as
defined in the Listing Rules) of the Company or a member of a group of the
Controlling Shareholders of the Company or would together with the other
Controlling Shareholders cease to be “Controlling Shareholders” (as defined in the
Listing Rules) of the Company.
Each of our Controlling Shareholders has further undertaken to us and the Stock
Exchange that, within the period commencing on the date by reference to which disclosure of
its/his shareholdings in the Company is made in this prospectus and ending on the date which
is 12 months from the Listing Date, it/he will and will procure that the relevant registered
holder(s) will:
(a) when it/he pledges or charges any securities in the Company beneficially owned by
it/him in favor of an authorized institution pursuant to Note (2) to Rule 10.07(2) of
the Listing Rules, immediately inform us in writing of such pledge or charge
together with the number of our securities so pledged or charged; and
UNDERWRITING
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(b) when it/he receives indications, either verbal or written, from the pledgee or chargee
that any of our pledged or charged securities beneficially owned by it/him will be
disposed of, immediately inform us in writing of such indications.
The Company will inform the Stock Exchange as soon as we have been informed of the
matters referred to in paragraphs (i) and (ii) above (if any) by the Controlling Shareholders and
subject to the then requirements of the Listing Rules disclose such matters by way of an
announcement which is published in accordance with Rule 2.07C of the Listing Rules as soon
as possible.
Undertakings pursuant to the Hong Kong Underwriting Agreement
Pursuant to the Hong Kong Underwriting Agreement, the Company has undertaken to
each of the Joint Sponsors, the Sponsor-OCs, the Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Hong Kong Underwriters
and the Capital Market Intermediaries that except for the issue, offer or sale of the Offer Shares
by the Company pursuant to the Global Offering, at any time from the date of this Agreement
up to and including the date falling six months after the Listing Date (the “ First Six Month
Period ”), it will not without the prior written consent of the Joint Sponsors and the Overall
Coordinators (for themselves and on behalf of the Hong Kong Underwriters) and unless in
compliance with the requirements of the Listing Rules:
(a) allot, issue, sell, accept subscription for, offer to allot, issue or sell, contract or agree
to allot, issue or sell, mortgage, charge, pledge, hypothecate, lend, grant or sell any
option, warrant, contract or right to subscribe for or purchase, grant or purchase any
option, warrant, contract or right to allot, issue or sell, or otherwise transfer or
dispose of or create an Encumbrance (as defined in the Hong Kong Underwriting
Agreement) over, or agree to transfer or dispose of or create an Encumbrance (as
defined in the Hong Kong Underwriting Agreement) over, either directly or
indirectly, conditionally or unconditionally, any legal or beneficial interest in the
share capital or any other equity securities of the Company or any interest in any of
the foregoing (including, without limitation, any securities convertible into or
exchangeable or exercisable for or that represents the right to receive, or any
warrants or other rights to purchase any Shares or other equity securities of the
Company), or deposit any Shares or other equity securities of the Company with a
depositary in connection with the issue of depositary receipts; or
(b) enter into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership (legal or beneficial) of the H
Shares or any other equity securities of the Company or any interest in any of the
foregoing (including, without limitation, any securities convertible into or
exchangeable or exercisable for or that represent the right to receive, or any warrants
or other rights to purchase, any Shares or any other equity securities of the
Company); or
UNDERWRITING
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(c) enter into any transaction with the same economic effect as any transaction
described in paragraph (a) or (b) above; or
(d) offer to or agree to do any of the foregoing or announce any intention to do so,
in each case, whether any of the foregoing transactions is to be settled by delivery of share
capital or such other equity securities, in cash or otherwise (whether or not the issue of
such share capital or other equity securities will be completed within the First Six Month
Period). The Company further agrees that, in the event the Company is allowed to enter
into any of the transactions described in paragraph (a), (b) or (c) above or offers to or
agrees to or announces any intention to effect any such transaction during the period of
six months commencing on the date on which the First Six Month Period expires (the
“Second Six Month Period ”), it will take all reasonable steps to ensure that such an issue
or disposal will not, and no other act of the Company will, create a disorderly or false
market for any Shares or other securities of the Company.
Yongqing Technology has undertaken to each of the Joint Sponsors, the Sponsor-OCs, the
Overall Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead
Managers, the Hong Kong Underwriters and the Capital Market Intermediaries to use best
endeavours to procure the Company to comply with the aforesaid undertakings.
Pursuant to the Hong Kong Underwriting Agreement, Yongqing Technology has
undertaken to each of the Joint Sponsors, the Sponsor-OCs, the Overall Coordinators, the Joint
Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Hong Kong
Underwriters and the Capital Market Intermediaries, without the prior written consent of the
Joint Sponsors and the Overall Coordinators (for themselves and on behalf of the Hong Kong
Underwriters) and unless in compliance with the requirements of the Listing Rules and/or
pursuant to the Global Offering:
(a) it will not, and will procure that the relevant registered holder(s) will not, at any
time during the First Six Month Period, (i) offer, accept subscription for, pledge,
charge, allot, issue, sell, lend, mortgage, contract to allot, issue or sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant or agree
to grant any option, right or warrant to purchase or subscribe for, lend or otherwise
transfer, dispose of or create an Encumbrance (as defined in the Hong Kong
Underwriting Agreement) over, either directly or indirectly, conditionally or
unconditionally, any of its share capital or other securities of the Company or any
interest therein (including, without limitation, any securities convertible into or
exercisable or exchangeable for or that represent the right to receive any shares or
any other equity securities of the Company); or (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership (legal or beneficial) of such share capital or securities
or any interest therein, as applicable, or any interest in any of the foregoing
(including, without limitation, any securities convertible into or exchangeable or
exercisable for or that represent the right to receive, or any warrants or other rights
UNDERWRITING
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to purchase, any shares or any other equity securities of the Company); or (iii) enter
into any transaction with the same economic effect as any transaction specified in
paragraph (i) or (ii) above; or (iv) offer to or agree to do any of the foregoing or
announce any intention to effect any transactions specified in (i), (ii) or (iii) above,
in each case, whether any of the foregoing transactions is to be settled by delivery
of share capital or such other securities, in cash or otherwise (whether or not the
foregoing transactions will be completed within the First Six-Month Period);
(b) it will not, and will procure that the relevant registered holder(s) will not, at any
time during the Second Six Month Period, enter into any of the transactions
specified in (i), (ii) or (iii) above or offer to or agree to or announce any intention
to effect any such transaction if, immediately following any sale, transfer or disposal
or upon the exercise or enforcement of any option, right, interest or encumbrance
pursuant to such transaction, he or it will cease to be a controlling shareholder (as
defined in the Listing Rules) of the Company; and
(c) until the expiry of the Second Six Month period, in the event that it enters into any
of the transactions specified in (i), (ii) or (iii) above or offer to or agrees to or
announce any intention to effect any such transaction, it will take all reasonable
steps to ensure that he, she or it will not create a disorderly or false market in the
securities of the Company.
provided that, subject to strict compliance with any requirements of applicable laws
(including, without limitation and for the avoidance of doubt, the requirements of the
Stock Exchange or of the SFC or of any other relevant Governmental Authority (as
defined in the Hong Kong Underwriting Agreement)), nothing above shall prevent
Yongqing Technology from using equity securities of the Company beneficially owned by
it as security in favor of an authorized institution (as defined in the Banking Ordinance
(Chapter 155 of the Laws of Hong Kong)) for a bona fide commercial loan.
International Offering
The International Offering
In connection with the International Offering, it is expected that the Company will enter
into the International Underwriting Agreement with the International Underwriters. Under the
International Underwriting Agreement, among others, the International Underwriters will,
subject to certain conditions set out therein, severally and not jointly, agree to procure
subscribers or purchasers for the International Offer Shares, failing which they agree to
subscribe for or purchase their respective proportions of the International Offer Shares which
are not taken up under the International Offering.
UNDERWRITING
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It is expected that the International Underwriting Agreement may be terminated on
similar grounds as the Hong Kong Underwriting Agreement. Potential investors should note
that if the International Underwriting Agreement is not entered into, or is terminated, the
Global Offering will not proceed.
Commission and Expenses
The Underwriters and the Capital Market Intermediaries will receive an underwriting
commission equal to 1.75% of the aggregate Offer Price of all the Offer Shares (the “ Fixed
Fees”). The Company may, at our sole and absolute discretion, pay to one or more
Underwriters or Capital Market Intermediaries an incentive fee of up to 0.75% of the aggregate
Offer Price of all the Offer Shares (the “ Discretionary Fees ”). The ratio of Fixed Fees and
Discretionary Fees payable to all Underwriters is therefore 70:30. For unsubscribed Hong
Kong Offer Shares reallocated to the International Offering, we will pay an underwriting
commission at the rate applicable to the International Offering and such commission will be
paid to the relevant International Underwriters and not the Hong Kong Underwriters.
The aggregate commissions and fees, together with the listing fees, SFC transaction levy,
the Stock Exchange trading fee and AFRC transaction levy, legal and other professional fees,
printing and other expenses payable by us relating to the Global Offering are estimated to
amount to approximately HK$133.0 million in total (based on the Offer Price of HK$19.40 per
Offer Share which is the mid-point of the Offer Price range).
An aggregate amount of US$600,000 is payable by the Company as sponsor fees to the
Joint Sponsors.
Indemnity
The Company and Yongqing Technology, jointly and severally, agreed to indemnify the
Joint Sponsors, the Sponsor-OCs, the Overall Coordinators, the Joint Global Coordinators, the
Joint Bookrunners, the Joint Lead Managers, the Hong Kong Underwriters and the Capital
Market Intermediaries for certain losses which they may suffer or incur, including losses
arising from their performance of their obligations under the Hong Kong Underwriting
Agreement and any breach by the Company of the Hong Kong Underwriting Agreement.
Activities by Syndicate Members
We describe below a variety of activities that underwriters of the Hong Kong Public
Offering and the International Offering, together referred to as “ Syndicate Members ” and
their affiliates, may each individually undertake, and which do not form part of the
underwriting or the stabilizing process.
The Syndicate Members and their affiliates are diversified financial institutions with
relationships in countries around the world. These entities engage in a wide range of
commercial and investment banking, brokerage, funds management, trading, hedging,
UNDERWRITING
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investing and other activities for their own account and for the account of others. In relation
to our H Shares, those activities could include acting as agent for buyers and sellers of our H
Shares, entering into transactions with those buyers and sellers in a principal capacity,
proprietary trading in our H Shares and entering into over the counter or listed derivative
transactions or listed and unlisted securities transactions (including issuing securities such as
derivative warrants listed on a stock exchange) which have our H Shares as their or part of their
underlying assets. Those activities may require hedging activity by those entities involving,
directly or indirectly, buying and selling our H Shares. All such activities could occur in Hong
Kong and elsewhere in the world and may result in the Syndicate Members and their affiliates
holding long and/or short positions in our H Shares, in baskets of securities or indices including
our H Shares, in units of funds that may purchase our H Shares, or in derivatives related to any
of the foregoing.
In relation to issues by Syndicate Members or their affiliates of any listed securities
having our H Shares as their or part of their underlying assets, whether on the Stock Exchange
or on any other stock exchange, the rules of the relevant exchange may require the issuer of
those securities (or one of its affiliates or agents) to act as a market maker or liquidity provider
in the security, and this will also result in hedging activity in our H Shares in most cases.
Such activities may affect the market price or value of our H Shares, the liquidity or
trading volume in our H Shares and the volatility of their share price, and the extent to which
this occurs from day to day cannot be estimated.
It should be noted that when engaging in any of these activities, the Syndicate Members
will be subject to certain restrictions, including the following:
(a) the Syndicate Members must not, in connection with the distribution of the Offer
Shares, effect any transactions (including issuing or entering into any option or other
derivative transactions relating to the Offer Shares), whether in the open market or
otherwise, with a view to stabilizing or maintaining the market price of any of the
Offer Shares at levels other than those which might otherwise prevail in the open
market; and
(b) the Syndicate Members must comply with all applicable laws and regulations,
including the market misconduct provisions of the SFO, including the provisions
prohibiting insider dealing, false trading, price rigging and stock market
manipulation.
No stabilizing manager will be appointed, and it is anticipated that no stabilization
activities will be carried out in relation to the Global Offering.
UNDERWRITING
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Hong Kong Underwriters’ Interests in the Company
Save for its obligations under the Hong Kong Underwriting Agreement and as disclosed
in this prospectus, as of the Latest Practicable Date, none of the Hong Kong Underwriters had
any shareholding interests in the Company or the right or option (whether legally enforceable
or not) to subscribe for or to nominate persons to subscribe for securities in the Company.
Following the completion of the Global Offering, the Hong Kong Underwriters and their
affiliated companies may hold a certain portion of our H Shares as a result of fulfilling their
obligations under the Underwriting Agreements.
Other Services to the Company
Certain of the Joint Sponsors, the Sponsor-OCs, the Overall Coordinators, the Joint
Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Hong Kong
Underwriters, the Capital Market Intermediaries or their respective affiliates have, from time
to time, provided and expect to provide in the future investment banking and other services to
the Company and our respective affiliates, for which such Joint Sponsors, Sponsor-OCs,
Overall Coordinators, Joint Global Coordinators, Joint Bookrunners, Joint Lead Managers,
Hong Kong Underwriters, Capital Market Intermediaries or their respective affiliates have
received or will receive customary fees and commissions.
Other Services Provided by the Joint Sponsors, the Sponsor-OCs, Overall Coordinators,
the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the
Underwriters and the Capital Market Intermediaries
The Joint Sponsors, the Sponsor-OCs, Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters and the
Capital Market Intermediaries may in their ordinary course of business provide financing to
investors subscribing for the Offer Shares offered by this prospectus. Such Joint Sponsors,
Sponsor-OCs, Overall Coordinators, Joint Global Coordinators, Joint Bookrunners, Joint Lead
Managers, Underwriters and Capital Market Intermediaries may enter into hedges and/or
dispose of such Offer Shares in relation to the financing which may have a negative impact on
the trading price of our H Shares.
Sponsor’s Independence
Each of the Joint Sponsors satisfies the independence criteria applicable to sponsors set
out in Rule 3A.07 of the Listing Rules.
UNDERWRITING
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THE GLOBAL OFFERING
This prospectus is published in connection with the Hong Kong Public Offering as part
of the Global Offering. The Global Offering comprises:
(i) the Hong Kong Public Offering of 11,607,200 H Shares in Hong Kong as described
below in the paragraph headed “– The Hong Kong Public Offering” below; and
(ii) the International Offering of an aggregate of initially 104,463,000 H Shares (a) in
the United States to QIBs in reliance on Rule 144A or another available exemption;
and (b) outside the United States (including to professional and institutional
investors within Hong Kong) in offshore transactions in accordance with Regulation
S as described in “The International Offering” below.
Investors may apply for Offer Shares under the Hong Kong Public Offering or apply for
or indicate an interest for Offer Shares under the International Offering, but may not do both.
The Offer Shares will represent approximately 5.10% of the enlarged issued share capital
of the Company immediately after completion of the Global Offering and the conversion of
Domestic Unlisted Shares into H Shares.
The number of Offer Shares to be offered under the Hong Kong Public Offering and the
International Offering may be subject to reallocation as described in the paragraph headed
“– The Hong Kong Public Offering – Reallocation and Clawback” below.
THE HONG KONG PUBLIC OFFERING
Number of Offer Shares initially offered
The Company is initially offering 11,607,200 H Shares for subscription by the public in
Hong Kong at the Offer Price, representing approximately 10% of the total number of Offer
Shares available under the Global Offering. Subject to the reallocation of Offer Shares between
the International Offering and the Hong Kong Public Offering, the Hong Kong Offer Shares
will represent approximately 0.51% of the enlarged share capital of the Company immediately
following the completion of the Global Offering and conversion of Domestic Unlisted Shares
into H Shares.
The Hong Kong Public Offering is open to members of the public in Hong Kong as well
as to institutional and professional investors. Professional investors generally include brokers,
dealers, companies (including fund managers) whose ordinary business involves dealing in
shares and other securities and corporate entities which regularly invest in shares and other
securities.
STRUCTURE OF THE GLOBAL OFFERING
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Completion of the Hong Kong Public Offering is subject to the conditions as set out in
the paragraph headed “– The International Offering – Conditions of the Hong Kong Public
Offering” below.
Allocation
Allocation of Offer Shares to investors under the Hong Kong Public Offering will be
based solely on the level of valid applications received under the Hong Kong Public Offering.
The basis of allocation may vary, depending on the number of Hong Kong Offer Shares validly
applied for by applicants. Such allocation could, where appropriate, consist of balloting, which
would mean that some applicants may receive a higher allocation than others who have applied
for the same number of Hong Kong Offer Shares, and those applicants who are not successful
in the ballot may not receive any Hong Kong Offer Shares.
The total number of Offer Shares initially available for subscription under the Hong Kong
Public Offering (after taking into account of any reallocation referred to below) is to be divided
equally into two pools for allocation purposes. The Offer Shares in pool A will be allocated on
an equitable basis to applicants who have applied for Offer Shares with an aggregate price of
HK$5 million (excluding the brokerage, SFC transaction levy, Stock Exchange trading fee and
AFRC transaction levy payable) or less. The Offer Shares in pool B will be allocated on an
equitable basis to applicants who have applied for Offer Shares with an aggregate price of more
than HK$5 million (excluding the brokerage, SFC transaction levy, Stock Exchange trading fee
and AFRC transaction levy payable) and up to the total value in pool B. Investors should be
aware that applications in pool A and applications in pool B may receive different allocation
ratios. If Offer Shares in one (but not both) of the pools are undersubscribed, the surplus Offer
Shares will be transferred to the other pool to satisfy demand in this other pool and be allocated
accordingly. For the purpose of this paragraph only, the “price” for Offer Shares means the
price payable on application therefor (without regard to the Offer Price as finally determined).
Applicants can only receive an allocation of Offer Shares from either pool A or pool B but not
from both pools. Multiple or suspected multiple applications and any application for more than
5,803,600 Offer Shares (being approximately 50% of the 11,607,200 Hong Kong Offer Shares
initially available under the Hong Kong Public Offering) are liable to be rejected.
Reallocation and Clawback
The allocation of the Offer Shares between the Hong Kong Public Offering and the
International Offering is subject to adjustment. Paragraph 4.2 of Practice Note 18 of the Listing
Rules requires a clawback mechanism to be put in place which would have the effect of
increasing the number of Offer Shares under the Hong Kong Public Offering to a certain
percentage of the total number of Offer Shares to be offered under the Global Offering if
certain prescribed total demand levels are reached.
If the number of Offer Shares validly applied for under the Hong Kong Public Offering
represents (a) 15 times or more but less than 50 times, (b) 50 times or more but less than 100
times and (c) 100 times or more of the total number of Offer Shares initially available under
STRUCTURE OF THE GLOBAL OFFERING
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--- page 494 ---
the Hong Kong Public Offering, then Offer Shares will be reallocated to the Hong Kong Public
Offering from the International Offering. As a result of such reallocation, the total number of
Offer Shares available under the Hong Kong Public Offering will be increased to 34,821,200
Offer Shares (in the case of (a)), 46,428,200 Offer Shares (in the case of (b)) and 58,035,200
Offer Shares (in the case of (c)), representing approximately 30%, 40% and 50% of the total
number of Offer Shares available under the Global Offering, respectively. In each case, the
additional Offer Shares reallocated to the Hong Kong Public Offering will be allocated between
pool A and pool B and the number of Offer Shares allocated to the International Offering will
be correspondingly reduced in such manner as the Overall Coordinators deem appropriate.
In addition, the Overall Coordinators may at their sole absolute discretion reallocate Offer
Shares from the International Offering to the Hong Kong Public Offering to satisfy valid
applications under the Hong Kong Public Offering. In accordance with the Guidance Letter
HKEX-GL91-18 issued by the Stock Exchange, if (a) the International Offering is
undersubscribed and the Hong Kong Public Offering is fully subscribed or oversubscribed or
the International Offering is fully subscribed or oversubscribed and the Hong Kong Public
Offering is oversubscribed by less than 15 times of the total number of Offer Shares initially
available under the Hong Kong Public Offering, then the Overall Coordinators may only
reallocate Offer Shares from the International Offering to the Hong Kong Public Offering other
than pursuant to Practice Note 18 of the Listing Rules on the following conditions in
accordance with Guidance Letter HKEX-GL91-18 (the “ Allocation Cap ”):
(i) the maximum total number of Offer Shares available under the Hong Kong Public
Offering following such reallocation would be 23,214,200 Shares, representing
double the number of Hong Kong Offer Shares initially available under the Hong
Kong Public Offering and approximately 20% of the total number of Offer Shares
available under the Global Offering; and
(ii) the final Offer Price shall be fixed at the bottom of the indicative Offer Price range
stated in this prospectus.
If the Hong Kong Public Offering is not fully subscribed, the Overall Coordinators may
reallocate all or any unsubscribed Hong Kong Offer Shares to the International Offering, in
such proportions as the Overall Coordinators deem appropriate. The Allocation Cap is not
triggered.
The Offer Shares to be offered in the Hong Kong Public Offering and the Offer Shares
to be offered in the International Offering may, in certain circumstances, be reallocated
between these offerings at the discretion of the Overall Coordinators, subject to the PN18
Clawback and the Allocation Cap (as applicable).
Details of any reallocation of the Offer Shares between the Hong Kong Public Offering
and the International Offering will be disclosed in the results announcement which is expected
to be published on Friday, December 15, 2023.
STRUCTURE OF THE GLOBAL OFFERING
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Applications
Each applicant under the Hong Kong Public Offering will also be required to give an
undertaking and confirmation in the application submitted by him that he and any person(s) for
whose benefit he is making the application have not applied for or taken up, or indicated an
interest for, and will not apply for or take up, or indicate an interest for, any Offer Shares under
the International Offering, and such applicant’s application is liable to be rejected if the said
undertaking and/or confirmation is breached and/or untrue (as the case may be) or it has been
or will be placed or allocated Offer Shares under the International Offering.
The listing of H Shares on the Stock Exchange is sponsored by the Joint Sponsors.
Applicants under the Hong Kong Public Offering are required to pay, on application, the
maximum price of HK$20.60 per Offer Share in addition to any brokerage, SFC transaction
levy, Stock Exchange trading fee and AFRC transaction levy payable on each Offer Share. If
the Offer Price, as finally determined in the manner described in the section headed “– Pricing
and Allocation” below, is less than the maximum Offer Price of HK$20.60 per Hong Kong
Offer Share, appropriate refund payments (including the brokerage, SFC transaction levy,
Stock Exchange trading fee and AFRC transaction levy attributable to the surplus application
monies) will be made to successful applicants, without interest. Further details are set out in
“How to Apply for the Hong Kong Offer Shares.”
References in this prospectus to applications, application monies or the procedure for
application relate solely to the Hong Kong Public Offering.
THE INTERNATIONAL OFFERING
Number of Offer Shares offered
Subject to reallocation as described above, the International Offering will consist of an
aggregate of 104,463,000 H Shares to be initially offered by us.
Allocation
The International Offering will include selective marketing of Offer Shares to
institutional and professional investors and other investors anticipated to have a sizeable
demand for such Offer Shares. Professional investors generally include brokers, dealers,
companies (including fund managers) whose ordinary business involves dealing in shares and
other securities and corporate entities which regularly invest in shares and other securities.
Allocation of Offer Shares pursuant to the International Offering will be effected in accordance
with the “book-building” process described in the paragraph headed “– Pricing and Allocation”
below and based on a number of factors, including the level and timing of demand, the total
value of the relevant investor’s invested assets or equity assets in the relevant sector and
whether or not it is expected that the relevant investor is likely to buy further Offer Shares,
and/or hold or sell its Offer Shares, after the listing of the Offer Shares on the Stock Exchange.
STRUCTURE OF THE GLOBAL OFFERING
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Such allocation is intended to result in a distribution of the Offer Shares on a basis which
would lead to the establishment of a solid professional and institutional shareholder base to the
benefit of the Company and our Shareholders as a whole.
The Joint Sponsors, the Overall Coordinators and the Joint Global Coordinators may
require any investor who has been offered Offer Shares under the International Offering and
who has made an application under the Hong Kong Public Offering to provide sufficient
information to the Joint Sponsors, the Overall Coordinators and the Joint Global Coordinators
so as to allow them to identify the relevant application under the Hong Kong Public Offering
and to ensure that it is excluded from any application of Offer Shares under the Hong Kong
Public Offering.
PRICING AND ALLOCATION
The International Underwriters will be soliciting from prospective investors indications
of interest in acquiring Offer Shares in the International Offering. Prospective professional and
institutional investors will be required to specify the number of Offer Shares under the
International Offering they would be prepared to acquire either at different prices or at a
particular price. This process, known as “book-building,” is expected to continue up to, and to
cease on or around, the last day for lodging applications under the Hong Kong Public Offering.
The Offer Price is expected to be fixed by agreement between the Overall Coordinators
and us on the Price Determination Date, which is expected to be on or about Thursday,
December 14, 2023 and in any event no later than 12:00 noon on Thursday, December 14, 2023.
The Offer Price will not be more than HK$20.60 per Offer Share and is expected to be
not less than HK$18.20 per Offer Share unless otherwise announced, as further explained
below, not later than the morning of the last day for lodging applications under the Hong Kong
Public Offering. Prospective investors should be aware that the Offer Price to be determined
on the Price Determination Date may be, but is not expected to be, lower than the indicative
Offer Price range stated in this prospectus.
If, for any reason, the Offer Price is not agreed between the Overall Coordinators
and us by 12:00 noon on Thursday, December 14, 2023, the Global Offering will not
proceed and will lapse.
Announcement of Offer Price Reduction
The Overall Coordinators (for themselves and on behalf of the Underwriters) may, where
considered appropriate, based on the level of interest expressed by prospective professional
and institutional investors during the book-building process, and with the consent of the
Company, reduce the number of Offer Shares offered in the Global Offering and/or the
indicative Offer Price range below that stated in this prospectus at any time on or prior to the
morning of the last day for lodging applications under the Hong Kong Public Offering. In such
a case, the Company will, as soon as practicable following the decision to make such reduction,
STRUCTURE OF THE GLOBAL OFFERING
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and in any event not later than the morning of the day which is the last day for lodging
applications under the Hong Kong Public Offering, cause there to be published on the websites
of the Company at www.chinarept.com and the Stock Exchange at www.hkexnews.hk notices
of the reduction, and the cancellation of the Global Offering and relaunch of the offer at the
revised number of Offer Shares and/or the revised Offer Price. In the absence of any such
notices, the number of Offer Shares will not be reduced and the Offer Price, if agreed upon by
the Overall Coordinators, for themselves and on behalf of the Underwriters, and the Company,
will under no circumstances be set outside the Offer Price range as stated in this prospectus.
If there is any change to the offer size due to change in the number of Offer Shares offered
in the Global Offering (other than pursuant to the reallocation mechanism as disclosed in this
prospectus), or change to the Offer Price which leads to the resulting price falling outside the
indicative Offer Price range as stated in this prospectus, or if the Company becomes aware that
there has been a significant change affecting any matter contained in this prospectus or a
significant new matter has arisen, the inclusion of information in respect of which would have
been required to be in this prospectus if it had arisen before this prospectus was issued, after
the issue of this prospectus and before the commencement of dealings in our H Shares as
prescribed under Rule 11.13 of the Listing Rules, we are required to cancel the Global Offering
and relaunch the offer and issue a supplemental prospectus or a new prospectus.
The Offer Shares to be offered in the International Offering and the Offer Shares to be
offered in the Hong Kong Public Offering may, in certain circumstances, be reallocated as
between these offerings at the discretion of the Overall Coordinators.
Announcement of Results
The final Offer Price, the level of indications of interest in the Global Offering, the results
of applications and the basis of allotment of Offer Shares available under the Hong Kong
Public Offering are expected to be announced on or around Friday, December 15, 2023 on the
websites of the Company at www.chinarept.com and the Stock Exchange at
www.hkexnews.hk .
HONG KONG UNDERWRITING AGREEMENT
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters
under the terms of the Hong Kong Underwriting Agreement and is conditional upon the
International Underwriting Agreement being signed and becoming unconditional.
The Company expects to enter into the International Underwriting Agreement relating to
the International Offering on or around the Price Determination Date.
These underwriting arrangements, and the respective Underwriting Agreements, are
summarized in “Underwriting” in this prospectus.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 498 ---
SHARES WILL BE ELIGIBLE FOR CCASS
All necessary arrangements have been made enabling the H Shares to be admitted into
CCASS.
If the Stock Exchange grants the listing of, and permission to deal in, the H Shares and
the Company complies with the stock admission requirements of HKSCC, the H Shares will be
accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with
effect from the date of commencement of dealings in the H Shares on the Stock Exchange or
any other date HKSCC chooses. Settlement of transactions between participants of the Stock
Exchange is required to take place in CCASS on the second settlement day after any trading
day.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC
Operational Procedures in effect from time to time.
CONDITIONS OF THE HONG KONG PUBLIC OFFERING
Acceptance of all applications for Offer Shares pursuant to the Hong Kong Public
Offering will be conditional on:
(a) the Stock Exchange granting listing of, and permission to deal in, the Offer Shares
being offered pursuant to the Global Offering (subject only to allotment) and the H
Shares to be converted from the Domestic Unlisted Shares on the Main Board of the
Stock Exchange and such listing permission not subsequently having been revoked
prior to the commencement of dealings in the H Shares on the Stock Exchange;
(b) the Offer Price having been fixed on or around the Price Determination Date;
(c) the execution and delivery of the International Underwriting Agreement on or
around the Price Determination Date; and
(d) the obligations of the Underwriters under each of the respective Underwriting
Agreements becoming and remaining unconditional and not having been terminated
in accordance with the terms of the respective agreements.
If, for any reason, the Offer Price is not agreed between the Overall Coordinators and us
on or before 12:00 noon on Thursday, December 14, 2023, the Global Offering will lapse.
The consummation of each of the Hong Kong Public Offering and the International
Offering is conditional upon, among other things, the other offering becoming unconditional
and not having been terminated in accordance with its terms.
STRUCTURE OF THE GLOBAL OFFERING
– 489 –


--- page 499 ---
If the above conditions are not fulfilled or waived prior to the times and dates specified,
the Global Offering will lapse and the Stock Exchange will be notified immediately. Notice of
the lapse of the Hong Kong Public Offering will be published by the Company on the websites
of the Company at www.chinarept.com and the Stock Exchange at www.hkexnews.hk on the
next day following such lapse. In such eventuality, all application monies will be returned,
without interest, on the terms set out in “How to Apply for the Hong Kong Offer Shares.” In
the meantime, all application monies will be held in a separate bank account(s) with the
receiving bank or other licensed bank(s) in Hong Kong licensed under the Banking Ordinance
(Chapter 155 of the Laws of Hong Kong) (as amended).
Share certificates for the Offer Shares are expected to be issued on Friday, December 15,
2023 but will only become valid evidence of title at 8:00 a.m. on Monday, December 18, 2023
provided that (i) the Global Offering has become unconditional in all respects and (ii) the right
of termination as described in “Underwriting – Underwriting Arrangements and Expenses –
Hong Kong Public Offering – Grounds for Termination” has not been exercised.
DEALINGS IN THE H SHARES
Assuming that the Hong Kong Public Offering becomes unconditional at or before 8:00
a.m. in Hong Kong on Monday, December 18, 2023, it is expected that dealings in the Offer
Shares on the Stock Exchange will commence at 9:00 a.m. on Monday, December 18, 2023.
The H Shares will be traded in board lots of 200 H Shares each and the stock code of the
H Shares will be 0666.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 500 ---
IMPORTANT NOTICE TO INVESTORS
OF HONG KONG OFFER SHARES
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong
Public Offering and below are the procedures for application.
This prospectus is available at the website of the Hong Kong Stock Exchange at
www.hkexnews.hk under the “ HKEXnews > New Listings > New Listing Information ”
section, and our website at www.chinarept.com.
The contents of this prospectus are identical to the prospectus as registered with the
Registrar of Companies in Hong Kong pursuant to Section 342C of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance.
APPLICATIONS FOR THE HONG KONG OFFER SHARES
1 Who can apply
If you apply for Hong Kong Offer Shares, then you may not apply for or indicate an
interest for International Offer Shares.
You can apply for Hong Kong Offer Shares if you or the person(s) for whose benefit you
are applying:
 are 18 years of age or older;
 have a Hong Kong address ( for the White Form eIPO service only ); and
 are outside the United States (within the meaning of Regulation S), and are a person
described in paragraph (h)(3) of Rule 902 of Regulation S.
Unless permitted by the Listing Rules or a waiver and/or consent has been granted by the
Hong Kong Stock Exchange to us, you cannot apply for any Hong Kong Offer Shares if you
or the person(s) for whose benefit you are applying for:
 are an existing beneficial owner of our Shares and/or a substantial shareholder of
any of our subsidiaries;
 are director, chief executive officer or supervisor of ours and/or any of our
subsidiaries;
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
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--- page 501 ---
 are a close associate of any of the above persons; or
 have been allocated or have applied for any International Offer Shares or otherwise
participate in the International Offering.
2 Application Channels
The Hong Kong Public Offering period will begin at 9:00 a.m. on Friday, December
8, 2023 and end at 12:00 noon on Wednesday, December 13, 2023 (Hong Kong time).
To apply for Hong Kong Offer Shares, you may use one of the following application
channels:
Application Channel Platform Target Investors Application Time
White Form eIPO
Service
www.eipo.com.hk Investors who would like
to receive a physical H
Share certificate. Hong
Kong Offer Shares
successfully applied for
will be allotted and
issued in your own
name.
From 9:00 a.m. on Friday,
December 8, 2023 to
11:30 a.m., Wednesday,
December 13, 2023,
Hong Kong time.
The latest time for
completing full payment
of application monies
will be 12:00 noon on
Wednesday, December
13, 2023, Hong Kong
time.
HKSCC EIPO channel Your broker or
custodian who is
an HKSCC
Participant will
submit an EIPO
application on
your behalf
through HKSCC’s
FINI system in
accordance with
your instruction.
Investors who would not
like to receive a
physical H Share
certificate. Hong Kong
Offer Shares
successfully applied for
will be allotted and
issued in the name of
HKSCC Nominees,
deposited directly into
CCASS and credited to
your designated HKSCC
Participant’s stock
account.
Contact your broker or
custodian for the
earliest and latest time
for giving such
instructions, as this may
vary by broker or
custodian .
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
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--- page 502 ---
The White Form eIPO service and the HKSCC EIPO channel are facilities subject to
capacity limitations and potential service interruptions and you are advised not to wait until the
last day of the application period to apply for Hong Kong Offer Shares.
For those applying through the White Form eIPO service, once you complete payment
in respect of any application instructions given by you or for your benefit through the White
Form eIPO service to make an application for Hong Kong Offer Shares, an actual application
shall be deemed to have been made. If you are a person for whose benefit the electronic
application instructions are given, you shall be deemed to have declared that only one set of
electronic application instructions has been given for your benefit. If you are an agent for
another person, you shall be deemed to have declared that you have only given one set of
electronic application instructions for the benefit of the person for whom you are an agent
and that you are duly authorized to give those instructions as an agent.
For the avoidance of doubt, giving an application instruction under the White Form eIPO
service more than once and obtaining different application reference numbers without effecting
full payment in respect of a particular reference number will not constitute an actual
application.
If you apply through the White Form eIPO service, you are deemed to have authorized
the White Form eIPO Service Provider to apply on the terms and conditions in this
prospectus, as supplemented and amended by the terms and conditions of the White Form
eIPO service.
By instructing your broker or custodian to apply for the Hong Kong Offer Shares on
your behalf through the HKSCC EIPO Channel, you (and, if you are joint applicants, each of
you jointly and severally) are deemed to have instructed and authorized HKSCC to cause
HKSCC Nominees (acting as nominee for the relevant HKSCC Participants) to apply for Hong
Kong Offer Shares on your behalf and to do on your behalf all the things stated in this
prospectus and any supplement to it.
For those applying through HKSCC EIPO channel, an actual application will be deemed
to have been made for any application instructions given by you or for your benefit to HKSCC
(in which case an application will be made by HKSCC Nominees on your behalf) provided such
application instruction has not been withdrawn or otherwise invalidated before the closing time
of the Hong Kong Public Offering.
HKSCC Nominees will only be acting as a nominee for you and neither HKSCC nor
HKSCC Nominees shall be liable to you or any other person in respect of any actions taken by
HKSCC or HKSCC Nominees on your behalf to apply for Hong Kong Offer Shares or for any
breach of the terms and conditions of this prospectus.
Only one application may be made for the benefit of any person. If you are suspected of
making more than one application through the White Form eIPO service or any other channel,
all of your applications are liable to be rejected.
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
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--- page 503 ---
3 Information Required to Apply
You must provide the following information with your application:
For Individual/Joint Applicants For Corporate Applicants
 Full name(s) 2 as shown on your identity
document
 Identity document’s issuing country or
jurisdiction
 Identity document type, with order of
priority:
i. HKID card; or
ii. National identification document;
or
iii. Passport; and
 Identity document number
 Full name(s)
2 as shown on your identity
document
 Identity document’s issuing country or
jurisdiction
 Identity document type, with order of
priority:
i. LEI registration document; or
ii. Certificate of incorporation; or
iii. Business Registration Certificate;
or
iv. Other equivalent document; and
 Identity document number
Notes:
1. If you are applying through the White Form eIPO service, you are required to provide a valid e-mail
address, a contact telephone number and a Hong Kong address. You are also required to declare that the
identity information provided by you follows the requirements as described in Note 2 below. In
particular, where you cannot provide a HKID number, you must confirm that you do not hold a HKID
card.
2. The applicant’s full name as shown on their identity document must be used. If an applicant’s identity
document contains both an English and Chinese name, both English and Chinese names must be used.
Otherwise, either English or Chinese names will be accepted. The order of priority of the applicant’s
identity document type must be strictly followed and where an individual applicant has a valid HKID
card, the HKID number must be used when making an application to subscribe for shares in a public
offer. Similarly for corporate applicants, a LEI number must be used if an entity has a LEI certificate.
3. If the applicant is a trustee, the client identification data (“ CID”) of the trustee, as set out above, will
be required. If the applicant is an investment fund (i.e. a collective investment scheme, or CIS), the CID
of the asset management company or the individual fund, as appropriate, which has opened a trading
account with the broker will be required, as above.
4. The maximum number of joint applicants on FINI is capped at 4
(1) in accordance with market practice.
5. If you are applying as a nominee, you must provide: (i) the full name (as shown on the identity
document), the identity document’s issuing country or jurisdiction, the identity document type; and (ii),
the identity document number, for each of the beneficial owners or, in the case(s) of joint beneficial
owners, for each joint beneficial owner. If you do not include this information, the application will be
treated as being made for your benefit.
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
– 494 –


--- page 504 ---
6. If you are applying as an unlisted company and (i) the principal business of that company is dealing in
securities; and (ii) you exercise statutory control over that company, then the application will be treated
as being for your benefit and you should provide the required information in your application as stated
above.
“Unlisted company ” means a company with no equity securities listed on the Stock Exchange or any
other stock exchange.
“Statutory control ” means you:
 control the composition of the board of directors of the company;
 control more than half of the voting power of the company; or
 hold more than half of the issued share capital of the company (not counting any part of it which
carries no right to participate beyond a specified amount in a distribution of either profits or
capital).
(1) Subject to change, if the Company’s Articles of Association and applicable company law prescribe a
lower cap
For those applying through HKSCC EIPO channel, and making an application under a
power of attorney, we and the Overall Coordinators, as our agent, have discretion to consider
whether to accept it on any conditions we think fit, including evidence of the attorney’s
authority.
Failing to provide any required information may result in your application being rejected.
4 Permitted Number of Hong Kong Offer Shares for Application
Board lot size : 200 shares
Permitted Number of
Hong Kong Offer
Shares for application
and amount payable on
application/successful
allotment
: Hong Kong Offer Shares are available for application
in specified board lot sizes only. Please refer to the
amount payable associated with each specified board
lot size in the table below.
The maximum Offer Price is HK$20.60 per Share.
If you are applying through the HKSCC EIPO
channel, you are required to pre-fund your
application based on the amount specified by your
broker or custodian , as determined based on the
applicable laws and regulations in Hong Kong. By
instructing your broker or custodian to apply for the
Hong Kong Offer Shares on your behalf through the
HKSCC EIPO channel, you (and, if you are joint
applicants, each of you jointly and severally) are
deemed to have instructed and authorized HKSCC to
cause HKSCC Nominees (acting as nominee for the
relevant HKSCC Participants) to arrange payment of
the final Offer Price, brokerage, SFC transaction
levy, the Hong Kong Stock Exchange trading fee and
the AFRC transaction levy by debiting the relevant
nominee bank account at the designated bank for
your broker or custodian .
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
– 495 –


--- page 505 ---
If you are applying through the White Form eIPO
service, you may refer to the table below for the
amount payable for the number of Shares you have
selected. You must pay the respective amount payable
on application in full upon application for Hong
Kong Offer Shares.
REPT BATTERO Energy Co., Ltd.
(HK$20.60 per Hong Kong Offer Share)
NUMBER OF HONG KONG OFFER SHARES THAT MAY BE APPLIED FOR
AND PAYMENTS
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application (2)
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application (2)
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application (2)
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application (2)
HK$ HK$ HK$ HK$
200 4,161.55 5,000 104,038.75 80,000 1,664,620.08 1,500,000 31,211,626.50
400 8,323.10 6,000 124,846.51 90,000 1,872,697.59 2,000,000 41,615,502.00
600 12,484.65 7,000 145,654.26 100,000 2,080,775.10 2,500,000 52,019,377.50
800 16,646.19 8,000 166,462.01 200,000 4,161,550.20 3,000,000 62,423,253.00
1,000 20,807.75 9,000 187,269.77 300,000 6,242,325.30 3,500,000 72,827,128.50
1,200 24,969.31 10,000 208,077.51 400,000 8,323,100.40 4,000,000 83,231,004.00
1,400 29,130.85 20,000 416,155.02 500,000 10,403,875.50 4,500,000 93,634,879.50
1,600 33,292.40 30,000 624,232.54 600,000 12,484,650.60 5,000,000 104,038,755.00
1,800 37,453.96 40,000 832,310.05 700,000 14,565,425.70 5,803,600
(1) 120,759,863.70
2,000 41,615.50 50,000 1,040,387.56 800,000 16,646,200.80
3,000 62,423.25 60,000 1,248,465.05 900,000 18,726,975.90
4,000 83,231.00 70,000 1,456,542.56 1,000,000 20,807,751.00
(1) Maximum number of Hong Kong Offer Share you may apply for.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee and AFRC
transaction levy. If your application is successful, brokerage will be paid to the Exchange Participants (as
defined in the Listing Rules) and the SFC transaction levy, the Stock Exchange trading fee and AFRC
transaction levy are paid to the Stock Exchange (in the case of the SFC transaction levy, collected by the Stock
Exchange on behalf of the SFC; and in the case of the AFRC transaction levy, collected by the Stock Exchange
on behalf of the AFRC).
No application for any other number of the Hong Kong Offer Shares will be considered
and any such application is liable to be rejected.
5 Multiple Applications Prohibited
You or your joint applicant(s) shall not make more than one application for your own
benefit, except where you are a nominee and provide the information of the underlying investor
in your application as required under the paragraph headed “ – Applications for Hong Kong
Offer Shares – Information Required to Apply ” in this section. If you are suspected of
submitting or cause to submit more than one application, all of your applications will be
rejected.
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
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--- page 506 ---
Multiple applications made either through (i) the White Form eIPO service, (ii) HKSCC
EIPO channel, or (iii) both channels concurrently are prohibited and will be rejected. If you
have made an application through the White Form eIPO service or HKSCC EIPO channel,
you or the person(s) for whose benefit you have made the application shall not apply for any
International Offer Shares.
6 Terms and conditions of an application
By applying for Hong Kong Offer Shares through the White Form eIPO service or
HKSCC EIPO channel, you (or as the case may be, HKSCC Nominees will do the following
things on your behalf):
(a) undertake to execute all relevant documents and instruct and authorise us and/or the
Overall Coordinators (or their agents or nominees), as our agents, to execute any
documents for you and to do on your behalf all things necessary to register any Hong
Kong Offer Shares allocated to you in your name or in the name of HKSCC
Nominees as required by the Articles of Association, and (if you are applying
through the HKSCC EIPO channel) to deposit the allotted Hong Kong Offer Shares
directly into CCASS for the credit of your designated HKSCC Participant’s stock
account on your behalf;
(b) confirm that you have read and understand the terms and conditions and application
procedures set out in this prospectus and the designated website of the White Form
eIPO Service Provider (or as the case may be, the agreement you entered into with
your broker or custodian ), and agree to be bound by them;
(c) (if you are applying through the HKSCC EIPO channel) agree to the arrangements,
undertakings and warranties under the participant agreement between your broker
or custodian and HKSCC and observe the General Rules of HKSCC and the
HKSCC Operational Procedures for giving application instructions to apply for
Hong Kong Offer Shares;
(d) confirm that you are aware of the restrictions on offers and sales of shares set out
in this prospectus and they do not apply to you, or the person(s) for whose benefit
you have made the application;
(e) confirm that you have read this prospectus and have only relied on the information
and representations contained in this prospectus in making your application and will
not rely on any other information or representations, except those contained in any
supplement to this prospectus;
(f) agree that none of us, the Joint Sponsors, the Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters, the
Capital Market Intermediaries, the H Share Registrar, HKSCC, any of our or their
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
– 497 –


--- page 507 ---
affiliates or any of their respective directors, officers, employees, agents or advisers,
or any other persons or parties involved in the Global Offering is or will be liable
for any information and representations not contained in this prospectus (and any
supplement to it);
(g) agree to disclose the details of your application and your personal data and any other
personal data which may be required about you and the person(s) for whose benefit
you have made the application to us, the Joint Sponsors, the Overall Coordinators,
the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the
Underwriters, the Capital Market Intermediaries, receiving bank(s), the H Share
Registrar, HKSCC, HKSCC Nominees, the Hong Kong Stock Exchange, the SFC
and any other statutory regulatory or governmental bodies or otherwise as required
by laws, rules or regulations, for the purposes under the paragraph headed “–
Personal Data – Purposes ” and “ – Personal Data – Transfer of personal data ”i n
this section;
(h) agree (without prejudice to any other rights which you may have once your
application (or as the case may be, HKSCC Nominees’ application) has been
accepted) that you will not rescind it because of an innocent misrepresentation;
(i) agree that subject to Section 44A(6) of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, any application made by you or HKSCC
Nominees on your behalf cannot be revoked once it is accepted, which will be
evidenced by the notification of the result of the ballot by the H Share Registrar by
way of publication of the results at the time and in the manner as specified in the
paragraph headed “ – Publication of Results ” in this section;
(j) confirm that you are aware of the situations specified in the paragraph headed “–
Circumstances in which You Will Not Be Allocated Hong Kong Offer Shares ” in this
section;
(k) agree that your application or HKSCC Nominees’ application, any acceptance of it
and the resulting contract will be governed by and construed in accordance with the
laws of Hong Kong;
(l) agree to comply with the Companies Ordinance, Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the Articles of Association, and that neither
we nor any of the Joint Sponsors, the Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters and
the Capital Market Intermediaries will breach any law inside and/or outside Hong
Kong as a result of the acceptance of your offer to purchase, or any action arising
from your rights and obligations under the terms and conditions contained in this
prospectus;
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
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--- page 508 ---
(m) confirm that (a) your application or HKSCC Nominees’ application on your behalf
is not financed directly or indirectly by the Company, any of the directors, chief
executives, substantial Shareholder(s) or existing shareholder(s) of the Company or
any of its subsidiaries or any of their respective close associates; and (b) you are not
accustomed or will not be accustomed to taking instructions from the Company, any
of the directors, chief executives, substantial shareholder(s) or existing
shareholder(s) of the Company or any of its subsidiaries or any of their respective
close associates in relation to the acquisition, disposal, voting or other disposition
of the Shares registered in your name or otherwise held by you;
(n) warrant that the information you have provided is true and accurate;
(o) confirm that you understand that we, our Directors and the Overall Coordinators will
rely on your declarations and representations in deciding whether or not to make any
allotment of any of the Hong Kong Offer Shares to you and that you may be
prosecuted for making a false declaration;
(p) agree to accept the Hong Kong Offer Shares applied for, or any lesser number
allocated to you under the application;
(q) declare and represent that this is the only application made and the only application
intended by you to be made to benefit you or the person for whose benefit you are
applying;
(r) represent, warrant and undertake that (i) you understand that the Hong Kong Offer
Shares have not been and will not be registered under the U.S. Securities Act; and
(ii) you and any person for whose benefit you are applying for the Hong Kong Offer
Shares are outside the United States (as defined in Regulation S) or are a person
described in paragraph (h)(3) of Rule 902 of Regulation S;
(s) undertake and confirm that you or the person(s) for whose benefit you have made
the application have not applied for or taken up, or indicated an interest for, and will
not apply for or take up, or indicate an interest for, any International Offer Shares
nor have participated in the International Offering;
(t) confirm that you are aware of the restrictions on the Global Offering set out in this
prospectus;
(u) (if you are making the application for your own benefit) warrant that no other
application has been or will be made for your benefit by giving electronic
application instructions to HKSCC directly or through the White Form eIPO
service or by any one as your agent or by any other person;
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
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--- page 509 ---
(v) (if you are making the application as an agent for the benefit of another person)
warrant that: (i) no other application has been or will be made by you as agent for
or for the benefit of that person or by that person or by any other person as agent
for that person by giving application instructions to HKSCC; and (ii) you have due
authority to give electronic application instructions on behalf of that other person
as its agent; and
(w) if the laws of any place outside Hong Kong apply to your application, agree and
warrant that you have complied with all these laws and none of us nor any of the
Joint Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, the Underwriters and the Capital Market
Intermediaries will breach any of these laws as a result of the acceptance of your
offer to purchase, or any action arising from your rights and obligations under the
terms and conditions contained in this prospectus.
PUBLICATION OF RESULTS
Results of Allocation
You can check whether you are successfully allocated any Hong Kong Offer Shares
through:
Platform Date/Time
Applying through White Form eIPO service or HKSCC EIPO channel:
Website The designated results of allocation at
www.iporesults.com.hk
(alternatively:
www.eipo.com.hk/eIPOAllotment )
with a “search by ID” function.
24 hours, from 11:00 p.m.,
Friday, December 15,
2023 to 12:00 midnight,
Thursday, December 21,
2023 (Hong Kong time).
The full list of (i) wholly or partially
successful applicants using the White
Form eIPO service and HKSCC
EIPO channel, and (ii) the number of
Hong Kong Offer Shares
conditionally allotted to them, among
other things, will be displayed on the
“Allotment Results” page of the
White Form eIPO service at
www.iporesults.com.hk
(alternatively:
www.eipo.com.hk/eIPOAllotment )
The Hong Kong Stock Exchange’s
website at www.hkexnews.hk and
our website at www.chinarept.com
which will provide links to the above
mentioned websites of the H Share
Registrar.
No later than 11:00 p.m. on
Friday, December 15,
2023 (Hong Kong time).
Telephone +852 2862 8555 – the allocation results
telephone enquiry line provided by
the H Share Registrar.
Between 9:00 a.m. and 6:00
p.m., from Monday,
December 18, 2023 to
Thursday, December 21,
2023 (Hong Kong time)
on a business day.
For those applying through HKSCC EIPO channel, you may also check with your
broker or custodian from 6:00 p.m., Thursday, December 14, 2023 (Hong Kong
time).
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
– 500 –


--- page 510 ---
HKSCC Participants can log into FINI and review the allotment result from 6:00 p.m.,
Thursday, December 14, 2023 (Hong Kong time) on a 24-hour basis and should report any
discrepancies on allotments to HKSCC as soon as practicable.
Allocation Announcement
We expect to announce the results of the final Offer Price, the level of indications of
interest in the Global Offering, the level of applications in the Hong Kong Public Offering and
the basis of allocations of Hong Kong Offer Shares on the Hong Kong Stock Exchange’s
website at www.hkexnews.hk and our website at www.chinarept.com by no later than 11:00
p.m. on Friday, December 15, 2023 (Hong Kong time).
CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED HONG KONG
OFFER SHARES
You should note the following situations in which no Hong Kong Offer Shares will be
allocated to you or the person(s) for whose benefit you are applying for:
1. If your application is revoked:
Your application or the application made by HKSCC Nominees on your behalf may be
revoked pursuant to Section 44A(6) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
2. If we or our agents exercise discretion to reject your application:
We, the Overall Coordinators, the H Share Registrar and our/their respective agents and
nominees have full discretion to reject or accept any application, or to accept only part of any
application, without giving any reasons.
3. If the allocation of Hong Kong Offer Shares is void:
The allocation of Hong Kong Offer Shares will be void if the Hong Kong Stock Exchange
does not grant permission to list our Shares either:
 within three weeks from the closing date of the application lists; or
 within a longer period of up to six weeks if the Hong Kong Stock Exchange notifies
us of that longer period within three weeks of the closing date of the application
lists.
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
– 501 –


--- page 511 ---
4. If:
 you make multiple applications or suspected multiple applications. You may refer to
the paragraph headed “ – Applications for Hong Kong Offer Shares – 5. Multiple
Applications Prohibited ” in this section on what constitutes multiple applications;
 your application instruction is incomplete;
 your payment (or confirmation of funds, as the case may be) is not made correctly;
 the Underwriting Agreements do not become unconditional or are terminated; or
 we or the Overall Coordinators believe that by accepting your application, we or
they would violate applicable securities or other laws, rules or regulations.
5. If there is money settlement failure for allotted Shares:
Based on the arrangements between HKSCC Participants and HKSCC, HKSCC
Participants will be required to hold sufficient application funds on deposit with their
designated bank before balloting. After balloting of Hong Kong Offer Shares, the Receiving
Bank will collect the portion of these funds required to settle each HKSCC Participant’s actual
Hong Kong Offer Share allotment from their designated bank.
There is a risk of money settlement failure. In the extreme event of money settlement
failure by a HKSCC Participant (or its designated bank), who is acting on your behalf in
settling payment for your allotted shares, HKSCC will contact the defaulting HKSCC
Participant and its designated bank to determine the cause of failure and request such
defaulting HKSCC Participant to rectify or procure to rectify the failure.
However, if it is determined that such settlement obligation cannot be met, the affected
Hong Kong Offer Shares will be reallocated to the International Offering. Hong Kong Offer
Shares applied for by you through the broker or custodian may be affected to the extent of
the settlement failure. In the extreme case, you will not be allocated any Hong Kong Offer
Shares due to the money settlement failure by such HKSCC Participant. None of us, the Joint
Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the
Joint Lead Managers, the Underwriters, the Capital Market Intermediaries, the H Share
Registrar and HKSCC is or will be liable if Hong Kong Offer Shares are not allocated to you
due to the money settlement failure.
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
– 502 –


--- page 512 ---
DESPATCH/COLLECTION OF H SHARE CERTIFICATES AND REFUND OF
APPLICATION MONIES
You will receive one H Share certificate for all Hong Kong Offer Shares allocated to you
under the Hong Kong Public Offering (except pursuant to applications made through the
HKSCC EIPO channel where the H Share certificate will be deposited into CCASS as
described below).
We will not issue: (i) temporary document of title in respect of our Shares; or (ii) receipt
for sums paid on application.
H Share certificates will only become valid evidence of title at 8:00 a.m. on Monday,
December 18, 2023 (Hong Kong time), provided that the Global Offering has become
unconditional and the right of termination described in the section headed “Underwriting” has
not been exercised. Investors who trade Shares prior to the receipt of the H Share certificates
or the H Share certificates becoming valid do so entirely at their own risk.
The right is reserved to retain any H Share certificate(s) and (if applicable) any surplus
application monies pending clearance of application monies.
The following sets out the relevant procedures and time:
White Form eIPO Service HKSCC EIPO channel
Despatch/collection of H Share certificate 1
For application of
1,000,000 Hong
Kong Offer
Shares or more
Collection in person from our H
Share Registrar at Shops
1712-1716, 17th Floor,
Hopewell Centre, 183 Queen’s
Road East, Wan Chai, Hong
Kong.
Time: from 9:00 a.m. to 1:00
p.m. on Monday, December
18, 2023
2 (Hong Kong time).
H Share certificate(s) will be
issued in the name of HKSCC
Nominees, deposited into
CCASS and credited to your
designated HKSCC
Participant’s stock account.
No action by you is required.
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
– 503 –


--- page 513 ---
White Form eIPO Service HKSCC EIPO channel
If you are an individual, you
must not authorise any other
person to collect for you. If
you are a corporate applicant,
your authorised representative
must bear a letter of
authorization from your
corporation stamped with your
corporation’s chop.
Both individuals and authorised
representatives must produce,
at the time of collection,
evidence of identity
acceptable to the H Share
Registrar.
Note: If you do not collect your
H Share certificate(s)
personally within the time
above, it/they will be sent to
the address specified in your
application instructions by
ordinary post at your own
risk.
For application of
less than
1,000,000 Hong
Kong Offer
Shares
Your H Share certificate(s) will
be sent to the address
specified in your application
instructions by ordinary post
at your own risk.
Time: Friday, December 15
2023
Notes:
1. Except in the event of a tropical cyclone warning signal number 8 or above, a black rainstorm warning
and/or an “extreme conditions” announcement issued after a super typhoon in force in Hong Kong in
the morning on the Listing Date rendering it impossible for the relevant share certificates to be
dispatched to HKSCC in a timely manner, the Company shall procure the Share Registrar to arrange for
delivery of the supporting documents and share certificates in accordance with the contingency
arrangements as agreed between them. You may refer to “– Severe Weather Arrangements” in this
section.
2. As agreed with the issuer and communicated to the subscribers in the relevant subscription
channel/application forms (if any).
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
– 504 –


--- page 514 ---
White Form eIPO Service HKSCC EIPO channel
Refund mechanism for surplus application monies paid by you
Date Monday, December 18, 2023 Subject to the arrangement
between you and your
broker or custodian .
Responsible party H Share Registrar Your broker or custodian
Application
monies paid
through single
bank account
Any refund will be despatched
to the bank account in the
form of White Form
e-Refund payment
instructions.
Your broker or custodian will
arrange refund to your
designated bank account
subject to the arrangement
between you and it.
Application
monies paid
through
multiple bank
accounts
Refund cheque(s) will be
dispatched to the address as
specified in your application
instructions by ordinary post
at your own risk.
SEVERE WEATHER ARRANGEMENTS
The Opening and Closing of the Application Lists
The application lists will not open or close on Wednesday, December 13, 2023 if, there
is (are):
 a tropical cyclone warning signal number 8 or above;
 a “black” rainstorm warning; and/or
 Extreme Conditions
(collectively, “ Severe Weather Signals ”) in force in Hong Kong at any time between 9:00 a.m.
and 12:00 noon on Wednesday, December 13, 2023.
Instead they will open between 11:45 a.m. and 12:00 noon and/or close at 12:00 noon on
the next business day which does not have any of those warnings in Hong Kong in force at any
time between 9:00 a.m. and 12:00 noon.
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
– 505 –


--- page 515 ---
Prospective investors should be aware that a postponement of the opening/closing of the
application lists may result in a delay in the listing date. Should there be any changes to the
dates mentioned in the section headed “Expected Timetable” in this prospectus, an
announcement will be made and published on the Hong Kong Stock Exchange’s website at
www.hkexnews.hk and our website at www.chinarept.com of the revised timetable.
If any of those warnings is hoisted on Friday, December 15, 2023, the H Share Registrar
will make appropriate arrangements for the delivery of the H Share certificates to the CCASS
Depository’s service counter so that they would be available for trading on Monday, December
18, 2023.
If any of those warnings is hoisted on Monday, December 18, 2023, for physical H Share
certificates of over 1,000,000 offer shares issued under your own name, you may pick them up
from the H Share Registrar’s office after any of those warnings is lowered or cancelled (e.g.
in the afternoon of Monday, December 18, 2023 or on Tuesday, December 19, 2023).
If any of those warnings is hoisted on Friday, December 15, 2023, for physical H Share
certificates of less than 1,000,000 offer shares issued under your own name, despatch will be
made by ordinary post when the post office re-opens after any of those warnings is lowered or
cancelled (e.g. in the afternoon of Friday, December 15, 2023 or on Monday, December 18,
2023).
Prospective investors should be aware that if they choose to receive physical H Share
certificates issued in their own name, there may be a delay in receiving the H Share
certificates.
ADMISSION OF OUR SHARES INTO CCASS
If the Hong Kong Stock Exchange grants the listing of, and permission to deal in, our
Shares and we comply with the stock admission requirements of HKSCC, our Shares will be
accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with
effect from the Listing Date or any other date HKSCC chooses. Settlement of transactions
between Exchange Participants is required to take place in CCASS on the second settlement
day after any trading day.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC
Operational Procedures in effect from time to time.
All necessary arrangements have been made enabling the Shares to be admitted into
CCASS.
You should seek the advice of your broker or other professional advisor for details of the
settlement arrangement as such arrangements may affect your rights and interests.
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
– 506 –


--- page 516 ---
PERSONAL DATA
The following Personal Information Collection Statement applies to any personal data
collected and held by us, the Joint Sponsors, the Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters, the Capital
Market Intermediaries, the H Share Registrar and the receiving bank(s) about you in the same
way as it applies to personal data about applicants other than HKSCC Nominees. This personal
data may include client identifier(s) and your identification information. By giving application
instructions to HKSCC, you acknowledge that you have read, understood and agree to all of
the terms of the Personal Information Collection Statement below.
Personal Information Collection Statement
This Personal Information Collection Statement informs applicant for, and holder of,
Hong Kong Offer Shares, of the policies and practices of ours and the H Share Registrar in
relation to personal data and the Personal Data (Privacy) Ordinance (Chapter 486 of the Laws
of Hong Kong).
Reasons for the collection of your personal data
It is necessary for applicants and registered holders of Hong Kong Offer Shares to ensure
that personal data supplied to us or our agents and the H Share Registrar is accurate and
up-to-date when applying for Hong Kong Offer Shares or transferring Hong Kong Public
Shares into or out of their names or in procuring the services of the H Share Registrar.
Failure to supply the requested data or supplying inaccurate data may result in your
application for the Hong Kong Offer Shares being rejected, or in the delay or the inability of
us or the H Share Registrar to effect transfers or otherwise render their services. It may also
prevent or delay registration or transfers of Hong Kong Offer Shares which you have
successfully applied for and/or the despatch of H Share certificate(s) to which you are entitled.
It is important that applicants for and holders of Hong Kong Offer Shares inform us and
the H Share Registrar immediately of any inaccuracies in the personal data supplied.
Purposes
Y our personal data may be used, held, processed, and/or stored (by whatever means)
for the following purposes:
 processing your application and refund cheque and White Form e-Refund payment
instruction(s), where applicable, verification of compliance with the terms and
application procedures set out in this prospectus and announcing results of
allocation of Hong Kong Offer Shares;
 compliance with applicable laws and regulations in Hong Kong and elsewhere;
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
– 507 –


--- page 517 ---
 registering new issues or transfers into or out of the names of the holders of our
Shares including, where applicable, HKSCC Nominees;
 maintaining or updating our register of members;
 verifying identities of applicants for and holders of our Shares and identifying any
duplicate applications for our Shares;
 facilitating Hong Kong Offer Shares balloting;
 establishing benefit entitlements of holders of our Shares, such as dividends, rights
issues, bonus issues, etc.;
 distributing communications from us and our subsidiaries;
 compiling statistical information and profiles of the holder of our Shares;
 disclosing relevant information to facilitate claims on entitlements; and
 any other incidental or associated purposes relating to the above and/or to enable us
and the H Share Registrar to discharge our or their obligations to applicants and
holders of our Shares and/or regulators and/or any other purposes to which the
applicants and holders of the Shares may from time to time agree.
Transfer of personal data
Personal data held by us and the H Share Registrar relating to the applicants for and
holders of Hong Kong Offer Shares will be kept confidential, but we and the H Share Registrar
may, to the extent necessary for achieving any of the above purposes, disclose, obtain or
transfer (whether within or outside Hong Kong) the personal data to, from or with any of the
following:
 our appointed agents such as financial advisers, receiving bank(s) and overseas
principal share registrar;
 HKSCC or HKSCC Nominees, who will use the personal data and may transfer the
personal data to the H Share Registrar for the purposes of providing its services or
facilities or performing its functions in accordance with its rules or procedures and
operating FINI and CCASS (including where applicants for the Hong Kong Offer
Shares request a deposit into CCASS);
 any agents, contractors or third-party service providers who offer administrative,
telecommunications, computer, payment or other services to us or the H Share
Registrar in connection with their respective business operation;
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
– 508 –


--- page 518 ---
 the Hong Kong Stock Exchange, the SFC and any other statutory regulatory or
governmental bodies or otherwise as required by laws, rules or regulations including
for the purpose of the Hong Kong Stock Exchange’s administration of the Listing
Rules and the SFC’s performance of its statutory functions; and
 any persons or institutions with which the holders of Hong Kong Offer Shares have
or propose to have dealings, such as their bankers, solicitors, accountants or
stockbrokers, etc.
Retention of personal data
We and the H Share Registrar will keep the personal data of the applicants and holders
of Hong Kong Offer Shares for as long as necessary to fulfil the purposes for which the
personal data were collected. Personal data which is no longer required will be destroyed or
dealt with in accordance with the Personal Data (Privacy) Ordinance (Chapter 486 of the Laws
of Hong Kong).
Access to and correction of personal data
Applicants for and holders of Hong Kong Offer Shares have the right to ascertain whether
we or the H Share Registrar hold their personal data, to obtain a copy of that data, and to
correct any data that is inaccurate. We and the H Share Registrar have the right to charge a
reasonable fee for the processing of such requests. All requests for access to data or correction
of data should be addressed to us and the H Share Registrar, at our and their registered address
disclosed in the section headed “Corporate Information” in this prospectus or as notified from
time to time, for the attention of the secretary, or the H Share Registrar for the attention of the
privacy compliance officer.
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
– 509 –


--- page 519 ---
ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF REPT BATTERO ENERGY CO., LTD. AND MORGAN STANLEY
ASIA LIMITED AND CITIC SECURITIES (HONG KONG) LIMITED
Introduction
We report on the historical financial information of REPT BATTERO Energy Co., Ltd.
(the “Company”) and its subsidiaries (together, the “Group”) set out on pages I-5 to I-117,
which comprises the consolidated statements of profit or loss and other comprehensive income,
statements of changes in equity and statements of cash flows of the Group for each of the years
ended 31 December 2020, 2021 and 2022, and the six months ended 30 June 2023 (the
“Relevant Periods”), and the consolidated statements of financial position of the Group and the
statements of financial position of the Company as at 31 December 2020, 2021 and 2022 and
30 June 2023 and material accounting policy information and other explanatory information
(together, the “Historical Financial Information”). The Historical Financial Information set out
on pages I-5 to I-117 forms an integral part of this report, which has been prepared for
inclusion in the prospectus of the Company dated 8 December 2023 (the “Prospectus”) in
connection with the initial listing of the shares of the Company on the Main Board of The Stock
Exchange of Hong Kong Limited (the “Stock Exchange”).
Directors’ responsibility for the Historical Financial Information
The directors of the Company are responsible for the preparation of the Historical
Financial Information that gives a true and fair view in accordance with the basis of preparation
set out in note 2.1 to the Historical Financial Information, and for such internal control as the
directors determine is necessary to enable the preparation of the Historical Financial
Information that is free from material misstatement, whether due to fraud or error.
Reporting accountants’ responsibility
Our responsibility is to express an opinion on the Historical Financial Information and to
report our opinion to you. We conducted our work in accordance with Hong Kong Standard on
Investment Circular Reporting Engagements 200 Accountants’ Reports on Historical Financial
Information in Investment Circulars issued by the Hong Kong Institute of Certified Public
Accountants (“HKICPA”). This standard requires that we comply with ethical standards and
plan and perform our work to obtain reasonable assurance about whether the Historical
Financial Information is free from material misstatement.
APPENDIX I ACCOUNTANTS’ REPORT
– I-1 –


--- page 520 ---
Our work involved performing procedures to obtain evidence about the amounts and
disclosures in the Historical Financial Information. The procedures selected depend on the
reporting accountants’ judgment, including the assessment of risks of material misstatement of
the Historical Financial Information, whether due to fraud or error. In making those risk
assessments, the reporting accountants consider internal control relevant to the entity’s
preparation of the Historical Financial Information that gives a true and fair view in accordance
with the basis of preparation set out in note 2.1 to the Historical Financial Information in order
to design procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. Our work also
included evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the directors, as well as evaluating the overall presentation of
the Historical Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion, the Historical Financial Information gives, for the purposes of the
accountants’ report, a true and fair view of the financial position of the Group and the Company
as at 31 December 2020, 2021 and 2022 and 30 June 2023 and of the financial performance
and cash flows of the Group for each of the Relevant Periods in accordance with the basis of
preparation set out in note 2.1 to the Historical Financial Information.
Review of interim comparative financial information
We have reviewed the interim comparative financial information of the Group which
comprises the consolidated statement of profit or loss and other comprehensive income,
statement of changes in equity and statement of cash flows for the six months ended 30 June
2022 and other explanatory information (the “Interim Comparative Financial Information”).
The directors of the Company are responsible for the preparation of the Interim Comparative
Financial Information in accordance with the basis of preparation set out in note 2.1 to the
Historical Financial Information. Our responsibility is to express a conclusion on the Interim
Comparative Financial Information based on our review. We conducted our review in
accordance with Hong Kong Standard on Review Engagements 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the Entity issued by the
HKICPA. A review consists of making inquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with Hong Kong Standards
on Auditing and consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit. Accordingly, we do not
express an audit opinion. Based on our review, nothing has come to our attention that causes
us to believe that the Interim Comparative Financial Information, for the purposes of the
accountants’ report, is not prepared, in all material respects, in accordance with the basis of
preparation set out in note 2.1 to the Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
– I-2 –


--- page 521 ---
Report on matters under the Rules Governing the Listing of Securities on the Stock
Exchange and the Companies (Winding Up and Miscellaneous Provisions) Ordinance
Adjustments
In preparing the Historical Financial Information, no adjustments to the Underlying
Financial Statements as defined on page I-4 have been made.
Dividends
We refer to note 11 to the Historical Financial Information which states that no dividends
have been paid by the Company in respect of the Relevant Periods.
Ernst & Y oung
Certified Public Accountants
Hong Kong
8 December 2023
APPENDIX I ACCOUNTANTS’ REPORT
– I-3 –


--- page 522 ---
I. HISTORICAL FINANCIAL INFORMATION
Preparation of Historical Financial Information
Set out below is the Historical Financial Information which forms an integral part of this
accountants’ report.
The financial statements of the Group for the Relevant Periods, on which the Historical
Financial Information is based, were audited by Ernst & Young in accordance with Hong Kong
Standards on Auditing issued by the HKICPA (the “Underlying Financial Statements”).
The Historical Financial Information is presented in Renminbi (“RMB”) and all values
are rounded to the nearest thousand (RMB’000) except when otherwise indicated.
The Board refers to the board of Directors.
APPENDIX I ACCOUNTANTS’ REPORT
– I-4 –


--- page 523 ---
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Y ear ended 31 December
Six months ended
30 June
Notes 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
REVENUE 5 906,986 2,109,144 14,647,778 4,016,575 6,594,794
Cost of Sales (795,888) (2,434,024) (13,559,490) (4,157,865) (6,327,560)
Gross profit/(loss) 111,098 (324,880) 1,088,288 (141,290) 267,234
Other income and gains 5 12,307 35,323 167,818 23,976 85,990
Selling and distribution expenses (34,036) (72,346) (320,795) (98,897) (157,715)
Administrative expenses (34,007) (160,612) (346,787) (151,759) (239,655)
Research and development costs (72,716) (245,558) (767,685) (257,142) (505,246)
Impairment losses on
financial and contract assets, net (1,951) (1,585) (81,050) (2,182) (249,102)
Other expenses (11,199) (1,892) (75) – (5,817)
Finance costs 7 (22,775) (32,659) (188,925) (78,178) (113,114)
Share of profits and losses of
joint ventures – – (1,587) – (681)
LOSS BEFORE TAX 6 (53,279) (804,209) (450,798) (705,472) (918,106)
Income tax expense 10 – – (25) – (1,628)
LOSS FOR THE YEAR/PERIOD (53,279) (804,209) (450,823) (705,472) (919,734)
Attributable to:
Owners of the parent (40,843) (717,227) (354,121) (609,030) (710,215)
Non-controlling interests (12,436) (86,982) (96,702) (96,442) (209,519)
(53,279) (804,209) (450,823) (705,472) (919,734)
TOTAL COMPREHENSIVE
INCOME FOR THE
YEAR/PERIOD (53,279) (804,209) (450,823) (705,472) (919,734)
Attributable to:
Owners of the parent (40,843) (717,227) (354,121) (609,030) (710,215)
Non-controlling interests (12,436) (86,982) (96,702) (96,442) (209,519)
(53,279) (804,209) (450,823) (705,472) (919,734)
LOSS PER SHARE
ATTRIBUTABLE TO
ORDINARY EQUITY
HOLDERS OF THE PARENT
Basic and diluted
– For loss for the
year/period (RMB) 12 (0.14) (1.08) (0.20) (0.40) (0.33)
APPENDIX I ACCOUNTANTS’ REPORT
– I-5 –


--- page 524 ---
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at 31 December
As at
30 June
Notes 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
NON-CURRENT ASSETS
Property, plant and
equipment 13 1,290,089 4,240,292 8,743,370 11,922,379
Right-of-use assets 14 107,342 291,801 489,054 737,330
Other intangible assets 15 6,692 10,295 28,777 34,826
Investments in joint ventures 16 – – 132,391 168,933
Prepayments, other
receivables and other
assets 17 94,210 606,688 607,225 1,547,842
Equity investments
designated at fair value
through other
comprehensive income 18 – – – 10,000
Due from related parties 38 1,880 1,887 1,887 2,333
Total non-current assets 1,500,213 5,150,963 10,002,704 14,423,643
CURRENT ASSETS
Inventories 19 244,570 720,654 3,245,649 3,028,454
Trade and bills receivables 20 611,826 1,053,510 4,194,057 3,553,114
Contract assets 21 6,686 20,935 113,426 166,995
Prepayments, other
receivables and other
assets 17 36,959 639,139 717,908 437,134
Financial assets at fair value
through profit or loss 22 50,454 – 17,186 116,959
Due from related parties 38 17,219 41,604 1,405,883 763,802
Restricted cash 23 40,850 817,327 1,843,528 1,857,888
Cash and cash equivalents 23 146,430 580,507 4,901,062 4,021,452
Total current assets 1,154,994 3,873,676 16,438,699 13,945,798
CURRENT LIABILITIES
Trade and bills payables 24 586,609 1,660,312 6,773,324 5,902,947
Other payables and accruals 25 208,521 1,196,526 2,787,628 3,663,832
Contract liabilities 26 8,855 158,538 184,408 303,411
Interest-bearing bank and
other borrowings 27 173,205 367,136 465,209 843,396
Lease liabilities 14 6,464 8,760 9,616 11,239
Deferred government grants 28 3,904 6,389 13,355 22,707
Due to related parties 38 1,132,459 3,029,579 117,383 55,184
Tax payable – – 25 –
Provisions 29 2,139 2,804 48,534 86,302
Total current liabilities 2,122,156 6,430,044 10,399,482 10,889,018
APPENDIX I ACCOUNTANTS’ REPORT
– I-6 –


--- page 525 ---
As at 31 December
As at
30 June
Notes 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
NET CURRENT
(LIABILITIES)/ASSETS (967,162) (2,556,368) 6,039,217 3,056,780
TOTAL ASSETS LESS
CURRENT
LIABILITIES 533,051 2,594,595 16,041,921 17,480,423
NON-CURRENT
LIABILITIES
Interest-bearing bank and
other borrowings 27 108,000 211,440 4,185,965 6,291,516
Lease liabilities 14 37,615 32,825 25,828 21,737
Deferred government grants 28 39,733 60,296 155,012 268,223
Provisions 29 18,590 47,154 223,543 253,981
Due to related parties 38 – – – 36,000
Total non-current liabilities 203,938 351,715 4,590,348 6,871,457
Net assets 329,113 2,242,880 11,451,573 10,608,966
EQUITY
Equity attributable to owners
of the parent
Paid-in capital/share capital 30 300,000 1,463,415 2,160,804 2,160,804
(Deficits)/reserves 31 (71,648) 565,576 8,588,143 7,955,055
228,352 2,028,991 10,748,947 10,115,859
Non-controlling interests 100,761 213,889 702,626 493,107
Total equity 329,113 2,242,880 11,451,573 10,608,966
APPENDIX I ACCOUNTANTS’ REPORT
– I-7 –


--- page 526 ---
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Y ear ended 31 December 2020
Attributable to owners of the parent
Notes
Paid-in
capital
Merger
reserve*
Accumulated
losses* Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2020 300,000 – (148,622) 151,378 – 151,378
Loss for the year – – (40,843) (40,843) (12,436) (53,279)
Total comprehensive income
for the year – – (40,843) (40,843) (12,436) (53,279)
Business combination under
common control 31(ii) – 117,817 – 117,817 113,197 231,014
At 31 December 2020 300,000 117,817 (189,465) 228,352 100,761 329,113
APPENDIX I ACCOUNTANTS’ REPORT
– I-8 –


--- page 527 ---
Y ear ended 31 December 2021
Attributable to owners of the parent
Notes
Paid-in
capital
Capital
reserve*
Merger
reserve*
Share
incentive
reserve*
Accumulated
losses* Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2021 300,000 – 117,817 – (189,465) 228,352 100,761 329,113
Loss for the year – – – – (717,227) (717,227) (86,982) (804,209)
Total comprehensive
income for the year – – – – (717,227) (717,227) (86,982) (804,209)
Contribution from
shareholders 30(a) 1,163,415 1,451,585 – – – 2,615,000 – 2,615,000
Business combination
under common
control 31(ii) – (774) (117,817) – – (118,591) (64,941) (183,532)
Contribution from
non-controlling
interests 31(ii) – – – – – – 243,900 243,900
Acquisition of
non-controlling
interests 31(i)(a) – (21,151) – – – (21,151) 21,151 –
Share incentive
plan expense 32 – – – 42,608 – 42,608 – 42,608
At 31 December 2021 1,463,415 1,429,660 – 42,608 (906,692) 2,028,991 213,889 2,242,880
APPENDIX I ACCOUNTANTS’ REPORT
– I-9 –


--- page 528 ---
Y ear ended 31 December 2022
Attributable to owners of the parent
Notes
Paid-in
capital/
share capital
Capital
reserve*
Share
incentive
reserve*
Accumulated
losses* Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2022 1,463,415 1,429,660 42,608 (906,692) 2,028,991 213,889 2,242,880
Loss for the year – – – (354,121) (354,121) (96,702) (450,823)
Total comprehensive income
for the year – – – (354,121) (354,121) (96,702) (450,823)
Contribution from
shareholders 30(c) 697,389 8,243,390 – – 8,940,779 – 8,940,779
Contribution from
non-controlling interests 33 – – – – – 588,000 588,000
Acquisition of
non-controlling interests 31(i)(b) – (339) – – (339) (2,561) (2,900)
Conversion into
a joint stock company 30(b) – (736,366) – 736,366 – – –
Share incentive plan expense 32 – – 133,637 – 133,637 – 133,637
At 31 December 2022 2,160,804 8,936,345 176,245 (524,447) 10,748,947 702,626 11,451,573
APPENDIX I ACCOUNTANTS’ REPORT
– I-10 –


--- page 529 ---
Six months ended 30 June 2022 (unaudited)
Attributable to owners of the parent
Notes
Paid-in
capital/
share capital
Capital
reserve*
Share
incentive
reserve
Accumulated
losses* Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2022 (audited) 1,463,415 1,429,660 42,608 (906,692) 2,028,991 213,889 2,242,880
Loss for the period – – – (609,030) (609,030) (96,442) (705,472)
Total comprehensive income
for the year – – – (609,030) (609,030) (96,442) (705,472)
Contribution from
shareholders 30(c) 300,461 3,059,539 – – 3,360,000 – 3,360,000
Contribution from non-
controlling interests 33 – – – – – 588,000 588,000
Acquisition of non-
controlling interests 31(i)(b) – (339) – – (339) (2,561) (2,900)
Conversion into a joint stock
company 30(b) – (736,366) – 736,366 – – –
Share incentive plan expense 32 – – 63,912 – 63,912 – 63,912
At 30 June 2022 (unaudited) 1,763,876 3,752,494 106,520 (779,356) 4,843,534 702,886 5,546,420
Six months ended 30 June 2023
Attributable to owners of the parent
Notes Share capital
Capital
reserve*
Share
incentive
reserve*
Accumulated
losses* Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2023 2,160,804 8,936,345 176,245 (524,447) 10,748,947 702,626 11,451,573
Loss for the period – – – (710,215) (710,215) (209,519) (919,734)
Total comprehensive income
for the period – – – (710,215) (710,215) (209,519) (919,734)
Share incentive plan expense 32 – – 77,127 – 77,127 – 77,127
At 30 June 2023 2,160,804 8,936,345 253,372 (1,234,662) 10,115,859 493,107 10,608,966
* These accounts comprise the consolidated (deficits)/reserves of RMB(71,648,000), RMB565,576,000,
RMB8,588,143,000 and RMB7,955,055,000 in the consolidated statements of financial position as at 31
December 2020, 2021 and 2022 and 30 June 2023, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-11 –


--- page 530 ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
Y ear ended 31 December
Six months ended
30 June
Notes 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
CASH FLOWS FROM
OPERATING ACTIVITIES
Loss before tax (53,279) (804,209) (450,798) (705,472) (918,106)
Adjustments for reconcile loss before
tax to net cash flows:
Finance costs 7 22,775 32,659 188,925 78,178 113,114
Disposal of items of property,
plant and equipment 13 ––4– 9 2
Share of profits and losses of
joint ventures – – 1,587 – 681
Interest income 6 (2,523) (9,211) (96,071) (14,093) (67,166)
Fair value loss/(gain) on financial
assets at fair value through
profit or loss 193 453 (2,186) – 3,515
Depreciation of property, plant and
equipment 13 69,557 151,094 490,755 158,362 405,303
Depreciation of right-of-use assets 14 19,103 12,597 16,809 8,001 10,526
Amortization of other intangible
assets 15 781 2,680 6,716 2,153 4,690
Amortization of deferred
government grants 28 (2,098) (4,032) (8,939) (3,422) (8,745)
Provision for impairment of trade
receivables, net 20 1,951 1,585 81,050 2,182 247,075
Provision for impairment of
contract assets, net 21 –––– 2,027
Provision for product warranty, net 29 20,060 36,653 239,078 68,419 88,946
(Reversal of)/provision for
impairment of inventories 19 (16,440) 82,620 (24,786) 118,481 264,692
Exchange loss/(gain), net 1,499 (4,939) (11,962) (3,230) (2,397)
Share incentive expense – 42,608 133,637 63,912 77,127
61,579 (459,442) 563,819 (226,529) 221,374
(Increase)/decrease in trade and bills
receivables (517,702) (443,159) (3,210,758) (1,161,197) 338,272
(Increase)/decrease in prepayments
and other receivables and other
assets (54,668) (1,093,675) 125,312 (194,164) 67,557
Decrease/(increase) in amounts due
from related parties 20,095 (24,392) (1,364,279) (99,992) 641,635
Increase/(decrease) in amounts due to
related parties 360,415 (40,434) (308,028) 3,968 (14,670)
Increase in inventories (85,903) (558,704) (2,498,187) (1,371,048) (44,720)
Increase/(decrease) in trade and bills
payables 385,958 1,073,159 5,113,012 2,226,102 (870,377)
Increase/(decrease) in other payables
and accruals 42,750 214,360 269,855 191,609 (36,643)
Decrease in provision (3,151) (7,424) (16,959) (1,366) (20,740)
Increase in contract liabilities 5,494 149,683 25,870 230,408 119,003
Increase in restricted cash (40,842) (776,477) (1,026,201) (1,363,079) (14,360)
APPENDIX I ACCOUNTANTS’ REPORT
– I-12 –


--- page 531 ---
Y ear ended 31 December
Six months ended
30 June
Notes 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Cash flows generated from/(used in)
operating activities 174,025 (1,966,505) (2,326,544) (1,765,288) 386,331
Interest received 2,523 9,211 96,071 14,093 67,166
Net cash flows generated from/(used
in) operating activities 176,548 (1,957,294) (2,230,473) (1,751,195) 453,497
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchases of items of property, plant
and equipment (727,815) (2,362,742) (3,713,042) (1,819,894) (3,615,029)
Proceeds from disposal of items of
property, plant and equipment – 1,58 8–––
Purchase of right-of-use assets – (154,615) (245,142) – (256,124)
Purchase of other intangible assets (6,948) (6,283) (25,198) (11,056) (10,739)
Receipt of government grants for
property, plant and equipment 28 14,929 27,080 110,621 59,000 131,308
Acquisition of subsidiaries 34 – (32,722) – – –
Investments in joint ventures – – (91,070) – (48,930)
Purchases of non-controlling interests – – (2,900) (2,900) –
Acquisition of subsidiaries under
common control 31 – (443,256) – – –
Purchase of financial assets at fair
value through profit or loss (100,710) (147,600) (1,182,814) (20,000) (115,000)
Proceeds from disposal of financial
assets at fair value through
profit or loss 131,170 197,600 1,167,814 – 11,712
Net cash flows used in investing
activities (689,374) (2,920,950) (3,981,731) (1,794,850) (3,902,802)
APPENDIX I ACCOUNTANTS’ REPORT
– I-13 –


--- page 532 ---
Y ear ended 31 December
Six months ended
30 June
Notes 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from contribution from
shareholders – 2,615,000 8,940,779 2,900,000 –
Proceeds from contribution from
original shareholders of
subsidiaries acquired under
common control 231,014 259,72 4–––
Contribution from non-controlling
interests – 243,900 310,000 – 218,000
New bank loans 100,793 538,069 5,290,865 3,075,443 2,808,146
New loans from related parties 463,836 5,269,504 2,184,232 2,126,496 –
Repayment of bank loans – (240,953) (1,190,442) (394,180) (325,560)
Repayment of loans from related
parties (134,906) (3,342,437) (4,837,929) (2,953,870) (2,599)
Interest paid (11,808) (19,931) (135,124) (16,781) (111,152)
Payment of listing expenses – (3,226) (19,109) (6,203) (10,713)
Principal portion of lease payments (12,151) (10,174) (9,822) (4,842) (5,146)
Interest paid for lease payment (5,581) (1,986) (1,814) (935) (810)
Net cash flows generated from
financing activities 631,197 5,307,490 10,531,636 4,725,128 2,570,166
NET INCREASE/(DECREASE) IN
CASH AND CASH
EQUIV ALENTS 118,371 429,246 4,319,432 1,179,083 (879,139)
Cash and cash equivalents at
beginning of year/period 30,064 146,430 580,507 580,507 4,901,062
Effect of foreign exchange rate
changes, net (2,005) 4,831 1,123 3,230 (471)
CASH AND CASH
EQUIV ALENTS AT END OF
YEAR/PERIOD 146,430 580,507 4,901,062 1,762,820 4,021,452
ANALYSIS OF BALANCES OF
CASH AND CASH
EQUIV ALENTS
Cash and cash equivalents as stated
in the statement of financial
position 23 146,430 580,507 4,901,062 1,762,820 4,021,452
Cash and cash equivalents as stated
in the statement of cash flows 146,430 580,507 4,901,062 1,762,820 4,021,452
APPENDIX I ACCOUNTANTS’ REPORT
– I-14 –


--- page 533 ---
STATEMENTS OF FINANCIAL POSITION OF THE COMPANY
As at 31 December
As at
30 June
Notes 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
NON-CURRENT ASSETS
Property, plant and equipment 13 1,212,429 3,084,012 4,758,579 4,875,923
Right-of-use assets 14 73,302 110,714 239,738 237,724
Other intangible assets 15 6,135 6,352 17,765 19,591
Investments in joint ventures 16 – – 132,391 168,933
Investments in subsidiaries 1 7,510 682,598 1,667,845 2,630,637
Prepayments, other receivables and
other assets 17 38,625 185,966 30,569 23,914
Equity investments designated at fair
value through other
comprehensive income 18 – – – 10,000
Due from related parties 38 103 110 110 110
Total non-current assets 1,338,104 4,069,752 6,846,997 7,966,832
CURRENT ASSETS
Inventories 19 239,342 680,702 2,158,919 1,973,405
Trade and bills receivables 20 609,863 1,050,738 3,719,742 2,694,168
Contract assets 21 6,686 20,920 75,622 130,601
Prepayments, other receivables and
other assets 17 24,575 371,655 239,067 121,963
Financial assets at fair value through
profit or loss 22 50,454 – 17,186 116,959
Due from related parties 38 24,446 37,346 2,721,078 3,692,043
Restricted cash 23 13,090 442,790 1,146,022 1,077,724
Cash and cash equivalents 23 3,495 523,573 4,554,868 3,515,273
Total current assets 971,951 3,127,724 14,632,504 13,322,136
CURRENT LIABILITIES
Trade and bills payables 24 559,360 1,254,832 4,867,228 3,951,992
Other payables and accruals 25 176,891 769,963 1,416,363 1,456,627
Contract liabilities 26 8,855 155,156 137,504 113,299
Interest-bearing bank and other
borrowings 27 173,205 367,136 463,437 489,559
Lease liabilities 14 896 1,459 1,990 3,125
Deferred government grants 28 3,904 6,389 10,365 10,720
Due to related parties 38 1,083,529 2,137,250 398,431 895,864
Provisions 29 2,139 2,744 42,719 78,898
Total current liabilities 2,008,779 4,694,929 7,338,037 7,000,084
NET CURRENT
(LIABILITIES)/ASSETS (1,036,828) (1,567,205) 7,294,467 6,322,052
TOTAL ASSETS LESS CURRENT
LIABILITIES 301,276 2,502,547 14,141,464 14,288,884
APPENDIX I ACCOUNTANTS’ REPORT
– I-15 –


--- page 534 ---
As at 31 December
As at
30 June
Notes 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
NON-CURRENT LIABILITIES
Interest-bearing bank and other
borrowings 27 108,000 211,440 2,701,689 2,851,343
Lease liabilities 14 6,341 8,315 8,834 8,130
Deferred government grants 28 39,733 60,296 99,880 136,301
Due to related parties 38 – – – 36,000
Provisions 29 18,590 46,761 205,097 224,462
Total non-current liabilities 172,664 326,812 3,015,500 3,256,236
Net assets 128,612 2,175,735 11,125,964 11,032,648
EQUITY
Paid-in capital/share capital 30 300,000 1,463,415 2,160,804 2,160,804
(Deficits)/reserves (171,388) 712,320 8,965,160 8,871,844
Total equity 128,612 2,175,735 11,125,964 11,032,648
APPENDIX I ACCOUNTANTS’ REPORT
– I-16 –


--- page 535 ---
II. NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1. CORPORATE AND GROUP INFORMATION
REPT BATTERO Energy Co., Ltd. (the “Company”, formerly known as “REPT Energy Co., Ltd.”) was a
limited liability company incorporated in the People’s Republic of China (the “PRC”) on 25 October 2017 by Mr. Yu
Zhaoyu (ρ), Mr. Liu Si (ܠMr. Bao Zheng ( ͍̍), Mr. Jiang Sen (ಌ), Irestal (Shanghai) Stainless Pipe
Co., Ltd.* (“ןܠ(ɪऎ)ʮ̡”) (“Irestal”), Zhejiang Tsingshan Enterprise Management Co., Ltd.*
(“ʮ̡”), Ruipu Technology Group Co., Ltd.* (“ʮ̡”). The registered
office of the Company is located at Room A205, Building C, No. 205, Binhai 6th Road, Jinhai 2nd Road, Konggang
New District, Longwan District, Wenzhou, Zhejiang Province.
During the Relevant Periods, the Company and its subsidiaries (together, the “Group”) are principally engaged
in the R&D, manufacturing and sales of lithium-ion battery products.
As at the date of this report, the Company had direct and indirect interests in its subsidiaries, all of which are
private limited liability companies, the particulars of which are set out below:
Name Notes
Place and
date of
incorporation
Registered
paid-in capital
Percentage of
equity attributable
to the Company Principal
activitiesDirect Indirect
BatteroTech Corporation Limited*
(“ʮ̡”)
(“BatteroTech Shanghai”)
(a) Shanghai
23 July
2020
RMB1,000,000,000 71% – Battery R&D,
production
and sales
BatteroTech Co., Ltd.*
(“ʮ̡”)
(“BatteroTech Jiashan”)
(b) Zhejiang
9 December
2020
RMB820,000,000 – 71% Battery R&D,
production
and sales
Wuhan BatteroTech Corporation
Limited* (“ҦϞ
ʮ̡”) (“BatteroTech Wuhan”)
(c) Hubei
20 August
2019
RMB50,000,000 – 71% Battery R&D
Shanghai REPT Qingchuang
New Energy Co., Ltd.* (“ ɪऎ๿
ʮ̡”) (“REPT
Qingchuang”)
(d) Shanghai
2 January 2018
RMB10,000,000 100% – Battery R&D
Guangdong REPT BATTERO
Energy Co., Ltd.* (“๿ऌᚆඓ
ʮ̡”) (“Guangdong
REPT BATTERO”)
(e) Guangdong
27 July 2021
RMB350,000,000 80% 20% Battery
production
and sales
Zhejiang Ruixu Technology
Co., Ltd.* (“ʮ
̡”) (“Zhejiang Ruixu”)
(f) Zhejiang
6 December
2019
RMB1,010,000 100% – Battery sales
Wenzhou Xinke Technology
Co., Ltd.*
(“ʮ̡”)
(“Wenzhou Xinke”)
(g) Zhejiang
24 April 2020
RMB1,000,000 – 100% Aluminum shell
processing and
machining
Wenzhou Qianshi Mining
Technology Partnership (Limited
Partnership)*
(“ҦΥྫΆุ(Ϟ
Υྫ)”) (“Wenzhou Qianshi”)
(h) Zhejiang
15 November
2021
RMB100,000,000 – 99.99% Shareholding
platform
Zhejiang Ruiyuan Technology
Co., Ltd. *
(“ʮ̡
”)
(“Zhejiang Ruiyuan”)
(i) Zhejiang
6 June 2022
RMB100,000,000 100% – Shareholding
platform
APPENDIX I ACCOUNTANTS’ REPORT
– I-17 –


--- page 536 ---
Name Notes
Place and
date of
incorporation
Registered
paid-in capital
Percentage of
equity attributable
to the Company Principal
activitiesDirect Indirect
REPT SAIC EV Battery
Co., Ltd. *
(“ʮ̡“)
(“REPT SAIC”)
(j) Guangxi
15 April
2022
RMB1,200,000,000 51% – Battery
production
and sales
Chongqing REPT BATTERO Energy
Co., Ltd.*
(“ʮ̡”)
(“Chongqing REPT BATTERO”)
(k) Chongqing
1 March
2023
RMB800,000,000 100% – Battery
production
and sales
BatteroTech (Jiaxing) Co., Ltd.*
(“ʮ̡”)
(“BatteroTech Jiaxing”)
(l) Zhejiang
11 April
2023
RMB1,000,000,000 – 71% Battery
research and
development,
production
and sales
(a) BatteroTech Shanghai is registered as a limited liability company under PRC law. The statutory financial
statements for the years ended 31 December 2020, 2021 and 2022, prepared under PRC Generally Accepted
Accounting Principles (“PRC GAAP”) were audited by Zhejiang South Audit Group Co., Ltd., certified public
accountants registered in the PRC.
(b) BatteroTech Jiashan is registered as a limited liability company under PRC law. The statutory financial
statements for the year ended 31 December 2021 and 2022, prepared under PRC GAAP were audited by
Zhejiang South Audit Group Co., Ltd., certified public accountants registered in the PRC.
(c) BatteroTech Wuhan is registered as a limited liability company under PRC law. No audited financial statements
have been prepared for this entity for the years ended 31 December 2020, 2021 and 2022, as the entity was
not subject to any statutory audit requirements under the relevant rules and regulations in its jurisdiction of
incorporation.
(d) REPT Qingchuang is registered as a limited liability company under PRC law. No audited financial statements
have been prepared for this entity for the years ended 31 December 2020 and 2021, as the entity was not
subject to any statutory audit requirements under the relevant rules and regulations in its jurisdiction of
incorporation. The statutory financial statements for the year ended 31 December 2022, prepared under PRC
GAAP was audited by Zhejiang South Audit Group Co., Ltd., certified public accountants registered in the
PRC.
(e) Guangdong REPT BATTERO is registered as a limited liability company under PRC law. No audited financial
statements have been prepared for this entity for the year ended 31 December 2021, as the entity was not
subject to any statutory audit requirements under the relevant rules and regulations in its jurisdiction of
incorporation. The statutory financial statements for the year ended 31 December 2022, prepared under PRC
GAAP was audited by Zhejiang South Audit Group Co., Ltd., certified public accountants registered in the
PRC.
(f) Zhejiang Ruixu is registered as a limited liability company under PRC law. No audited financial statements
have been prepared for this entity for the years ended 31 December 2020, 2021 and 2022, as the entity was
not subject to any statutory audit requirements under the relevant rules and regulations in its jurisdiction of
incorporation.
(g) Wenzhou Xinke is registered as a limited liability company under PRC law. No audited financial statements
have been prepared for this entity for the years ended 31 December 2020, 2021 and 2022, as the entity was
not subject to any statutory audit requirements under the relevant rules and regulations in its jurisdiction of
incorporation.
APPENDIX I ACCOUNTANTS’ REPORT
– I-18 –


--- page 537 ---
(h) Wenzhou Qianshi is registered as a limited liability company under PRC law. No audited financial statements
have been prepared for this entity for the years ended 31 December 2021 and 2022, as the entity was not
subject to any statutory audit requirements under the relevant rules and regulations in its jurisdiction of
incorporation.
(i) Zhejiang Ruiyuan is registered as a limited liability company under PRC law. No audited financial statements
have been prepared for this entity for the period ended 31 December 2022, as the entity was not subject to any
statutory audit requirements under the relevant rules and regulations in its jurisdiction of incorporation.
(j) REPT SAIC is registered as a limited liability company under PRC law. The statutory financial statements for
the year ended 31 December 2022, prepared under PRC GAAP was audited by Zhejiang South Audit Group
Co., Ltd., certified public accountants registered in the PRC.
(k) Chongqing REPT BATTERO is registered as a limited liability company under PRC law. No audited financial
statements have been prepared for this entity since its incorporation.
(l) BatteroTech Jiaxing is registered as a limited liability company under PRC law. No audited financial
statements have been prepared for this entity since its incorporation.
The Group was ultimately controlled by Mr. Xiang Guangda.
The following table illustrates the details of investments in subsidiaries of the Company:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
REPT Qingchuang 6,500 7,500 10,000 10,000
Zhejiang Ruixu 1,010 1,010 1,010 1,010
BatteroTech Shanghai – 668,988 695,287 708,129
Guangdong REPT BATTERO – 5,100 279,498 399,498
REPT SAIC – – 612,000 612,000
Zhejiang Ruiyuan – – 70,050 100,000
Chongqing REPT BATTERO – – – 800,000
7,510 682,598 1,667,845 2,630,637
* The English names of these companies registered in the PRC represent the translated names of these companies
as no English names have been registered.
2.1 BASIS OF PREPARATION
The Historical Financial Information has been prepared in accordance with International Financial Reporting
Standards (“IFRSs”), which comprise all standards and interpretations approved by the International Accounting
Standards Board. All IFRSs effective for the accounting period commencing from 1 January 2023, together with the
relevant transitional provisions, have been early adopted by the Group in the preparation of the Historical Financial
Information throughout the Relevant Periods.
The Historical Financial Information has been prepared under the historical cost convention, except for wealth
management products, bills receivables classified as the financial assets at fair value through other comprehensive
income and equity investments designated at fair value through other comprehensive income which have been
measured at fair value.
APPENDIX I ACCOUNTANTS’ REPORT
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Basis of consolidation
The Historical Financial Information includes the financial statements of the Company and its subsidiaries for
Relevant Periods. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the
Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that
give the Group the current ability to direct the relevant activities of the investee).
Generally, there is a presumption that a majority of voting rights results in control. When the Company has,
directly or indirectly, less than a majority of the voting or similar rights of an investee, the Group considers all
relevant facts and circumstances in assessing whether it has power over an investee, including:
(a) the contractual arrangement with the other vote holders of the investee;
(b) rights arising from other contractual arrangements; and
(c) the Group’s voting rights and potential voting rights.
The financial statements of the subsidiaries are prepared for the same relevant periods as the Company, using
consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group obtains
control, and continue to be consolidated until the date that such control ceases.
Profit or loss and each component of other comprehensive income are attributed to the owners of the parent
of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit
balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control described above. A change in the ownership interest of a
subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and liabilities
of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation
differences recorded in equity; and recognizes (i) the fair value of the consideration received, (ii) the fair value of
any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Group’s share of components
previously recognized in other comprehensive income is reclassified to profit or loss or retained profits, as
appropriate, on the same basis as would be required if the Group had directly disposed of the related assets or
liabilities.
2.2 ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING STANDARDS
The Group has not applied the following new and revised IFRSs, that have been issued but are not yet effective,
in the Historical Financial Information.
Amendments to IFRS 10 and
IAS 28 (2011)
Sale or Contribution of Assets between an Investor and its Associate or
Joint V enture
2
Amendments to IFRS 16 Lease Liability in a Sale and Leaseback 1
Amendments to IAS 1 Classification of Liabilities as Current or Non-current
(the “2020 Amendments”) 1,3
Amendments to IAS 1 Non-current Liabilities with Covenants (the “2022 Amendments”) 1
Amendments to IAS 7 and
IFRS 7
Supplier Finance Arrangements 1
1 Effective for annual periods beginning on or after 1 January 2024
2 No mandatory effective date yet determined but available for adoption
3 As a consequence of the 2022 Amendments, the effective date of the 2020 Amendments was deferred
to annual periods beginning on or after 1 January 2024
APPENDIX I ACCOUNTANTS’ REPORT
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The Group is in the process of making an assessment of the impact of these new and revised IFRSs upon initial
application. So far, the Group considers that these new and revised IFRSs may result in changes in accounting
policies but are unlikely to have a significant impact on the Group’s financial performance and financial position.
2.3 MATERIAL ACCOUNTING POLICY INFORMATION
Investments in associates and joint ventures
An associate is an entity in which the Group has a long term interest of generally not less than 20% of the
equity voting rights and over which it is in a position to exercise significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the investee, but is not control or joint control
over those policies.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement
have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the
parties sharing control.
The Group’s investments in associates and joint ventures are stated in the consolidated statement of financial
position at the Group’s share of net assets under the equity method of accounting, less any impairment losses.
The Group’s share of the post-acquisition results and other comprehensive income of associates and joint
ventures is included in the consolidated statement of profit or loss and consolidated other comprehensive income,
respectively. In addition, when there has been a change recognized directly in the equity of the associate or joint
venture, the Group recognizes its share of any changes, when applicable, in the consolidated statement of changes
in equity. Unrealized gains and losses resulting from transactions between the Group and its associates or joint
ventures are eliminated to the extent of the Group’s investments in the associates or joint ventures, except where
unrealized losses provide evidence of an impairment of the assets transferred. Goodwill arising from the acquisition
of associates or joint ventures is included as part of the Group’s investments in associates or joint ventures.
If an investment in an associate becomes an investment in a joint venture or vice versa, the retained interest
is not remeasured. Instead, the investment continues to be accounted for under the equity method. In all other cases,
upon loss of significant influence over the associate or joint control over the joint venture, the Group measures and
recognizes any retained investment at its fair value. Any difference between the carrying amount of the associate or
joint venture upon loss of significant influence or joint control and the fair value of the retained investment and
proceeds from disposal is recognized in profit or loss.
When an investment in an associate or a joint venture is classified as held for sale, it is accounted for in
accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.
Merger accounting for business combination under common control
An acquisition of a business which is a business combination under common control is accounted for in a
manner similar to a uniting of interests whereby the assets and liabilities acquired are accounted for at carryover
predecessor values to the other party to the business combination within all periods presented as if the operations of
the Group and the business acquired had always been combined. The difference between the consideration paid by
the Group and the net assets or liabilities of the business acquired is adjusted against equity.
Business combinations and goodwill
Business combinations are accounted for using the acquisition method except for business combination under
common control. The consideration transferred is measured at the acquisition date fair value which is the sum of the
acquisition date fair values of assets transferred by the Group, liabilities assumed by the Group to the former owners
of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. For each business
combination, the Group elects whether to measure the non-controlling interests in the acquiree that are present
ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation at fair
value or at the proportionate share of the acquiree’s identifiable net assets. All other components of non-controlling
interests are measured at fair value. Acquisition-related costs are expensed as incurred.
The Group determines that it has acquired a business when the acquired set of activities and assets includes
an input and a substantive process that together significantly contribute to the ability to create outputs.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 540 ---
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts of the
acquiree.
If the business combination is achieved in stages, the previously held equity interest is remeasured at its
acquisition date fair value and any resulting gain or loss is recognized in profit or loss.
Any contingent consideration to be transferred by the acquirer is recognized at fair value at the acquisition
date. Contingent consideration classified as an asset or liability is measured at fair value with changes in fair value
recognized in profit or loss. Contingent consideration that is classified as equity is not remeasured and subsequent
settlement is accounted for within equity.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the
amount recognized for non-controlling interests and any fair value of the Group’s previously held equity interests in
the acquiree over the identifiable assets acquired and liabilities assumed. If the sum of this consideration and other
items is lower than the fair value of the net assets acquired, the difference is, after reassessment, recognized in profit
or loss as a gain on bargain purchase.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is
tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying
value may be impaired. The Group performs its annual impairment test of goodwill as at 31 December. For the
purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated
to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from
the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those
units or groups of units.
Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of
cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit
(group of cash-generating units) is less than the carrying amount, an impairment loss is recognized. An impairment
loss recognized for goodwill is not reversed in a subsequent period.
Where goodwill has been allocated to a cash-generating unit (or group of cash-generating units) and part of
the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in
the carrying amount of the operation when determining the gain or loss on the disposal. Disposed of in these
circumstances is measured based on the relative value of the operation disposed of and the portion of the
cash-generating unit retained.
Fair value measurement
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant
to the fair value measurement as a whole:
Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 – based on valuation techniques for which the lowest level input that is significant to the fair
value measurement is observable, either directly or indirectly
Level 3 – based on valuation techniques for which the lowest level input that is significant to the fair
value measurement is unobservable
APPENDIX I ACCOUNTANTS’ REPORT
– I-22 –


--- page 541 ---
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group
determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on
the lowest level input that is significant to the fair value measurement as a whole) at the end of each of the Relevant
Periods.
Impairment of non-financial assets
Where an indication of impairment exists, or when annual impairment testing for an asset is required (other
than inventories, contract assets, financial assets and non-current assets), the asset’s recoverable amount is estimated.
An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value less
costs of disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups of assets, in which case the recoverable amount is
determined for the cash-generating unit to which the asset belongs. In testing a cash-generating unit for impairment,
a portion of the carrying amount of a corporate asset (e.g., a headquarters building) is allocated to an individual
cash-generating unit if it can be allocated on a reasonable and consistent basis or, otherwise, to the smallest group
of cash-generating units.
An impairment loss is recognized only if the carrying amount of an asset exceeds its recoverable amount. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset. An
impairment loss is charged to the statement of profit or loss in the period in which it arises in those expense categories
consistent with the function of the impaired asset.
An assessment is made at the end of each of the Relevant Periods as to whether there is an indication that
previously recognized impairment losses may no longer exist or may have decreased. If such an indication exists, the
recoverable amount is estimated. A previously recognized impairment loss of an asset other than goodwill is reversed
only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to
an amount higher than the carrying amount that would have been determined (net of any depreciation/amortization)
had no impairment loss been recognized for the asset in prior years. A reversal of such an impairment loss is credited
to the statement of profit or loss in the period in which it arises.
Related parties
A party is considered to be related to the Group if:
(a) the party is a person or a close member of that person’s family and that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or of a parent of the Group;
or
(b) the party is an entity where any of the following conditions applies:
(i) the entity and the Group are members of the same group;
(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow
subsidiary of the other entity);
(iii) the entity and the Group are joint ventures of the same third party;
(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;
(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or
an entity related to the Group;
(vi) the entity is controlled or jointly controlled by a person identified in (a);
APPENDIX I ACCOUNTANTS’ REPORT
– I-23 –


--- page 542 ---
(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity); and
(viii) the entity, or any member of a group of which it is a part, provides key management personnel
services to the Group or to the parent of the Group.
Property, plant and equipment and depreciation
Property, plant and equipment, other than construction in progress, are stated at cost less accumulated
depreciation and any impairment losses. The cost of an item of property, plant and equipment comprises its purchase
price and any directly attributable costs of bringing the asset to its working condition and location for its intended
use.
Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs
and maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where the
recognition criteria are satisfied, the expenditure for a major inspection is capitalized in the carrying amount of the
asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at
intervals, the Group recognizes such parts as individual assets with specific useful lives and depreciates them
accordingly.
Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and
equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as
follows:
Buildings 4.75-9.50%
Leasehold improvements 16.29-31.67%
Plant and machinery 9.50-31.67%
Motor vehicles 23.75%
Furnitures and other 9.50-31.67%
Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is
allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives
and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end.
An item of property, plant and equipment including any significant part initially recognized is derecognized
upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal
or retirement recognized in profit or loss in the year the asset is derecognized is the difference between the net sales
proceeds and the carrying amount of the relevant asset.
Construction in progress represents a building under construction, which is stated at cost less any impairment
losses, and is not depreciated. Cost comprises the direct costs of construction and capitalized borrowing costs on
related borrowed funds during the period of construction. Construction in progress is reclassified to the appropriate
category of property, plant and equipment when completed and ready for use.
Intangible assets (other than goodwill)
Intangible assets acquired separately are measured on initial recognition at cost. The useful lives of intangible
assets are assessed to be either finite or indefinite. Intangible assets with finite lives are subsequently amortized over
the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may
be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are
reviewed at least at each financial year end.
Software
Software is stated at cost less any impairment losses and is amortized on the straight-line basis over its
estimated useful life of 5 years.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 543 ---
Emission rights
Emission rights is stated at cost less any impairment losses and is amortized on the straight-line basis over its
estimated useful life of 5 years.
Research and development costs
All research costs are charged to the profit or loss as incurred.
Expenditure incurred on projects to develop new products is capitalized and deferred only when the Group can
demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its
intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the
availability of resources to complete the project and the ability to measure reliably the expenditure during the
development. Product development expenditure which does not meet these criteria is expensed when incurred.
Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases
and leases of low-value assets. The Group recognizes lease liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.
(a) Right-of-use assets
Right-of-use assets are recognized at the commencement date of the lease (that is the date the underlying
asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and any
impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at
or before the commencement date less any lease incentives received.
Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease terms and the
estimated useful lives of the assets as follows:
Leasehold land 1.5–50 years
Buildings 2-6 years
Plant and machinery 2 years
If ownership of the leased asset transfers to the Group by the end of the lease term or the cost reflects
the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
(b) Lease liabilities
Lease liabilities are recognized at the commencement date of the lease at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in-substance
fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate,
and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for
termination of a lease, if the lease term reflects the Group exercising the option to terminate the lease. The
variable lease payments that do not depend on an index or a rate are recognized as an expense in the period
in which the event or condition that triggers the payment occurs.
APPENDIX I ACCOUNTANTS’ REPORT
– I-25 –


--- page 544 ---
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the
lease commencement date because the interest rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced
for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in lease payments (e.g., a change to future lease payments
resulting from a change in an index or rate) or a change in assessment of an option to purchase the underlying
asset.
(c) Short-term leases
The Group applies the short-term lease recognition exemption to its short-term leases of buildings (that
is those leases that have a lease term of 12 months or less from the commencement date and do not contain
a purchase option). Lease payments on short-term leases are recognized as an expense on a straight-line basis
over the lease term.
Group as a lessor
When the Group acts as a lessor, it classifies at lease inception (or when there is a lease modification) each
of its leases as either an operating lease or a finance lease.
Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of
an asset are classified as operating leases. When a contract contains lease and non-lease components, the Group
allocates the consideration in the contract to each component on a relative stand-alone selling price basis. Rental
income is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of
profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease
are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental
income. Contingent rents are recognized as revenue in the period in which they are earned.
Leases that transfer substantially all the risks and rewards incidental to ownership of an underlying asset to
the lessee are accounted for as finance leases.
Investments and other financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, and fair value
through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash
flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that
do not contain a significant financing component or for which the Group has applied the practical expedient of not
adjusting the effect of a significant financing component, the Group initially measures a financial asset at its fair
value, plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables
that do not contain a significant financing component or for which the Group has applied the practical expedient are
measured at the transaction price determined under IFRS 15 in accordance with the policies set out for “Revenue
recognition” below.
In order for a financial asset to be classified and measured at amortized cost or fair value through other
comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest (“SPPI”)
on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured
at fair value through profit or loss, irrespective of the business model.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order
to generate cash flows. The business model determines whether cash flows will result from collecting contractual
cash flows, selling the financial assets, or both. Financial assets classified and measured at amortized cost are held
within a business model with the objective to hold financial assets in order to collect contractual cash flows, while
financial assets classified and measured at fair value through other comprehensive income are held within a business
model with the objective of both holding to collect contractual cash flows and selling. Financial assets which are not
held within the aforementioned business models are classified and measured at fair value through profit or loss.
APPENDIX I ACCOUNTANTS’ REPORT
– I-26 –


--- page 545 ---
All regular way purchases and sales of financial assets are recognized on the trade date, that is, the date that
the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial
assets that require delivery of assets within the period generally established by regulation or convention in the
marketplace.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:
Financial assets at amortized cost (debt instruments)
Financial assets at amortized cost are subsequently measured using the effective interest method and are
subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized,
modified or impaired.
Financial assets at fair value through other comprehensive income (debt instruments)
For debt investments at fair value through other comprehensive income, interest income, foreign
exchange revaluation and impairment losses or reversals are recognized in the statement of profit or loss and
computed in the same manner as for financial assets measured at amortized cost. The remaining fair value
changes are recognized in other comprehensive income. Upon derecognition, the cumulative fair value change
recognized in other comprehensive income is recycled to the statement of profit or loss.
Financial assets designated at fair value through other comprehensive income (equity investments)
Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity
investments designated at fair value through other comprehensive income when they meet the definition of
equity under IAS 32 Financial Instruments: Presentation and are not held for trading. The classification is
determined on an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to the statement of profit or loss. Dividends
are recognised as other income in the statement of profit or loss when the right of payment has been
established, it is probable that the economic benefits associated with the dividend will flow to the Group and
the amount of the dividend can be measured reliably, except when the Group benefits from such proceeds as
a recovery of part of the cost of the financial asset, in which case, such gains are recorded in other
comprehensive income. Equity investments designated at fair value through other comprehensive income are
not subject to impairment assessment.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are carried in the statement of financial position at
fair value with net changes in fair value recognized in profit or loss.
This category includes derivative instruments and equity investments which the Group had not
irrevocably elected to classify at fair value through other comprehensive income. Dividends on equity
investments classified as financial assets at fair value through profit or loss are also recognized as other income
in the statement of profit or loss when the right of payment has been established, it is probable that the
economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be
measured reliably.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets)
is primarily derecognized (i.e., removed from the Group’s consolidated statement of financial position) when:
 the rights to receive cash flows from the asset have expired; or
 the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation
to pay the received cash flows in full without material delay to a third party under a “pass-through”
arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset,
or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset,
but has transferred control of the asset.
APPENDIX I ACCOUNTANTS’ REPORT
– I-27 –


--- page 546 ---
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When
it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of
the asset, the Group continues to recognize the transferred asset to the extent of the Group’s continuing involvement.
In that case, the Group also recognizes an associated liability. The transferred asset and the associated liability are
measured on a basis that reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower
of the original carrying amount of the asset and the maximum amount of consideration that the Group could be
required to repay.
Impairment of financial assets
The Group recognizes an allowance for expected credit losses (“ECLs”) for all debt instruments not held at
fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in
accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation
of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held
or other credit enhancements that are integral to the contractual terms.
General approach
ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase
in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are
possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a
significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over
the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
At each reporting date, the Group assesses whether the credit risk on a financial instrument has increased
significantly since initial recognition. When making the assessment, the Group compares the risk of a default
occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial
instrument as at the date of initial recognition and considers reasonable and supportable information that is available
without undue cost or effort, including historical and forward-looking information.
The Group considers a financial asset in default when contractual payments are 90 days past due. However,
in certain cases, the Group may also consider a financial asset to be in default when internal or external information
indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account
any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation
of recovering the contractual cash flows.
Debt investments at fair value through other comprehensive income and financial assets at amortized cost are
subject to impairment under the general approach and they are classified within the following stages for measurement
of ECLs, except for trade receivables, bills receivables, contract assets and certain of amount due from related parties
which apply the simplified approach as detailed below:
Stage 1 – Financial instruments for which credit risk has not increased significantly since initial
recognition and for which the loss allowance is measured at an amount equal to 12-month
ECLs
Stage 2 – Financial instruments for which credit risk has increased significantly since initial
recognition but that are not credit-impaired financial assets and for which the loss
allowance is measured at an amount equal to lifetime ECLs
Stage 3 – Financial assets that are credit-impaired at the reporting date (but that are not purchased or
originated credit-impaired) and for which the loss allowance is measured at an amount
equal to lifetime ECLs
APPENDIX I ACCOUNTANTS’ REPORT
– I-28 –


--- page 547 ---
Simplified approach
For trade receivables, bills receivables, contract assets and certain of amount due from related parties that do
not contain a significant financing component or when the Group applies the practical expedient of not adjusting the
effect of a significant financing component, the Group applies the simplified approach in calculating ECLs. Under
the simplified approach, the Group does not track changes in credit risk, but instead recognizes a loss allowance based
on lifetime ECLs at the end of each of the Relevant Periods. The Group has established a provision matrix that is
based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the
economic environment.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as loans and borrowings or payables, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
The Group’s financial liabilities include trade and bills payables, certain other payables and accruals, amounts
due to related parties, and interest-bearing bank and other borrowings.
Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification as follows:
Financial liabilities at amortized cost (loans and borrowings)
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized
cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which
case they are stated at cost. Gains and losses are recognized in the statement of profit or loss when the
liabilities are derecognized as well as through the effective interest rate amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or
costs that are an integral part of the effective interest rate. The effective interest rate amortization is included
in finance costs in the statement of profit or loss.
Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or canceled, or
expires.
When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as
a derecognition of the original liability and a recognition of a new liability, and the difference between the respective
carrying amounts is recognized in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial
position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to
settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined on the weighted average
basis. Net realizable value is based on estimated selling prices less any estimated costs to be incurred to completion
and disposal.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 548 ---
Cash and cash equivalents
For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash and bank
balances and demand deposits, are subject to an insignificant risk of changes in value, and have a short maturity of
generally within three months when acquired and form an integral part of the Group’s cash management.
For the purpose of the consolidated statement of financial position, cash and cash equivalents comprise cash
on hand and at banks, including demand deposits, and assets similar in nature to cash, which are not restricted as to
use.
Provisions
A provision is recognized when a present obligation (legal or constructive) has arisen as a result of a past event
and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable
estimate can be made of the amount of the obligation.
When the effect of discounting is material, the amount recognized for a provision is the present value at the
end of Relevant Periods of the future expenditures expected to be required to settle the obligation.
The increase in the discounted present value amount arising from the passage of time is included in finance
costs in the statement of profit or loss.
The Group provides for warranties in relation to the sale of certain products for general repairs of defects
occurring during the warranty period. Provisions for these assurance-type warranties granted by the Group are
recognized based on sales volume and past experience of the level of repairs and returns, discounted to their present
values as appropriate.
Income tax
Income tax comprises current and deferred tax. Income tax relating to items recognized outside profit or loss
is recognized outside profit or loss, either in other comprehensive income or directly in equity.
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the
taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of
the Relevant Periods, taking into consideration interpretations and practices prevailing in the countries in which the
Group operates.
Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting
period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
 when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in
a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
 in respect of taxable temporary differences associated with investments in subsidiaries, associates and
joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, and the carry forward of unused
tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences, and the carry forward of unused tax
credits and unused tax losses can be utilized, except:
 when the deferred tax asset relating to the deductible temporary differences arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit or loss; and
 in respect of deductible temporary differences associated with investments in subsidiaries, associates
and joint ventures, deferred tax assets are only recognized to the extent that it is probable that the
temporary differences will reverse in the foreseeable future and taxable profit will be available against
which the temporary differences can be utilized.
APPENDIX I ACCOUNTANTS’ REPORT
– I-30 –


--- page 549 ---
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
tax asset to be utilized. Unrecognized deferred tax assets are reassessed at the end of each reporting period and are
recognized to the extent that it has become probable that sufficient taxable profit will be available to allow all or part
of the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when
the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted by the end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right
to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which
intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities
simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected
to be settled or recovered.
Government grants
Government grants are recognized at their fair value where there is reasonable assurance that the grant will be
received and all attaching conditions will be complied with. When the grant relates to an expense item, it is
recognized as income on a systematic basis over the periods that the costs, for which it is intended to compensate,
are expensed.
Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to
the statement of profit or loss over the expected useful life of the relevant asset by equal annual instalments or
deducted from the carrying amount of the asset and released to the statement of profit or loss by way of a reduced
depreciation charge.
Revenue recognition
Revenue from contracts with customers
Revenue from contracts with customers is recognized when control of goods or services is transferred to the
customers at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those
goods or services.
When the consideration in a contract includes a variable amount, the amount of consideration is estimated to
which the Group will be entitled in exchange for transferring the goods or services to the customer. The variable
consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue
reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the
variable consideration is subsequently resolved.
(a) Sales of products
Revenue from the sales of goods primarily arises from sales of battery products, wastes, battery
components and others, which is recognized at the point in time when control of the products is transferred
to the customer, generally on the acceptance of the products.
(b) Research and development services
Revenue from R&D services was recognized only when it satisfied a performance obligation by
rendering the service or transferring the control of the result of R&D and there is no unfulfilled obligation that
could affect the buyer’s acceptance of the result. Before that, the counterparty had no right to receive and
consume the benefits of the R&D services.
Revenue from other sources
Rental income is recognized on a time proportion basis over the lease terms. Variable lease payments that do
not depend on an index or a rate are recognized as income in the accounting period in which they are incurred.
APPENDIX I ACCOUNTANTS’ REPORT
– I-31 –


--- page 550 ---
Other income
Interest income is recognized on an accrual basis using the effective interest rate method by applying the rate
that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter
period, when appropriate, to the net carrying amount of the financial asset.
Contract assets
A contract asset is the right to consideration in exchange for goods transferred or services provided to the
customer. If the Group performs by transferring goods or services to a customer before the customer pays
consideration or before payment is due, a contract asset is recognized for the earned consideration that is conditional.
Contract assets are subject to impairment assessment, details of which are included in the accounting policies for
impairment of financial assets.
Contract liabilities
A contract liability is recognized when a payment is received or a payment is due (whichever is earlier) from
a customer before the Group transfers the related goods or services. Contract liabilities are recognized as revenue
when the Group performs under the contract (i.e., transfers control of the related goods or services to the customer).
Share-based payments
The Company operates employee share plans for the purpose of providing incentives and rewards to eligible
participants who contribute to the success of the Group’s operations. Employees (including directors) of the Group
receive remuneration in the form of share-based payments, whereby employees render services in exchange for equity
instruments (“equity-settled transactions”).
The cost of equity-settled transactions with employees for grants is measured by reference to the fair value at
the date at which they are granted. The fair value is determined by an external valuer using a discounted cash flow
model, further details of which are given in note 32 to the financial statements.
The cost of equity-settled transactions is recognized in employee benefit expense, together with a
corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled.
The cumulative expense recognized for equity-settled transactions at the end of each of the Relevant Periods until
the vesting date reflects the extent to which the lock-up restricted period has expired and the Group’s best estimate
of the number of equity instruments that will ultimately vest. The charge or credit to profit or loss for a period
represents the movement in the cumulative expense recognized as at the beginning and end of that period.
Service and non-market performance conditions are not taken into account when determining the grant date
fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate
of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the
grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are
considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead
to an immediate expensing of an award unless there are also service and/or performance conditions.
For awards that do not ultimately vest because non-market performance and/or service conditions have not
been met, no expense is recognized. Where awards include a market or non-vesting condition, the transactions are
treated as vesting irrespective of whether the market or non-vesting condition is satisfied, provided that all other
performance and/or service conditions are satisfied.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognized as if the
terms had not been modified, if the original terms of the award are met. In addition, an expense is recognized for any
modification that increases the total fair value of the share-based payments, or is otherwise beneficial to the employee
as measured at the date of modification.
Where an equity-settled award is canceled, it is treated as if it had vested on the date of cancelation, and any
expense not yet recognized for the award is recognized immediately. This includes any award where non-vesting
conditions within the control of either the Group or the employee are not met. However, if a new award is substituted
for the canceled award, and is designated as a replacement award on the date that it is granted, the canceled and new
awards are treated as if they were a modification of the original award, as described in the previous paragraph.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 551 ---
Other employee benefits
Social pension plans
The Group has social pension plans for its employees arranged by local government labor and security
authorities. The Group makes contributions on a monthly basis to the social pension plans. The contributions are
charged to profit or loss as they become payable in accordance with the rules of the social pension plans. The Group’s
liability in respect of these funds is limited to the contributions payable in each of the Relevant Periods.
Housing fund and other social insurances
The Group has participated in defined social security contribution schemes for its employees pursuant to the
relevant laws and regulations of the PRC. These include housing fund, basic medical insurance, unemployment
insurance, injury insurance and maternity insurance. The Group makes monthly contributions to the housing fund and
other social insurances. The contributions are charged to profit or loss on an accrual basis. The Group’s liability in
respect of these funds is limited to the contributions payable in each of the Relevant Periods.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e.,
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalized as
part of the cost of those assets. The capitalization of such borrowing costs ceases when the assets are substantially
ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings
pending their expenditure on qualifying assets is deducted from the borrowing costs capitalized. All other borrowing
costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that
an entity incurs in connection with the borrowing of funds.
Dividends
Final dividends are recognized as a liability when they are approved by the shareholders in a general meeting.
Foreign currencies
These financial statements are presented in RMB, which is the Group’s functional currency. Each entity in the
Group determines its own functional currency and items included in the financial statements of each entity are
measured using that functional currency. Foreign currency transactions recorded by the entities in the Group are
initially recorded using their respective functional currency rates prevailing at the dates of the transactions. Monetary
assets and liabilities denominated in foreign currencies are translated at the functional currency rates of exchange
ruling at the end of Relevant Periods. Differences arising on settlement or translation of monetary items are
recognized in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency
are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on
translation of a non-monetary item measured at fair value is treated in line with the recognition of the gain or loss
on change in fair value of the item (i.e., translation difference on the item whose fair value gain or loss is recognized
in other comprehensive income or profit or loss is also recognized in other comprehensive income or profit or loss,
respectively).
In determining the exchange rate on initial recognition of the related asset, expense or income on the
derecognition of a non-monetary asset or non-monetary liability relating to an advance consideration, the date of
initial transaction is the date on which the Group initially recognizes the non-monetary asset or non-monetary
liability arising from the advance consideration. If there are multiple payments or receipts in advance, the Group
determines the transaction date for each payment or receipt of the advance consideration.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 552 ---
3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Group’s Historical Financial Information requires management to make judgements,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their
accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and
estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or
liabilities affected in the future.
Judgements
In the process of applying the Group’s accounting policies, management has made the following judgements,
apart from those involving estimations, which have the most significant effect on the amounts recognized in the
financial statements.
Research and development costs
All research expenses are charged to the profit or loss as incurred during the Relevant Periods.
Estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of
Relevant Periods, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described below:
Provision for expected credit losses on trade receivables
Provision for impairment of trade receivables is made based on an assessment of expected credit losses on
trade receivables. The assessment of expected credit losses requires management’s judgement and estimates. Trade
receivables relating to customers with known financial difficulties or significant doubt on collection are assessed
individually for impairment allowance. The remaining trading receivables are grouped based on aging of bills of
various customer segments with similar loss patterns and collectively assessed for impairment allowance.
Under the collective approach, the Group uses a provision matrix to calculate ECLs for trade receivables. The
provision rates are based on aging analysis of customers that have similar loss patterns.The provision matrix is
initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust the
historical credit loss experience with forward-looking information. For instance, if forecast economic conditions (i.e.,
gross domestic product) are expected to deteriorate over the next year which can lead to an increased number of
defaults in the distribution sector, the historical default rates are adjusted. At each reporting date, the historical
observed default rates are updated and changes in the forward-looking estimates are analyzed.
The assessment of the correlation among historical observed default rates, forecast economic conditions and
ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and forecast economic
conditions. The Group’s historical credit loss experience and forecast of economic conditions may also not be
representative of a customer’s actual default in the future. The information about the ECLs on the Group’s trade
receivables is disclosed in note 20 to the Historical Financial Information.
Impairment of non-financial assets (other than goodwill)
The Group assesses whether there are any indicators of impairment for all non-financial assets (including the
right-of-use assets) at the end of each of the Relevant Periods. Other non-financial assets are tested for impairment
when there are indicators that the carrying amounts may not be recoverable. An impairment exists when the carrying
value of an asset or a cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less
costs of disposal and its value in use. The calculation of the fair value less costs of disposal is based on available
data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less
incremental costs for disposing of the asset. When value-in-use calculations are undertaken, management must
estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in
order to calculate the present value of those cash flows. No impairment was provided by the Group for non-financial
assets as at 31 December 2020, 2021 and 2022 and 30 June 2023.
Write-down of inventories
The Group’s inventories are stated at the lower of cost and net realizable value. The Group writes down its
inventories based on estimates of the realizable value with reference to the aging and conditions of the inventories,
together with the economic circumstances on the marketability of such inventories. Inventories will be reviewed
annually for write-down, if appropriate. Further details of the inventories are set out in note 19 to the Historical
Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
– I-34 –


--- page 553 ---
Useful lives and residual values of items of property, plant and equipment
In determining the useful lives and residual values of items of property, plant and equipment, the Group has
to consider various factors, such as technical or commercial obsolescence arising from changes or improvements in
the production and provision of services, or from a change in the market demand for the product or service output
of the asset, expected usage of the asset, expected physical wear and tear, care and maintenance of the asset, and legal
or similar limits on the use of the asset. The estimation of the useful life of the asset is based on the experience of
the Group with similar assets that are used in a similar way. Additional depreciation is made if the estimated useful
lives and/or residual values of items of property, plant and equipment are different from previous estimation. Useful
lives and residual values are reviewed at the end of each of the years based on changes in circumstances. Further
details of the property, plant and equipment are set out in note 13 to the Historical Financial Information.
Provision
The Group makes a provision for product warranty for the sale of battery products according to the best
expected settlement under the sales agreement. The provision amount takes into account the Group’s recent claims,
past warranty data and the weight of all possible results and their related probabilities. As the Group continues to
upgrade its product design and introduce new models, the recent claims may not represent the claims it will face in
the future for past sales. Any increase or decrease in provision will affect the profit and loss in future years. Further
details of the inventories are set out in note 29 to the Historical Financial Information.
Deferred tax assets
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will
be available against which the losses can be utilized. Significant management judgment is required to determine the
amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits
together with future tax planning strategies. The amounts of unrecognized tax losses and deductible temporary
difference at 31 December 2020, 2021 and 2022 and 30 June 2023 were RMB296,186,000, RMB1,381,523,000,
RMB2,677,184,000 and RMB3,996,521,000, respectively. Further details are contained in note 10 to the Historical
Financial Information.
4. OPERATING SEGMENT INFORMATION
For management purposes, the Group is organized into one single business unit that is the sale of EV battery
products, ESS battery products, wastes, battery components, and R&D services. Management reviews the overall
results and financial position of the Group as a whole based on the same accounting policies set out in note 2.3.
Accordingly, the Group has only one single operating segment and no further analysis of the single segment is
presented.
Geographical information
(a) Revenue from external customers
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Mainland China (i) 904,476 2,091,700 14,480,096 3,905,432 6,218,709
Other countries/regions 2,510 17,444 167,682 111,143 376,085
906,986 2,109,144 14,647,778 4,016,575 6,594,794
(i) The amounts include sales of battery components to Yongqing Technology Group Co., Ltd. (“Ҧ
ʮ̡”) (“Yongqing Technology”) for onward exports to an overseas EV manufacturer.
The revenue information above is based on the locations of the direct customers who signed the sales
agreements with the Group.
(b) As the Group’s non-current assets were located in the PRC during the Relevant Periods, no geographical
information is presented.
APPENDIX I ACCOUNTANTS’ REPORT
– I-35 –


--- page 554 ---
Information about major customers
Revenue from a single customer, including group of entities which are known to be under common control,
accounted for over 10% of the Group’s total revenue during the Relevant Periods is as follows:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Customer A* 350,396 516,354 N/A N/A N/A
Customer B* N/A N/A 1,708,342 476,765 N/A
Customer C* N/A N/A N/A 645,422 N/A
Customer D* N/A N/A N/A N/A 835,301
350,396 516,354 1,708,342 1,122,187 835,301
* Revenue from customer A, amounted to less than 10% of the total revenue of the Group for the year
ended 31 December 2022 and the six months ended 30 June 2022 and 2023.
* Revenue from customer B, amounted to less than 10% of the total revenue of the Group for the years
ended 31 December 2020 and 2021 and the six months ended 30 June 2023.
* Revenue from customer C, amounted to less than 10% of the total revenue of the Group for the years
ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2023.
* Revenue from customer D, amounted to less than 10% of the total revenue of the Group for the years
ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022.
5. REVENUE, OTHER INCOME AND GAINS
An analysis of revenue is as follows:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Revenue from contracts
with customers 906,986 2,109,144 14,646,288 4,015,830 6,592,230
Revenue from other
sources
Gross rental income from
operating leases:
Other lease income,
including fixed
income – – 1,490 745 2,564
906,986 2,109,144 14,647,778 4,016,575 6,594,794
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 555 ---
Revenue from contracts with customers
(i) Disaggregated revenue information
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Revenue from contracts
with customers
Sales of EV battery
products-as specified by
the industries of the
customers 673,192 981,507 4,642,801 1,662,547 1,247,794
Sales of ESS battery
products-as specified by
the industries of the
customers 182,105 859,459 8,400,597 1,881,473 4,320,526
Sales of wastes 43,744 251,167 796,789 456,113 165,218
Sales of battery
components – – 771,756 – 832,737
R&D services 6,299 7,188 22,308 11,347 12,316
Others (a) 1,646 9,823 12,037 4,350 13,639
906,986 2,109,144 14,646,288 4,015,830 6,592,230
Timing of revenue
recognition
Goods transferred at a
point in time 900,687 2,101,956 14,623,980 4,004,483 6,579,914
Services satisfied at a
point in time 6,299 7,188 22,308 11,347 12,316
906,986 2,109,144 14,646,288 4,015,830 6,592,230
(a) The amounts mainly include revenue from sales of raw materials.
The following table shows the amounts of revenue recognized in each of the Relevant Periods that were
included in the contract liabilities at the beginning of each of the Relevant Periods and recognized from performance
obligations satisfied in previous years:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Sales of goods 3,361 8,855 158,538 158,538 146,358
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 556 ---
(ii) Performance obligations
Information about the Group’s performance obligations is summarized below:
Sales of goods
The performance obligation is satisfied upon the acceptance of the EV battery products, ESS battery
products, wastes, battery components and others by the customers and the payment is generally due within 60
to 90 days from delivery.
Research and development services
The performance obligation is satisfied at the point in time as services are completed or accepted and
payment is generally due within 30 days from the date of billing. Payment is conditional on the satisfaction
of the service quality by the customers at a point of time as stipulated in the contracts.
The amounts of transaction price allocated to the performance obligation (unsatisfied or partially
unsatisfied) as at the end of each of the Relevant Periods is as follows:
Y ear ended 31 December
Six
months
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Amounts expected to be
recognized as revenue:
Within one year 8,855 158,538 184,408 303,411
All amounts of transaction prices allocated to the performance obligations of sales of goods are expected
to be recognized as revenue within one year.
Other income and gains
An analysis of other income and gains is as follows:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Other income and
gains
Government grants
related to
– Assets (i) 2,098 4,032 8,939 3,422 8,745
– Income 6,936 15,533 43,196 2,322 1,967
Interest income 2,523 9,211 96,071 14,093 67,166
Foreign exchange
gains, net – 4,939 11,962 3,230 2,397
Changes in fair
value
– Financial assets
at fair value
through profit
or loss – – 2,186 – 1,959
Others 750 1,608 5,464 909 3,756
12,307 35,323 167,818 23,976 85,990
(i) The Group has received certain government grants related to assets for investment in equipment
and plant. The grants related to assets were recognized in profit or loss over the useful lives of
the relevant assets. Details of these grants related to assets are set out in note 28.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 557 ---
6. LOSS BEFORE TAX
The Group’s loss before tax is arrived at after charging/(crediting):
Notes Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Cost of inventories sold
and cost of service 697,221 2,128,299 12,579,913 3,660,301 5,551,990
Depreciation of
property, plant and
equipment 13 69,557 151,094 490,755 158,362 405,303
Depreciation of right-of-
use assets 14 19,103 12,597 16,809 8,001 10,526
Amortization of other
intangible assets 15 781 2,680 6,716 2,153 4,690
R&D costs 17,819 102,512 286,857 136,016 216,963
Auditor’s remuneration 30 1,981 300 154 232
Listing expenses – – 3,440 2,675 15,879
Employee benefit
expense (excluding
directors’ and chief
executive’s
remuneration (note
8)):
Wages and salaries 97,073 390,490 1,059,736 441,825 681,741
Pension scheme
contributions 3,315 12,640 86,417 38,983 66,148
Share incentive plan
expense – 27,587 88,339 41,379 53,525
100,388 430,717 1,234,492 522,187 801,414
Foreign exchange
losses/(gains), net 1,499 (4,939) (11,962) (3,230) (2,397)
Provision for
impairment of trade
receivables and
contract assets, net 1,951 1,585 81,050 2,182 249,102
Provision for products
warranty 20,060 36,653 239,078 68,419 88,946
(Reversal of)/provision
for impairment of
inventories (16,440) 82,620 (24,786) 118,481 264,692
Interest income (2,523) (9,211) (96,071) (14,093) (67,166)
Fair value losses/(gains)
on financial assets at
fair value through
profit or loss 193 453 (2,186) – 3,515
APPENDIX I ACCOUNTANTS’ REPORT
– I-39 –


--- page 558 ---
7. FINANCE COSTS
An analysis of finance costs is as follows:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Interest on bank and other
borrowings 11,851 30,673 227,390 111,352 120,774
Interest on lease liabilities 10,924 1,986 1,814 935 810
Interest capitalized – – (40,279) (34,109) (8,470)
22,775 32,659 188,925 78,178 113,114
8. DIRECTORS’ AND CHIEF EXECUTIVE’S REMUNERATION
Directors’ and chief executive’s remuneration for the Relevant Periods, disclosed pursuant to the Listing Rules,
section 383(1)(a), (b), (c) and (f) of the Hong Kong Companies Ordinance and Part 2 of the Companies (Disclosure
of Information about Benefits of Directors) Regulation, is as follows:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Fees –––––
Other emoluments:
Salaries, allowances and
benefits in kind 250 752 2,255 919 978
Performance related
bonuses 300 300 3,458 300 1,729
Pension scheme
contributions 4 57 230 34 93
Share incentive plan
expense – 15,021 45,298 22,533 23,602
554 16,130 51,241 23,786 26,402
During the years ended 31 December 2021 and 2022, certain directors were granted awarded shares, in respect
of their services to the Group, further details of which are set out in note 32 to the Historical Financial Information.
The fair value of such awarded shares, which has been recognized in profit or loss over the lock-up restricted period,
was determined as at the date of grant and the amount included in the Historical Financial Information for the years
ended 31 December 2021, 2022, and the six months ended 30 June 2023, is included in the above directors’ and chief
executives’ remuneration disclosures.
APPENDIX I ACCOUNTANTS’ REPORT
– I-40 –


--- page 559 ---
(a) Independent non-executive directors
The fees paid to independent non-executive directors during the Relevant Periods were as follows:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Ms. Wong Sze Wing N/A N/A – N/A –
Dr. Wang Zhenbo N/A N/A – N/A –
Dr. Ren Shenggang N/A N/A – N/A –
Dr. Simon Chen N/A N/A – N/A –
N/A N/A – N/A –
There were no independent non-executive directors for the Company during year ended 31 December 2020,
2021. On 11 November 2022, Ms. Wong Sze Wing, Dr. Wang Zhenbo, Dr. Ren Shenggang and Dr. Simon Chen were
appointed as independent non-executive directors of the Company.
There were no other emoluments payable to the independent non-executive directors during the Relevant
Periods.
(b) Executive directors, non-executive directors and the chief executive
The remuneration of each director and chief executive of the Company during the Relevant Periods is set out
below:
2020
Salaries,
allowances
and benefits
in kind
Performance
related
bonuses
Pension
scheme
contributions
Total
remuneration
RMB’000 RMB’000 RMB’000 RMB’000
Directors:
Dr. Cao Hui (i) 250 300 4 554
Ms. Sun Jianfen (ii) ––––
Mr. Feng Shaode (iii) ––––
Mr. Jiang Sen (iv) ––––
Mr. Xiang Bingxue (v) ––––
Mr. Hu Xiaodong (vii) ––––
Supervisor:
Ms. Zhao Na (vi) ––––
250 300 4 554
APPENDIX I ACCOUNTANTS’ REPORT
– I-41 –


--- page 560 ---
2021
Salaries,
allowances
and benefits
in kind
Performance
related
bonuses
Pension
scheme
contributions
Share
incentive
plan expense
Total
remuneration
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Directors:
Dr. Cao Hui (i) 752 300 57 15,021 16,130
Ms. Sun Jianfen (ii) –––––
Mr. Jiang Sen (iv) –––––
Mr. Xiang Bingxue (v) –––––
Mr. Hu Xiaodong (vii) –––––
Supervisor:
Ms. Na Zhao (vi) –––––
752 300 57 15,021 16,130
2022
Salaries,
allowances
and benefits
in kind
Performance
related
bonuses
Pension
scheme
contributions
Share
incentive
plan expense
Total
remuneration
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Directors:
Dr. Cao Hui (i) 972 600 101 45,107 46,780
Ms. Sun Jianfen (ii) –––––
Mr. Jiang Sen (iv) –––––
Mr. Xiang Bingxue (v) –––––
Mr. Hu Xiaodong (vii) –––––
Dr. Wu Yanjun (viii) 193 1,500 50 – 1,743
Ms. Huang Jiehua (ix) 569 1,000 44 159 1,772
Mr. Wang Haijun (x) –––––
Ms. Xiang Yangyang (xi) –––––
Mr. Wei Yong (xii) –––––
Mr. Yu Xinhua (xiii) –––––
1,734 3,100 195 45,266 50,295
Non-executive directors:
Mr. Hu Xiaodong (vii) –––––
Mr. Wang Haijun (x) –––––
Ms. Xiang Yangyang (xi) –––––
Mr. Wei Yong (xii) –––––
Mr. Yu Xinhua (xiii) –––––
–––––
Supervisor:
Ms. Zhao Na (vi) –––––
Mr. Qu Enci (xiv) –––––
Mr. Fang Yihui (xv) –––––
Ms. Jin Shanyan (xvi) 521 358 35 32 946
2,255 3,458 230 45,298 51,241
APPENDIX I ACCOUNTANTS’ REPORT
– I-42 –


--- page 561 ---
Six months ended 30 June 2022 (unaudited)
Salaries,
allowances
and benefits
in kind
Performance
related
bonuses
Pension
scheme
contributions
Share
incentive
plan expense
Total
remuneration
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Directors:
Dr. Cao Hui (i) 595 300 21 22,533 23,449
Ms. Sun Jianfen (ii) –––––
Mr. Jiang Sen (iv) –––––
Mr. Xiang Bingxue (v) –––––
Mr. Hu Xiaodong (vii) –––––
Dr. Wu Yanjun (viii) –––––
Mr. Wang Haijun (x) –––––
Mr. Wei Yong (xii) –––––
Ms. Xiang Yangyang (xi) –––––
Supervisor:
Ms. Zhao Na (vi) –––––
Mr. Qu Enci (xiv) –––––
Ms. Jin Shanyan (xvi) 324 – 13 – 337
919 300 34 22,533 23,786
Six months ended 30 June 2023
Salaries,
allowances
and benefits
in kind
Performance
related
bonuses
Pension
scheme
contributions
Share
incentive
plan expense
Total
remuneration
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Directors:
Dr. Cao Hui (i) 255 300 30 23,220 23,805
Dr. Wu Yanjun (viii) 289 750 30 – 1,069
Ms. Huang Jiehua (ix) 273 500 19 318 1,110
817 1,550 79 23,538 25,984
Non-executive directors:
Mr. Hu Xiaodong (vii) –––––
Mr. Wang Haijun (x) –––––
Ms. Xiang Yangyang (xi) –––––
Mr. Wei Yong (xii) –––––
Mr. Yu Xinhua (xiii) –––––
Supervisor:
Mr. Qu Enci (xiv) –––––
Mr. Fang Yihui (xv) –––––
Ms. Jin Shanyan (xvi) 161 179 14 64 418
978 1,729 93 23,602 26,402
APPENDIX I ACCOUNTANTS’ REPORT
– I-43 –


--- page 562 ---
(i) Dr. Cao Hui has been appointed as a director and the chief executive officer of the Company with effect
from 25 October 2017.
(ii) Ms. Sun Jianfen has been appointed as a director of the Company with effect from 25 October 2017, and
tendered her resignation with effect from 7 April 2022 due to the commercial arrangement.
(iii) Mr. Feng Shaode has been appointed as a director of the Company with effect from 25 October 2017,
and tendered his resignation with effect from 26 August 2020 due to the commercial arrangement.
(iv) Mr. Jiang Sen has been appointed as a director of the Company with effect from 25 October 2017, and
tendered his resignation with effect from 7 April 2022 due to the commercial arrangement.
(v) Mr. Xiang Bingxue has been appointed as a director of the Company with effect from 25 October 2017,
and tendered his resignation with effect from 7 April 2022 due to the commercial arrangement.
(vi) Ms. Zhao Na has been appointed as a supervisor of the Company with effect from 25 October 2017, and
tendered his resignation with effect from 7 April 2022 due to the commercial arrangement.
(vii) Mr. Hu Xiaodong has been appointed as a director of the Company with effect from 12 June 2020, and
re-designated as a non-executive director on 11 November 2022.
(viii) Dr. Wu Yanjun has been appointed as a director of the Company with effect from 31 March 2022.
(ix) Ms. Huang Jiehua has been appointed as a director of the Company with effect from 4 August 2022.
(x) Mr. Wang Haijun has been appointed as a director of the Company with effect from 31 March 2022, and
re-designated as a non-executive director on 11 November 2022.
(xi) Ms. Xiang Yangyang has been appointed as a director of the Company with effect from 31 March 2022,
and re-designated as a non-executive director on 11 November 2022.
(xii) Mr. Wei Yong has been appointed as a director of the Company with effect from 11 April 2022, and
re-designated as a non-executive director on 11 November 2022.
(xiii) Mr. Yu Xinhua has been appointed as a director of the Company with effect from 4 August 2022, and
re-designated as a non-executive director on 11 November 2022.
(xiv) Mr. Qu Enci has been appointed as a supervisor of the Company with effect from 31 March 2022.
(xv) Mr. Fang Yihui has been appointed as a supervisor of the Company with effect from 4 August 2022.
(xvi) Ms. Jin Shanyan has been appointed as a supervisor of the Company with effect from 31 March 2022.
There was no arrangement under which a director waived or agreed to waive any remuneration during the
Relevant Periods.
APPENDIX I ACCOUNTANTS’ REPORT
– I-44 –


--- page 563 ---
9. FIVE HIGHEST PAID EMPLOYEES
The five highest paid employees during the Relevant Periods included nil, one, one and one director,
respectively, details of whose remuneration are set out in note 8.
Details of the remuneration for the remaining five, four, four and four highest paid employees who are neither
directors, supervisors nor the chief executive of the Company during the Relevant Periods are as follows:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Salaries, allowances and
benefits in kind 1,998 2,012 2,578 1,415 1,132
Performance related
bonuses 1,364 936 3,182 1,611 1,575
Pension scheme
contributions 19 213 383 83 141
Share incentive plan
expense – 17,622 52,204 26,433 26,102
3,381 20,783 58,347 29,542 28,950
The numbers of non-director, non-supervisor and non-chief executive highest paid employees whose
remuneration fell within the following bands are as follows:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
(unaudited)
Nil to HKD1,000,000 4––––
HKD1,000,000 to
HKD7,000,000 13––1
HKD7,000,000 to
HKD15,000,000 –1143
HKD15,000,000 to
HKD25,000,000 ––3––
54444
During the Relevant Periods, awarded shares were granted to four non-director, non-supervisor and non-chief
executive highest paid employees in respect of their services to the Group, further details are included in the
disclosures in note 32 to the Historical Financial Information. The fair value of such awarded shares, which has been
recognized in profit or loss over the vesting period, was determined as at the date of grant and the amount included
in the Historical Financial Information is included in the above non-director and non-chief executive highest paid
employees’ remuneration disclosures.
APPENDIX I ACCOUNTANTS’ REPORT
– I-45 –


--- page 564 ---
10. INCOME TAX
The Group is subject to income tax on an entity basis on profit arising in or derived from the countries or
jurisdictions in which members of the Group are domiciled and operate.
Under the Law of the PRC on Enterprise Income Tax (the “EIT Law”) and the Implementation Regulation of
the EIT Law, the EIT rate of the PRC subsidiaries is 25% unless they are subject to preferential tax as set out below.
The Company was qualified as High and New Technology Enterprises in 2020 and is entitled to a preferential
tax rate of 15% from 2020 to 2022. This qualification is subject to review by the relevant tax authority in the PRC
for every three years. As of 30 June 2023, the Company is currently in the process of renewal of the qualification.
The management believes that a preferential tax rate of 15% remains applicable for the Company for the six months
ended 30 June 2023.
REPT Qingchuang was qualified as High and New Technology Enterprises in 2021 and is entitled to a
preferential tax rate of 15% from 2021 to 2023. This qualification is subject to review by the relevant tax authority
in the PRC for every three years.
A reconciliation of the tax expense applicable to loss before tax using the statutory rate for the countries or
jurisdictions in which the Company and its subsidiaries are domiciled to the tax expense at the applicable tax rate
is as follows:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Loss before tax (53,279) (804,209) (450,798) (705,472) (918,106)
Tax at the statutory tax
rate (13,320) (201,053) (112,700) (176,368) (229,527)
Preferential tax rate
enacted by the Company
and the subsidiaries 2,742 56,239 41,428 35,942 18,814
Expenses not deductible
for tax 129 353 469 514 703
Additional deductible
allowance for R&D
costs (9,564) (42,498) (126,651) (36,694) (72,689)
Tax losses utilised from
previous periods –––– (18,387)
Temporary difference and
tax losses not recognized 20,013 186,959 197,479 176,606 302,714
Tax charge at the Group’s
effective rate – – 25 – 1,628
Deferred tax assets have not been recognized in respect of these timing differences as they have been incurred
in companies that were loss-making in the past and it is not probable that they will generate sufficient taxable income
in the foreseeable future to utilize such tax losses.
APPENDIX I ACCOUNTANTS’ REPORT
– I-46 –


--- page 565 ---
Deferred tax assets have not been recognized in respect of the following items:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Tax losses 210,505 1,036,027 1,636,569 1,980,431
Temporary difference 85,681 345,496 1,040,615 2,016,090
296,186 1,381,523 2,677,184 3,996,521
As at 31 December 2020, 2021, 2022 and 30 June 2023, unrecognized tax losses will expire as follow:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
2025 35,835 35,835 35,835 –
2026 – 268,059 268,059 181,313
2027 836 836 34,463 423,077
2028 43,556 43,556 43,556 468,293
2029 86,333 86,333 86,333 86,333
2030 43,945 43,945 43,945 43,945
2031 – 557,463 557,463 557,463
2032 – – 566,915 178,301
2033 – – – 41,706
210,505 1,036,027 1,636,569 1,980,431
11. DIVIDENDS
The Board did not recommend the payment of any dividend during the Relevant Periods.
12. LOSS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT
The basic loss per share is calculated based on the loss attributable to the owners of the parent and the weighted
average number of ordinary shares outstanding during the Relevant Periods. The Group had no potentially dilutive
ordinary shares in issue during the Relevant Periods.
The calculations of basic and diluted loss per share is based on:
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Loss
Loss attributable to ordinary
equity holders of the parent,
used in the basic and diluted
loss per share calculation (40,843) (717,227) (354,121) (609,030) (710,215)
APPENDIX I ACCOUNTANTS’ REPORT
– I-47 –


--- page 566 ---
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Shares
Weighted average number of
ordinary shares in issue
during the year used in the
basic and diluted loss per
share calculation 300,000,000 665,953,892 1,772,565,580 1,528,408,309 2,160,804,000
The weighted average number of ordinary shares in issue before the conversion into a joint stock company was
determined assuming that the paid-in capital had been fully converted into share capital at the same conversion ratio
of 1:1 as upon transformation into a joint stock company in April 2022.
13. PROPERTY, PLANT AND EQUIPMENT
The Group
Buildings
Leasehold
improvements
Plant and
machinery
Motor
vehicles
Furnitures
and other
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December, 2020
At 1 January, 2020:
Cost 377,338 2,956 76,528 403 48,801 6,672 512,698
Accumulated depreciation (10,583) (983) (2,485) (117) (4,958) – (19,126)
Net carrying amount 366,755 1,973 74,043 286 43,843 6,672 493,572
At 1 January, 2020, net of
accumulated depreciation 366,755 1,973 74,043 286 43,843 6,672 493,572
Additions – –––– 866,074 866,074
Depreciation provided
during the year (20,810) (1,425) (32,522) (256) (14,544) – (69,557)
Transfers – 12,852 658,013 2,845 36,776 (710,486) –
At 31 December, 2020,
net of accumulated
depreciation 345,945 13,400 699,534 2,875 66,075 162,260 1,290,089
At 31 December, 2020:
Cost 377,338 15,808 734,541 3,248 85,577 162,260 1,378,772
Accumulated depreciation (31,393) (2,408) (35,007) (373) (19,502) – (88,683)
Net carrying amount 345,945 13,400 699,534 2,875 66,075 162,260 1,290,089
APPENDIX I ACCOUNTANTS’ REPORT
– I-48 –


--- page 567 ---
Buildings
Leasehold
improvements
Plant and
machinery
Motor
vehicles
Furnitures
and other
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December, 2021
At 1 January, 2021:
Cost 377,338 15,808 734,541 3,248 85,577 162,260 1,378,772
Accumulated depreciation (31,393) (2,408) (35,007) (373) (19,502) – (88,683)
Net carrying amount 345,945 13,400 699,534 2,875 66,075 162,260 1,290,089
At 1 January, 2021, net of
accumulated depreciation 345,945 13,400 699,534 2,875 66,075 162,260 1,290,089
Additions – – – – 4,690 3,097,199 3,101,889
Acquisition of a subsidiary
(note 34) – – 961 – 35 – 996
Depreciation provided
during the year (35,724) (4,565) (88,708) (988) (21,109) – (151,094)
Disposals – – (1,340) – (248) – (1,588)
Transfers 239,615 10,744 1,125,323 3,442 224,237 (1,603,361) –
At 31 December, 2021,
net of accumulated
depreciation 549,836 19,579 1,735,770 5,329 273,680 1,656,098 4,240,292
At 31 December, 2021:
Cost 616,953 26,552 1,859,485 6,690 314,291 1,656,098 4,480,069
Accumulated depreciation (67,117) (6,973) (123,715) (1,361) (40,611) – (239,777)
Net carrying amount 549,836 19,579 1,735,770 5,329 273,680 1,656,098 4,240,292
APPENDIX I ACCOUNTANTS’ REPORT
– I-49 –


--- page 568 ---
Buildings
Leasehold
improvements
Plant and
machinery
Motor
vehicles
Furnitures
and other
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December, 2022
At 1 January, 2022:
Cost 616,953 26,552 1,859,485 6,690 314,291 1,656,098 4,480,069
Accumulated depreciation (67,117) (6,973) (123,715) (1,361) (40,611) – (239,777)
Net carrying amount 549,836 19,579 1,735,770 5,329 273,680 1,656,098 4,240,292
At 1 January, 2022, net of
accumulated depreciation 549,836 19,579 1,735,770 5,329 273,680 1,656,098 4,240,292
Additions – –––– 4,993,837 4,993,837
Depreciation provided
during the year (55,176) (5,228) (343,874) (2,321) (84,156) – (490,755)
Disposals – – (4) – – – (4)
Transfers 829,125 6,661 3,693,878 8,471 209,020 (4,747,155) –
At 31 December, 2022,
net of accumulated
depreciation 1,323,785 21,012 5,085,770 11,479 398,544 1,902,780 8,743,370
At 31 December, 2022:
Cost 1,446,078 33,213 5,553,359 15,161 523,311 1,902,780 9,473,902
Accumulated depreciation (122,293) (12,201) (467,589) (3,682) (124,767) – (730,532)
Net carrying amount 1,323,785 21,012 5,085,770 11,479 398,544 1,902,780 8,743,370
APPENDIX I ACCOUNTANTS’ REPORT
– I-50 –


--- page 569 ---
Buildings
Leasehold
improvements
Plant and
machinery
Motor
vehicles
Furnitures
and other
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
30 June, 2023
At 1 January, 2023:
Cost 1,446,078 33,213 5,553,359 15,161 523,311 1,902,780 9,473,902
Accumulated depreciation (122,293) (12,201) (467,589) (3,682) (124,767) – (730,532)
Net carrying amount 1,323,785 21,012 5,085,770 11,479 398,544 1,902,780 8,743,370
At 1 January, 2023, net of
accumulated depreciation 1,323,785 21,012 5,085,770 11,479 398,544 1,902,780 8,743,370
Additions – –––– 3,584,404 3,584,404
Depreciation provided
during the period (50,582) (3,149) (279,077) (1,886) (70,609) – (405,303)
Disposals – – – (92) – – (92)
Transfers 946,618 249 476,469 3,434 160,548 (1,587,318) –
At 30 June, 2023,
net of accumulated
depreciation 2,219,821 18,112 5,283,162 12,935 488,483 3,899,866 11,922,379
At 30 June, 2023:
Cost 2,392,696 33,462 6,029,828 18,503 683,859 3,899,866 13,058,214
Accumulated depreciation (172,875) (15,350) (746,666) (5,568) (195,376) – (1,135,835)
Net carrying amount 2,219,821 18,112 5,283,162 12,935 488,483 3,899,866 11,922,379
As at 31 December 2020, 2021 and 2022, and 30 June 2023, certain of the Group’s property, plant and
equipment with net carrying amounts of approximately nil, nil, RMB3,482,147,000 and RMB3,953,845,000,
respectively, were pledged to secure certain interest-bearing bank and other borrowings of the Group. Further details
are given in note 27.
During the Relevant Periods, there was no impairment provided for the Group’s property, plant and equipment.
APPENDIX I ACCOUNTANTS’ REPORT
– I-51 –


--- page 570 ---
The Company
Buildings
Leasehold
improvements
Plant and
machinery
Motor
vehicles
Furnitures
and other
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December, 2020
At 1 January, 2020:
Cost 377,338 2,956 76,528 403 48,801 6,672 512,698
Accumulated depreciation (10,583) (983) (2,485) (117) (4,958) – (19,126)
Net carrying amount 366,755 1,973 74,043 286 43,843 6,672 493,572
At 1 January, 2020, net of
accumulated depreciation 366,755 1,973 74,043 286 43,843 6,672 493,572
Additions – –––– 787,940 787,940
Depreciation provided
during the year (20,810) (985) (32,516) (253) (14,519) – (69,083)
Transfers – – 654,447 2,169 35,284 (691,900) –
At 31 December, 2020,
net of accumulated
depreciation 345,945 988 695,974 2,202 64,608 102,712 1,212,429
At 31 December, 2020:
Cost 377,338 2,956 730,975 2,572 84,085 102,712 1,300,638
Accumulated depreciation (31,393) (1,968) (35,001) (370) (19,477) – (88,209)
Net carrying amount 345,945 988 695,974 2,202 64,608 102,712 1,212,429
APPENDIX I ACCOUNTANTS’ REPORT
– I-52 –


--- page 571 ---
Buildings
Leasehold
improvements
Plant and
machinery
Motor
vehicles
Furnitures
and other
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December, 2021
At 1 January, 2021:
Cost 377,338 2,956 730,975 2,572 84,085 102,712 1,300,638
Accumulated depreciation (31,393) (1,968) (35,001) (370) (19,477) – (88,209)
Net carrying amount 345,945 988 695,974 2,202 64,608 102,712 1,212,429
At 1 January, 2021, net of
accumulated depreciation 345,945 988 695,974 2,202 64,608 102,712 1,212,429
Additions – – – – 4,690 2,001,675 2,006,365
Depreciation provided
during the year (35,724) (919) (78,185) (745) (19,209) – (134,782)
Transfers 239,615 – 831,717 2,592 205,113 (1,279,037) –
At 31 December, 2021,
net of accumulated
depreciation 549,836 69 1,449,506 4,049 255,202 825,350 3,084,012
At 31 December, 2021:
Cost 616,953 2,956 1,562,692 5,164 293,888 825,350 3,307,003
Accumulated depreciation (67,117) (2,887) (113,186) (1,115) (38,686) – (222,991)
Net carrying amount 549,836 69 1,449,506 4,049 255,202 825,350 3,084,012
APPENDIX I ACCOUNTANTS’ REPORT
– I-53 –


--- page 572 ---
Buildings
Leasehold
improvements
Plant and
machinery
Motor
vehicles
Furnitures
and other
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
31 December, 2022
At 1 January, 2022:
Cost 616,953 2,956 1,562,692 5,164 293,888 825,350 3,307,003
Accumulated depreciation (67,117) (2,887) (113,186) (1,115) (38,686) – (222,991)
Net carrying amount 549,836 69 1,449,506 4,049 255,202 825,350 3,084,012
At 1 January, 2022, net of
accumulated depreciation 549,836 69 1,449,506 4,049 255,202 825,350 3,084,012
Additions – –––– 2,066,453 2,066,453
Depreciation provided
during the year (43,147) (69) (271,802) (1,623) (75,241) – (391,882)
Disposals – – (4) – – – (4)
Transfers 231,941 – 2,308,084 4,338 164,359 (2,708,722) –
At 31 December, 2022,
net of accumulated
depreciation 738,630 – 3,485,784 6,764 344,320 183,081 4,758,579
At 31 December, 2022:
Cost 848,894 2,956 3,870,772 9,502 458,247 183,081 5,373,452
Accumulated depreciation (110,264) (2,956) (384,988) (2,738) (113,927) – (614,873)
Net carrying amount 738,630 – 3,485,784 6,764 344,320 183,081 4,758,579
APPENDIX I ACCOUNTANTS’ REPORT
– I-54 –


--- page 573 ---
Buildings
Leasehold
improvements
Plant and
machinery
Motor
vehicles
Furnitures
and other
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
30 June, 2023
At 1 January, 2023:
Cost 848,894 2,956 3,870,772 9,502 458,247 183,081 5,373,452
Accumulated depreciation (110,264) (2,956) (384,988) (2,738) (113,927) – (614,873)
Net carrying amount 738,630 – 3,485,784 6,764 344,320 183,081 4,758,579
At 1 January, 2023, net of
accumulated depreciation 738,630 – 3,485,784 6,764 344,320 183,081 4,758,579
Additions – –––– 396,082 396,082
Depreciation provided
during the period (24,415) – (190,469) (1,188) (62,574) – (278,646)
Disposals – – – (92) – – (92)
Transfers – – 105,568 1,651 131,576 (238,795) –
At 30 June, 2023,
net of accumulated
depreciation 714,215 – 3,400,883 7,135 413,322 340,368 4,875,923
At 30 June, 2023:
Cost 848,894 2,956 3,976,340 11,061 589,823 340,368 5,769,442
Accumulated depreciation (134,679) (2,956) (575,457) (3,926) (176,501) – (893,519)
Net carrying amount 714,215 – 3,400,883 7,135 413,322 340,368 4,875,923
As at 31 December 2020, 2021 and 2022 and 30 June 2023, certain of the Company’s property, plant and
equipment with net carrying amounts of approximately nil, nil, RMB2,292,115,000 and RMB2,448,239,000,
respectively, were pledged to secure certain interest-bearing bank and other borrowings of the Company. Further
details are given in note 27.
During the Relevant Periods, there was no impairment provided for the Company’s property, plant and
equipment.
14. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
The Group as a lessee
The Group has lease contracts mainly for various items of buildings, and plant and machinery used in its
operations. Leases of buildings generally have lease terms between 24 months and 72 months, while plant and
machinery generally have lease terms of 24 months. Generally, the Group is restricted from assigning and subleasing
the leased assets outside the Group.
APPENDIX I ACCOUNTANTS’ REPORT
– I-55 –


--- page 574 ---
(a) Right-of-use assets
The carrying amounts of the Group’s right-of-use assets and the movements during each of the Relevant
Periods are as follows:
The Group
Leasehold
land Buildings
Plant and
machinery Total
RMB’000 RMB’000 RMB’000 RMB’000
As at 1 January 2020 67,653 5,969 246,389 320,011
Additions – 39,662 – 39,662
Depreciation provided during the year (1,416) (4,526) (13,161) (19,103)
Disposal as a result of early cancelation
of lease – – (233,228) (233,228)
As at 31 December 2020 and 1 January
2021 66,237 41,105 – 107,342
Additions 189,376 7,680 – 197,056
Depreciation provided during the year (3,341) (9,256) – (12,597)
As at 31 December 2021 and 1 January,
2022 252,272 39,529 – 291,801
Additions 210,381 3,681 – 214,062
Depreciation provided during the year (6,419) (10,390) – (16,809)
As at 31 December, 2022 and 1 January,
2023 456,234 32,820 – 489,054
Additions 256,124 2,678 – 258,802
Depreciation provided during the period (5,261) (5,265) – (10,526)
As at 30 June 2023 707,097 30,233 – 737,330
As at 31 December 2020, 2021, 2022 and 30 June 2023, certain of the leasehold land with aggregate net
carrying amount of approximately RMB66,237,000, RMB64,821,000, RMB171,150,000 and RMB298,189,000,
respectively, was pledged to secure certain interest-bearing bank borrowings of the Group. Further details are given
in note 27.
The Company
Leasehold
land Buildings
Plant and
machinery Total
RMB’000 RMB’000 RMB’000 RMB’000
As at 1 January, 2020 67,653 5,665 246,389 319,707
Additions – 2,145 – 2,145
Depreciation provided during the year (1,416) (745) (13,161) (15,322)
Disposal as a result of early cancelation of
lease – – (233,228) (233,228)
APPENDIX I ACCOUNTANTS’ REPORT
– I-56 –


--- page 575 ---
Leasehold
land Buildings
Plant and
machinery Total
RMB’000 RMB’000 RMB’000 RMB’000
As at 31 December 2020 and 1 January,
2021 66,237 7,065 – 73,302
Additions 36,737 3,839 – 40,576
Depreciation provided during the year (1,781) (1,383) – (3,164)
As at 31 December 2021 and 1 January,
2022 101,193 9,521 – 110,714
Additions 130,604 2,952 – 133,556
Depreciation provided during the year (2,584) (1,948) – (4,532)
As at 31 December, 2022 and 1 January,
2023 229,213 10,525 – 239,738
Additions – 1,620 – 1,620
Depreciation provided during the period (2,381) (1,253) – (3,634)
As at 30 June 2023 226,832 10,892 – 237,724
As at 31 December 2020, 2021, 2022 and 30 June 2023, certain of the leasehold land with aggregate net
carrying amount of approximately RMB66,237,000, RMB64,821,000, RMB99,044,000 and RMB226,832,000,
respectively, was pledged to secure certain interest-bearing bank borrowings of the Company. Further details are
given in note 27.
(b) Lease liabilities
The carrying amounts of lease liabilities and the movements during each of the Relevant Periods are as
follows:
The Group
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Carrying amount at the beginning of
the year/period 289,341 44,079 41,585 35,444
New lease 39,662 7,680 3,681 2,678
Accretion of interest recognized
during the year/period 10,924 1,986 1,814 810
Payments (17,732) (12,160) (11,636) (5,956)
Disposal as a result of early
cancelation of lease (278,116) – – –
Carrying amount at the end of the
year/period 44,079 41,585 35,444 32,976
Analyzed into:
Current portion 6,464 8,760 9,616 11,239
Non-current portion 37,615 32,825 25,828 21,737
APPENDIX I ACCOUNTANTS’ REPORT
– I-57 –


--- page 576 ---
The Company
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Carrying amount at the beginning of
the year/period 289,042 7,237 9,774 10,824
New lease 2,145 3,839 2,952 1,620
Accretion of interest recognised
during the year/period 9,938 429 509 258
Payments (15,772) (1,731) (2,411) (1,447)
Disposal as a result of early
cancelation of lease (278,116) – – –
Carrying amount at the end of the
year/period 7,237 9,774 10,824 11,255
Analyzed into:
Current portion 896 1,459 1,990 3,125
Non-current portion 6,341 8,315 8,834 8,130
(c) The amounts recognized in profit or loss in relation to leases are as follows:
The Group
Y ear ended 31 December
Six months
ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Interest on lease liabilities 10,924 1,986 1,814 935 810
Depreciation charge of
right-of-use assets 19,103 12,597 16,809 8,001 10,526
Expense relating to short-
term leases 31 524 3,797 932 1,418
Total amount recognized in
profit or loss 30,058 15,107 22,420 9,868 12,754
APPENDIX I ACCOUNTANTS’ REPORT
– I-58 –


--- page 577 ---
The Company
Y ear ended 31 December
Six months
ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Interest on lease liabilities 9,938 429 509 242 258
Depreciation charge of
right-of-use assets 15,322 3,164 4,532 1,992 3,634
Expense relating to short-
term leases – 160 3,797 699 1,113
Total amount recognized in
profit or loss 25,260 3,753 8,838 2,933 5,005
(d) The total cash outflow for leases are disclosed in note 35 to the Historical Financial Information.
(e) Included in the lease expense, amounts of RMB2,647,000, RMB9,360,000, RMB7,701,000 and RMB4,575,000
during each of the Relevant Periods, respectively, were due to leases from related parties. Details were
disclosed in note 38(b) to the Historical Financial Information.
15. OTHER INTANGIBLE ASSETS
The Group
Software
RMB’000
31 December 2020
At 1 January 2020:
Cost 617
Accumulated amortization (92)
Net carrying amount 525
At 1 January 2020, net of accumulated amortization 525
Additions 6,948
Amortization provided during the year (781)
At 31 December 2020, net of accumulated amortization and impairment 6,692
At 31 December 2020:
Cost 7,565
Accumulated amortization and impairment (873)
Net carrying amount 6,692
APPENDIX I ACCOUNTANTS’ REPORT
– I-59 –


--- page 578 ---
Software
RMB’000
December 31, 2021
At 1 January 2021:
Cost 7,565
Accumulated amortization (873)
Net carrying amount 6,692
At 1 January 2021, net of accumulated amortization and impairment 6,692
Additions 6,283
Amortization provided during the year (2,680)
At 31 December 2021, net of accumulated amortization and impairment 10,295
At 31 December 2021:
Cost 13,848
Accumulated amortization and impairment (3,553)
Net carrying amount 10,295
Software
Emission
rights Total
RMB’000 RMB’000 RMB’000
31 December 2022
At 1 January 2022:
Cost 13,848 – 13,848
Accumulated amortization (3,553) – (3,553)
Net carrying amount 10,295 – 10,295
At 1 January 2022, net of accumulated
amortization and impairment 10,295 – 10,295
Additions 19,450 5,748 25,198
Amortization provided during the year (5,622) (1,094) (6,716)
At 31 December 2022, net of accumulated
amortization and impairment 24,123 4,654 28,777
At 31 December 2022:
Cost 33,298 5,748 39,046
Accumulated amortization and impairment (9,175) (1,094) (10,269)
Net carrying amount 24,123 4,654 28,777
APPENDIX I ACCOUNTANTS’ REPORT
– I-60 –


--- page 579 ---
Software
Emission
rights Total
RMB’000 RMB’000 RMB’000
30 June 2023
At 1 January 2023:
Cost 33,298 5,748 39,046
Accumulated amortisation (9,175) (1,094) (10,269)
Net carrying amount 24,123 4,654 28,777
At 1 January 2023, net of accumulated
amortisation and impairment 24,123 4,654 28,777
Additions 10,739 – 10,739
Amortisation provided during the period (4,036) (654) (4,690)
At 30 June 2023, net of accumulated
amortisation and impairment 30,826 4,000 34,826
At 30 June 2023:
Cost 44,037 5,748 49,785
Accumulated amortisation and impairment (13,211) (1,748) (14,959)
Net carrying amount 30,826 4,000 34,826
There was no impairment provided for the Group’s other intangible assets during the Relevant Periods.
The Company
Software
RMB’000
31 December 2020
At 1 January 2020:
Cost 617
Accumulated amortisation (92)
Net carrying amount 525
At 1 January 2020, net of accumulated amortisation 525
Additions 6,382
Amortisation provided during the year (772)
At 31 December 2020, net of accumulated amortisation and impairment 6,135
At 31 December 2020:
Cost 6,999
Accumulated amortisation and impairment (864)
Net carrying amount 6,135
APPENDIX I ACCOUNTANTS’ REPORT
– I-61 –


--- page 580 ---
Software
RMB’000
31 December 2021
At 1 January 2021:
Cost 6,999
Accumulated amortisation (864)
Net carrying amount 6,135
At 1 January 2021, net of accumulated amortisation and impairment 6,135
Additions 2,437
Amortisation provided during the year (2,220)
At 31 December 2021, net of accumulated amortisation and impairment 6,352
At 31 December 2021:
Cost 9,436
Accumulated amortisation and impairment (3,084)
Net carrying amount 6,352
Software
Emission
rights Total
RMB’000 RMB’000 RMB’000
31 December 2022
At 1 January 2022:
Cost 9,436 – 9,436
Accumulated amortisation (3,084) – (3,084)
Net carrying amount 6,352 – 6,352
At 1 January 2022, net of accumulated
amortisation and impairment 6,352 – 6,352
Additions 13,629 2,080 15,709
Amortisation provided during the year (3,945) (351) (4,296)
At 31 December 2022, net of accumulated
amortisation and impairment 16,036 1,729 17,765
At 31 December 2022:
Cost 23,065 2,080 25,145
Accumulated amortisation and impairment (7,029) (351) (7,380)
Net carrying amount 16,036 1,729 17,765
APPENDIX I ACCOUNTANTS’ REPORT
– I-62 –


--- page 581 ---
Software
Emission
rights Total
RMB’000 RMB’000 RMB’000
30 June 2023
At 1 January 2023:
Cost 23,065 2,080 25,145
Accumulated amortisation (7,029) (351) (7,380)
Net carrying amount 16,036 1,729 17,765
At 1 January 2023, net of accumulated
amortisation and impairment 16,036 1,729 17,765
Additions 4,404 – 4,404
Amortisation provided during the period (2,371) (207) (2,578)
At 30 June 2023, net of accumulated
amortisation and impairment 18,069 1,522 19,591
At 30 June 2023:
Cost 27,469 2,080 29,549
Accumulated amortisation and impairment (9,400) (558) (9,958)
Net carrying amount 18,069 1,522 19,591
16. INVESTMENTS IN JOINT VENTURES
The Group and the Company
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Share of net assets – – 132,391 168,933
As at 31 December 2022 and 30 June 2023, the Group’s trade receivable balances and payable balances with
the joint ventures are disclosed in note 38 to the financial statements.
Particulars of the joint ventures are as follows:
Name
Particulars of
shares held
Place of
registration
and
business
Percentage of
ownership
interest
attributable to
the Group Principal activity
SAIC REPT EV Battery
System Co., Ltd.
(“ᒄд๿ऌਗɢཥϫӻ୕
ʮ̡”) (SAIC
REPT)
Registered capital
of RMB1 each
China 34% Manufacture and
sale of battery
products
Zhejiang Qingruida
Precision Technology
Co., Ltd. (“๿༺
ʮ̡”)
(Qingruida)
Registered capital
of RMB1 each
China 40% Manufacture and
sale of battery
accessories
APPENDIX I ACCOUNTANTS’ REPORT
– I-63 –


--- page 582 ---
SAIC REPT, which is considered a material joint venture of the Group, acts as the Group’s strategic partner
engaged in manufacture of battery products and is accounted for using the equity method.
Qingruida, which is considered a joint venture of the Group, acts as the Group’s strategic partner engaged in
manufacture of battery accessories and is accounted for using the equity method.
The following table illustrates the summarised financial information in respect of SAIC REPT and Qingruida
adjusted for any differences in accounting policies and reconciled to the carrying amount in the financial statements:
SAIC REPT
31 December 30 June
2022 2023
RMB’000 RMB’000
Current assets 915,543 918,954
Non-current assets 244,562 326,985
Current liabilities (669,872) (660,983)
Non-current liabilities (94,900) (198,957)
395,333 385,999
Reconciliation to the Group’s interest in the joint venture:
Proportion of the Group’s ownership 34% 34%
Carrying amount of the investment 134,413 131,240
Loss for the year/period (4,667) (9,335)
Total comprehensive income for the year/period (4,667) (9,335)
Qingruida
30 June
2023
RMB’000
Current assets 6,918
Non-current assets 93,513
Current liabilities (2,133)
98,298
Reconciliation to the Group’s interest in the joint venture:
Proportion of the Group’s ownership 40%
Carrying amount of the investment 39,319
Loss for the period (1,702)
Total comprehensive income for the period (1,702)
APPENDIX I ACCOUNTANTS’ REPORT
– I-64 –


--- page 583 ---
17. PREPAYMENTS, OTHER RECEIV ABLES AND OTHER ASSETS
The Group
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Current
Prepayments 10,717 552,499 310,066 121,121
Value-added-tax recoverable (i) 24,254 73,017 148,377 265,008
Deposits and other receivables (ii) 1,988 13,623 259,465 51,005
36,959 639,139 717,908 437,134
Non-Current
Prepayments for property,
plant and equipment 93,803 551,202 547,063 1,487,842*
Value-added-tax recoverable (i) – 54,993 – –
Deposits and other receivables (ii) 407 493 60,162 60,000
94,210 606,688 607,225 1,547,842
The Company
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Current
Prepayments 8,065 311,505 146,180 54,311
Value-added-tax recoverable (i) 14,922 37,356 55,745 23,391
Deposits and other receivables (ii) 1,588 22,794 37,142 44,261
24,575 371,655 239,067 121,963
Non-Current
Prepayments for property,
plant and equipment 38,463 185,804 30,407 23,812
Deposits and other receivables (ii) 162 162 162 102
38,625 185,966 30,569 23,914
(i) The Group’s domestic sales of goods and rendering of services are subject to PRC value-added-tax
(“V AT”). Input V AT on purchases can be deducted from output V AT payable. The V AT recoverable is
mainly the net difference between output and deductible input V AT. The V AT recoverable is classified
as non-current asset when it is not expected to be utilized within the following 12 months.
APPENDIX I ACCOUNTANTS’ REPORT
– I-65 –


--- page 584 ---
(ii) The financial assets included in the above balances relate to deposits and other receivables which were
categorised in stage 1 at the end of each of the Relevant Periods. In calculating the expected credit loss
rate, the Group considers the historical loss rate and adjusts for forward-looking factors and
information. During the Relevant Periods, the deposits and other receivables had no recent history of
default and past due amounts. As at the end of each of the Relevant Periods, the loss allowance was
assessed to be minimal.
* The Group’s subsidiary, REPT SAIC, made large prepayments for machinery and equipment
procurement for its production facility, in preparation for commercial production in the second half of
2023, which resulted in the increase of prepayments for property, plant and equipment from
RMB547,063,000 as of 31 December 2022 to RMB1,487,842,000 as of 30 June 2023.
18. EQUITY INVESTMENTS DESIGNATED AT FAIR V ALUE THROUGH OTHER COMPREHENSIVE
INCOME
The Group and the Company
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Unlisted equity investments,
at fair value
Liuzhou Fansaike New Energy
Technology Co., Ltd.
(“Ҧ
ʮ̡”) (“Liuzhou
Fansaike”) – – – 10,000
In January 2023, the Company invested and held 5% shares in Liuzhou Fansaike, newly established in January
2023, with a consideration of RMB10,000,000. As at 30 June, Liuzhou Fansaike is still in construction stage and its
major business is the production and sale of electrolytes. The Company made such investment as part of its strategy
of ensuring stable and cost-effective supply of raw materials by investing in upstream raw material suppliers. The
above equity investment was irrevocably designated at fair value through other comprehensive income as the Group
considers these investments to be strategic in nature.
19. INVENTORIES
The Group
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Raw materials 113,229 398,149 1,263,202 652,061
Work in progress 67,578 171,054 522,294 670,334
Finished goods 63,763 151,451 1,460,153 1,706,059
244,570 720,654 3,245,649 3,028,454
APPENDIX I ACCOUNTANTS’ REPORT
– I-66 –


--- page 585 ---
The movements in the loss allowance for impairment of inventories are as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period 23,592 7,152 89,772 64,986
Provision for impairment losses, net (16,440) 82,620 (24,786) 264,692
At the end of the year/period 7,152 89,772 64,986 329,678
The Company
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Raw materials 116,282 372,096 737,506 400,092
Work in progress 67,578 166,036 317,754 524,107
Finished goods 55,482 142,570 1,103,659 1,049,206
239,342 680,702 2,158,919 1,973,405
The movements in the loss allowance for impairment of inventories are as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period 23,592 7,152 51,024 49,364
Provision for impairment losses, net (16,440) 43,872 (1,660) 70,910
At the end of the year/period 7,152 51,024 49,364 120,274
APPENDIX I ACCOUNTANTS’ REPORT
– I-67 –


--- page 586 ---
20. TRADE AND BILLS RECEIV ABLES
The Group
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables 417,100 626,834 3,614,199 2,964,824
Bills receivable 196,779 430,314 664,546 920,053
Impairment (2,053) (3,638) (84,688) (331,763)
611,826 1,053,510 4,194,057 3,553,114
Denominated in RMB 603,220 1,052,411 4,188,022 3,515,870
Denominated in USD 8,606 1,099 – 37,143
Denominated in EUR – – 6,035 101
611,826 1,053,510 4,194,057 3,553,114
The Group’s trading terms with its customers are mainly on credit. The credit term is generally from one to
six months. The Group seeks to maintain strict control over its outstanding receivables and has a credit control
process to minimize credit risk.
The Group does not hold any collateral or other credit enhancements over its trade receivable balances. Trade
receivables are non-interest-bearing.
The Group’s bills receivables were all aged within six months and were neither past due nor impaired.
As at 31 December 2020, 2021 and 2022 and 30 June 2023, certain of the bills receivables with net carrying
amounts of RMB793,000, RMB14,069,000, RMB50,000,000 and RMB138,135,000, respectively, were pledged to
secure certain of interest-bearing bank borrowings of the Group (note 27).
An aging analysis of the Group’s trade receivables, based on the invoice date and net of loss allowance, as at
the end of each of the Relevant Periods is as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Within 3 months 355,733 527,887 2,990,487 1,943,022
3 to 6 months 49,829 65,445 511,448 309,839
6 to 12 months 6,891 20,626 18,230 376,787
1 to 2 years 2,594 9,238 9,346 3,413
415,047 623,196 3,529,511 2,633,061
APPENDIX I ACCOUNTANTS’ REPORT
– I-68 –


--- page 587 ---
The movements in the loss allowance for impairment of trade receivables are as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period 102 2,053 3,638 84,688
Impairment losses, net 1,951 1,585 81,050 247,075
At the end of the year/period 2,053 3,638 84,688 331,763
The Group applies the simplified approach in calculating ECLs for trade receivables. Trade receivables relating
to customers with known financial difficulties or significant doubt on collection are assessed individually for
impairment allowance. The remaining trade receivables are grouped and collectively assessed for impairment
allowance. Under the collective approach, an impairment analysis is performed at each reporting date using a
provision matrix to measure expected credit losses. The provision rates are based on aging analysis for grouping of
customers that have similar loss patterns. The calculation reflects the probability-weighted outcome, the time value
of money and reasonable and supportable information that is available at the reporting date about past events, current
conditions and forecasts of future economic conditions. Generally, trade receivables are written off according to
management approval.
Set out below is the information about the credit risk exposure on the Group’s trade receivables using a
provision matrix:
The Group
As at 31 December 2020
Expected
credit loss
rate
Gross
carrying
amount
Expected
credit losses
Net carrying
amount
(%) RMB’000 RMB’000 RMB’000
Provision on an individual basis ––––
Provision on a collective basis
Aged less than 3 months 0.31 356,830 1,097 355,733
Aged 3 to 6 months 1.00 50,330 501 49,829
Aged 6 to 12 months 3.39 7,133 242 6,891
Aged 1 to 2 years 7.59 2,807 213 2,594
417,100 2,053 415,047
As at 31 December 2021
Expected
credit loss
rate
Gross
carrying
amount
Expected
credit losses
Net carrying
amount
(%) RMB’000 RMB’000 RMB’000
Provision on an individual basis 100.00 50 50 –
Provision on a collective basis
Aged less than 3 months 0.28 529,373 1,486 527,887
Aged 3 to 6 months 1.60 66,511 1,066 65,445
Aged 6 to 12 months 2.42 21,137 511 20,626
Aged 1 to 2 years 5.38 9,763 525 9,238
626,834 3,638 623,196
APPENDIX I ACCOUNTANTS’ REPORT
– I-69 –


--- page 588 ---
As at 31 December 2022
Expected
credit loss
rate
Gross
carrying
amount
Expected
credit losses
Net carrying
amount
(%) RMB’000 RMB’000 RMB’000
Provision on an individual basis 75.00 99,336 74,502 24,834
Provision on a collective basis
Aged less than 3 months 0.15 2,984,162 4,508 2,979,654
Aged 3 to 6 months 0.67 500,963 3,352 497,611
Aged 6 to 12 months 2.37 18,672 442 18,230
Aged 1 to 2 years 16.05 10,937 1,755 9,182
Aged over 2 years 100.00 129 129 –
3,614,199 84,688 3,529,511
As at 30 June 2023
Expected
credit loss
rate
Gross
carrying
amount
Expected
credit losses
Net carrying
amount
(%) RMB’000 RMB’000 RMB’000
Provision on an individual basis 59.08 420,496 248,417 172,079
Provision on a collective basis
Aged less than 3 months 0.86 1,950,057 16,774 1,933,283
Aged 3 to 6 months 4.97 326,053 16,214 309,839
Aged 6 to 12 months 18.51 263,159 48,712 214,447
Aged 1 to 2 years 30.77 4,930 1,517 3,413
Aged over 2 years 100.00 129 129 –
2,964,824 331,763 2,633,061
In consideration of the overall economy and market condition in first half of 2023, the collection period of the
Group’s trade receivables is longer than previous reporting period. The ageing of trade receivables, which is the basis
for calculating provision rates, increased under both collective and individual approach. Due to the above reason, the
provision rate on trade receivables aged 1 to 2 years increased from 16.05% as of 31 December 2022 to 30.77% as
of 30 June 2023.
The Company
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables 415,137 625,780 3,205,957 2,267,658
Bills receivable 196,779 428,596 597,413 715,046
Impairment (2,053) (3,638) (83,628) (288,536)
609,863 1,050,738 3,719,742 2,694,168
APPENDIX I ACCOUNTANTS’ REPORT
– I-70 –


--- page 589 ---
The Company’s trading terms with its customers are mainly on credit. The credit period is generally from one
to six months. The Company seeks to maintain strict control over its outstanding receivables and has a credit control
process to minimize credit risk. The Company does not hold any collateral or other credit enhancements over its trade
receivable balances. Trade receivables are non-interest-bearing.
The Company’s bills receivables were all aged within six months and were neither past due nor impaired.
As at 31 December 2020, 2021 and 2022 and 30 June 2023, certain of the Company’s bills receivables with
amounts of RMB793,000, RMB14,069,000, RMB50,000,000 and RMB138,135,000, respectively, were pledged to
secure certain of interest-bearing bank borrowings of the Company (note 27).
An aging analysis of the Company’s trade receivables, based on the invoice date and net of loss allowance, as
at the end of each of the Relevant Periods is as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Within 3 months 353,770 526,833 2,642,082 1,541,673
3 to 6 months 49,829 65,445 453,405 70,624
6 to 12 months 6,891 20,626 18,230 364,039
1 to 2 years 2,594 9,238 8,612 2,786
413,084 622,142 3,122,329 1,979,122
The movements in the loss allowance for impairment of trade receivables are as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period 102 2,053 3,638 83,628
Impairment losses, net 1,951 1,585 79,990 204,908
At the end of the year/period 2,053 3,638 83,628 288,536
The Company apply the simplified approach in calculating ECLs for trade receivables. Trade receivables
relating to customers with known financial difficulties or significant doubt on collection are assessed individually for
impairment allowance. The remaining trade receivables are grouped and collectively assessed for impairment
allowance. Under the collective approach, an impairment analysis is performed at each reporting date using a
provision matrix to measure expected credit losses. The provision rates are based on aging analysis for grouping of
customers that have similar loss patterns. The calculation reflects the probability-weighted outcome, the time value
of money and reasonable and supportable information that is available at the reporting date about past events, current
conditions and forecasts of future economic conditions. Generally, trade receivables are written off according to
management approval.
APPENDIX I ACCOUNTANTS’ REPORT
– I-71 –


--- page 590 ---
As at 31 December 2020
Expected
credit loss
rate
Gross
carrying
amount
Expected
credit losses
Net carrying
amount
(%) RMB’000 RMB’000 RMB’000
Provision on an individual basis ––––
Provision on a collective basis
Aged less than 3 months 0.31 354,867 1,097 353,770
Aged 3 to 6 months 1.00 50,330 501 49,829
Aged 6 to 12 months 3.39 7,133 242 6,891
Aged 1 to 2 years 7.59 2,807 213 2,594
415,137 2,053 413,084
As at 31 December 2021
Expected
credit loss
rate
Gross
carrying
amount
Expected
credit losses
Net carrying
amount
(%) RMB’000 RMB’000 RMB’000
Provision on an individual basis 100.00 50 50 –
Provision on a collective basis
Aged less than 3 months 0.28 528,319 1,486 526,833
Aged 3 to 6 months 1.60 66,511 1,066 65,445
Aged 6 to 12 months 2.42 21,137 511 20,626
Aged 1 to 2 years 5.38 9,763 525 9,238
625,780 3,638 622,142
As at 31 December 2022
Expected
credit loss
rate
Gross
carrying
amount
Expected
credit losses
Net carrying
amount
(%) RMB’000 RMB’000 RMB’000
Provision on an individual basis 75.00 99,336 74,502 24,834
Provision on a collective basis
Aged less than 3 months 0.15 2,635,230 3,981 2,631,249
Aged 3 to 6 months 0.67 442,527 2,959 439,568
Aged 6 to 12 months 2.37 18,672 442 18,230
Aged 1 to 2 years 16.05 10,063 1,615 8,448
Aged over 2 years 100.00 129 129 –
3,205,957 83,628 3,122,329
APPENDIX I ACCOUNTANTS’ REPORT
– I-72 –


--- page 591 ---
As at 30 June 2023
Expected
credit loss
rate
Gross
carrying
amount
Expected
credit losses
Net carrying
amount
(%) RMB’000 RMB’000 RMB’000
Provision on an individual basis 57.60 386,218 222,447 163,771
Provision on a collective basis
Aged less than 3 months 0.86 1,545,226 13,292 1,531,934
Aged 3 to 6 months 4.97 74,320 3,696 70,624
Aged 6 to 12 months 18.51 257,710 47,703 210,007
Aged 1 to 2 years 30.77 4,055 1,269 2,786
Aged over 2 years 100.00 129 129 –
2,267,658 288,536 1,979,122
21. CONTRACT ASSETS
The Group
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Contract assets arising from:
Sale of products 6,686 20,935 113,426 169,022
Impairment – – – (2,027)
6,686 20,935 113,426 166,995
Contract assets are initially recognized for revenue earned from the sale of products as the receipt of
consideration is conditional.
The Group and the Company seeks to maintain strict control over its outstanding contract assets and has a
credit control process to minimize credit risk. The Group and the Company does not hold any collateral or other credit
enhancements over its contract assets balances. Contract assets are non-interest-bearing.
During the year ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2023, nil, nil, nil
and RMB2,027,000, respectively, was recognised as an allowance for expected credit losses on contract assets.
The expected timing of recovery or settlement for contract assets at the end of each of the Relevant Periods
is as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Within one year 35 1,490 97,425 78,058
After one year 6,651 19,445 16,001 88,937
6,686 20,935 113,426 166,995
APPENDIX I ACCOUNTANTS’ REPORT
– I-73 –


--- page 592 ---
The movements in the loss allowance for impairment of contract assets are as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period ––––
Impairment losses, net – – – 2,027
At the end of the year/period – – – 2,027
The Company
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Contract assets arising from:
Sale of products 6,686 20,920 75,622 132,628
Impairment – – – (2,027)
6,686 20,920 75,622 130,601
The expected timing of recovery or settlement for contract assets at the end of each of the Relevant Periods
is as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Within one year 35 1,475 59,621 41,664
After one year 6,651 19,445 16,001 88,937
6,686 20,920 75,622 130,601
The movements in the loss allowance for impairment of contract assets are as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period ––––
Impairment losses, net – – – 2,027
At the end of the year/period – – – 2,027
APPENDIX I ACCOUNTANTS’ REPORT
– I-74 –


--- page 593 ---
An impairment analysis is performed at each reporting date using a provision matrix to measure expected
credit losses. The provision rates are based on those of the trade receivables as the contract assets and the trade
receivables are from the same customer bases. The provision rates of contract assets are based on the ageing from
invoice of trade receivables for groupings of various customer segments with similar loss patterns. The calculation
reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that
is available at the reporting date about past events, current conditions and forecasts of future economic conditions.
Generally, contract assets are written off according to management approval, which the amounts were immaterial
during the Related Periods.
The expected credit losses of the Group’s contract assets for the years ended 31 December 2020, 2021 and 2022
were assessed to be minimal. Set out below is the information about the credit risk exposure on the Group’s contract
assets using a provision matrix for the six months ended 30 June 2023:
Six months
ended 30 June
2023
Expected credit loss rate 1.20%
Gross carrying amount (RMB’000) 169,022
Expected credit losses (RMB’000) 2,027
22. FINANCIAL ASSETS AT FAIR V ALUE THROUGH PROFIT OR LOSS
The Group and the Company
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Current
Other unlisted investments, at
fair value (i) 50,454 – 15,000 115,497
Forward foreign exchange
contracts – – 2,186 1,462
50,454 – 17,186 116,959
(i) The unlisted investments were wealth management products issued by banks in Mainland China. They
were mandatorily classified as financial assets at fair value through profit or loss as their contractual
cash flows are not solely payments of principal and interest. As at 31 December 2020, 2021, 2022 and
30 June 2023, the unlisted investments amounting RMB50,454,000, nil, and RMB15,000,000 and
RMB115,497,000, respectively, were pledged for issuance of bills payables.
APPENDIX I ACCOUNTANTS’ REPORT
– I-75 –


--- page 594 ---
23. CASH AND CASH EQUIV ALENTS AND RESTRICTED CASH
The Group
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Cash and bank balances 146,432 580,510 4,961,073 4,221,485
Time deposits 40,848 817,324 1,783,517 1,657,855
187,280 1,397,834 6,744,590 5,879,340
Less:
Restricted time deposits:
Pledged for issuance of
bills 40,746 810,300 1,749,158 1,409,165
Pledged for issuance of
letter of guarantee (i) 102 7,024 34,359 48,691
Restricted bank deposits:
Pledged for issuance of
bills (ii) – – – 300,000
Pledged for bank facilities (iii) 2 3 60,011 100,032
Cash and cash equivalents 146,430 580,507 4,901,062 4,021,452
Denominated in USD 117,598 1,036 34,874 1,015
Denominated in RMB 69,682 1,396,798 6,709,713 5,876,705
Denominated in EUR – – 3 1,620
187,280 1,397,834 6,744,590 5,879,340
(i) As at 31 December 2020, 2021, 2022 and 30 June 2023, the deposits of RMB102,000, RMB7,024,000,
RMB34,359,000 and RMB48,691,000, respectively, were pledged to issue the letter of guarantee in
banks to provide guarantees in respect of purchase contracts signed with suppliers.
(ii) As at 30 June 2023, the restricted bank deposits of RMB300,000,000 were pledged for issuance of bills
payables.
(iii) As at 31 December 2022 and 30 June 2023, the restricted bank deposits of RMB60,011,000 and
RMB100,032,000 were pledged for bank facilities.
APPENDIX I ACCOUNTANTS’ REPORT
– I-76 –


--- page 595 ---
The Company
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Cash and bank balances 3,496 523,576 4,614,879 3,715,306
Time deposits 13,089 442,787 1,086,011 877,691
16,585 966,363 5,700,890 4,592,997
Less:
Restricted time deposits:
Pledged for issuance of
bills 12,987 435,763 1,055,952 643,645
Pledged for issuance of
letter of guarantee (i) 102 7,024 30,059 34,047
Restricted bank deposits:
Pledged for issuance of
bills (ii) – – – 300,000
Other restricted bank
deposits (iii) 2 3 60,011 100,032
Cash and cash equivalents 3,495 523,573 4,554,868 3,515,273
Denominated in USD 150 1,036 31,135 761
Denominated in RMB 16,435 965,327 5,669,752 4,590,616
Denominated in EUR – – 3 1,620
16,585 966,363 5,700,890 4,592,997
(i) As at 31 December 2020, 2021 and 2022, and 30 June 2023, the deposits of RMB102,000,
RMB7,024,000, RMB30,059,000 and RMB34,047,000, respectively, were pledged to issue the letter of
guarantee in banks to provide guarantees in respect of purchase contracts signed with suppliers.
(ii) As at 30 June 2023, the restricted bank deposits of RMB300,000,000 were pledged for issuance of bills
payables.
(iii) As at 31 December 2022 and 30 June 2023, the restricted bank deposits of RMB60,011,000 and
RMB100,032,000 were pledged for bank facilities.
The RMB is not freely convertible into other currencies, however, under Mainland China’s Foreign Exchange
Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the
Group is permitted to exchange RMB for other currencies through banks authorized to conduct foreign exchange
business.
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term time deposits are
made for varying periods of between one day and three months, depending on the immediate cash requirements of
the Group, and earn interest at the respective short term time deposit rates. The bank balances and time deposits are
deposited with creditworthy banks with no recent history of default.
APPENDIX I ACCOUNTANTS’ REPORT
– I-77 –


--- page 596 ---
24. TRADE AND BILLS PAYABLES
An aging analysis of the trade and bills payables as at the end of each of the Relevant Periods, based on the
invoice date, is as follows:
The Group
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year 586,119 1,660,128 6,772,880 5,814,714
1 to 2 years 490 184 444 88,214
Over 2 years – – – 19
586,609 1,660,312 6,773,324 5,902,947
The Company
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year 558,870 1,254,648 4,866,809 3,951,337
1 to 2 years 490 184 419 636
Over 2 years – – – 19
559,360 1,254,832 4,867,228 3,951,992
The trade payables are non-interest-bearing and are normally settled on 90 to 180 day terms.
25. OTHER PAYABLES AND ACCRUALS
The Group
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Payable for purchase of property,
plant and equipment 139,601 913,246 2,199,559 3,105,719
Salary payables 30,307 113,900 307,610 311,290
Deposit received – 134,624 184,371 125,366
Other tax payables 3,145 3,908 35,722 64,844
Other payables and accruals 35,468 30,848 60,366 56,613
208,521 1,196,526 2,787,628 3,663,832
APPENDIX I ACCOUNTANTS’ REPORT
– I-78 –


--- page 597 ---
The Company
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Payable for purchase of property,
plant and equipment 138,705 532,790 1,017,042 1,140,243
Salary payables 27,008 83,956 205,743 186,203
Deposit received – 131,227 151,762 89,433
Other tax payables 3,045 1,030 23,535 25,486
Others payables and accruals 8,133 20,960 18,281 15,262
176,891 769,963 1,416,363 1,456,627
Other payables are unsecured and non-interest-bearing, repayable within 1 year. The fair values of other
payables at the end of each of the Relevant Periods approximated to their corresponding carrying amounts.
26. CONTRACT LIABILITIES
Details of contract liabilities are as follows:
The Group
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Short-term advances received from
customers
Sales of goods 8,855 158,538 184,408 303,411
The Company
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Short-term advances received from
customers
Sales of goods 8,855 155,156 137,504 113,299
APPENDIX I ACCOUNTANTS’ REPORT
– I-79 –


--- page 598 ---
27. INTEREST-BEARING BANK AND OTHER BORROWINGS
The Group
As at 31 December 2020 As at 31 December 2021 As at 31 December 2022 As at 30 June 2023
Notes
Effective
interest
rate Maturity
Effective
interest
rate Maturity
Effective
interest
rate Maturity
Effective
interest
rate Maturity
(%) RMB’000 (%) RMB’000 (%) RMB’000 (%) RMB’000
Current
Bank loans – pledged
and guaranteed (a) 4.00 2021 100,134 4.35 2022 160,193 – – – – – –
Bank loans – pledged (b) 2.80 2021 793 2.80 2022 14,069 3.85 2023 100,033 3.00-3.85
2023-
2024 327,111
Bank loans – guaranteed (c) – – – 4.00 2022 100,111 3.85 2023 5,005 3.05-3.85
2023-
2024 355,346
Bank loans – unsecured (d) – – – – – – 4.15-4.20 2023 200,231 – – –
Current portion of long
term bank loans –
pledged and guaranteed (a) 4.65 2021 72,278 4.65 2022 72,140 4.30 2023 1,772 4.20-4.30
2023-
2024 2,040
Current portion of long
term bank loans –
pledged (b) – – – – – – 3.20-4.60 2023 2,662 3.20-4.30
2023-
2024 2,719
Current portion of long
term bank loans –
guaranteed (c) – – – 4.10 2022 20,623 3.90 2023 343 3.05-3.90
2023-
2024 620
Current portion of long
term bank loans –
unsecured (d) – – – – – – 3.60 2023 1,148 3.05-3.60
2023-
2024 2,320
Current portion of long
term other loans –
pledged (e) – – – – – – 4.80 2023 154,015 4.70
2023-
2024 153,240
173,205 367,136 465,209 843,396
Non-current
Bank loans – pledged
and guaranteed (a) 4.65
2022-
2023 108,000 4.65 2023 36,000 4.30
2025-
2030 1,484,276 4.20-4.30
2025-
2031 1,708,000
Bank loans – pledged (b) – – – – – – 3.20-4.60
2024-
2028 2,100,369 3.20-4.30
2024-
2033 2,325,583
Bank loans – guaranteed (c) –– – 4 . 1 0
2023-
2026 175,440 3.90 2025 311,940 3.05-3.90
2025-
2033 659,113
Bank loans – unsecured (d) – – – – – – 3.60 2024 26,880 3.05-3.60
2024-
2026 1,411,320
Other loans – pledged (e) – – – – – – 4.80
2024-
2025 262,500 4.70
2024-
2025 187,500
108,000 211,440 4,185,965 6,291,516
281,205 578,576 4,651,174 7,134,912
APPENDIX I ACCOUNTANTS’ REPORT
– I-80 –


--- page 599 ---
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Analyzed into:
Bank loans repayable:
Within one year or on demand 173,205 367,136 311,194 690,156
In the second year 72,000 38,040 275,924 1,373,678
In the third to fifth years, inclusive 36,000 173,400 2,019,990 3,012,148
Beyond five years – – 1,627,551 1,718,190
281,205 578,576 4,234,659 6,794,172
Other borrowings repayable:
Within one year or on demand – – 154,015 153,240
In the second year – – 150,000 150,000
In the third to fifth years, inclusive – – 112,500 37,500
– – 416,515 340,740
281,205 578,576 4,651,174 7,134,912
(a) As at 31 December 2020 and 2021, certain of the Group’s bank borrowings with the amounts of
RMB280,412,000, RMB268,333,000, respectively, were secured by:
– the pledge of certain of the Group’s leasehold land with a carrying amount of RMB66,237,000,
RMB64,821,000; and
– the guarantee from Fujian Dingxin Industrial Co., Ltd.* (“ʮ̡”) (“Dingxin”),
a company ultimately controlled by Mr. Xiang Guangda. During the year of 2022, the guarantee
from Dingxin has been released as the Group fully repaid the bank borrowings.
As at 31 December 2022 and 30 June 2023, certain of the Group subsidiary’s bank borrowings with the
amounts of RMB1,486,048,000 and RMB1,710,040,000, respectively, were secured by;
– the pledge of certain of the Group’s leasehold land with a carrying amount of RMB72,106,000
and RMB71,357,000;
– the pledge of certain of the Group’s property, plant and equipment with a carrying amount of
RMB1,190,032,000 and RMB1,505,606,000 and
– the guarantee from the Company.
(b) As at 31 December 2020, 2021, 2022 and 30 June 2023, certain of the Group’s bank borrowings with
the amount of RMB793,000, RMB14,069,000, RMB50,000,000 and RMB138,135,000, respectively,
were secured by the pledge of certain of the Group’s bills receivables with carrying amount of
RMB793,000, RMB14,069,000, RMB50,000,000 and RMB138,135,000.
As at 31 December 2022 and 30 June 2023, certain of the Group’s bank borrowings with the amounts
of RMB2,153,064,000 and RMB2,517,278,000, respectively, were secured by:
– the pledge of certain of the Group’s leasehold land with a carrying amount of RMB99,044,000
and RMB226,832,000;
– the pledge of certain of the Group’s property, plant and equipment with a carrying amount of
RMB1,735,705,000 and RMB1,942,872,000.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 600 ---
(c) As at 31 December 2021, certain of the Group’s bank borrowings with the amount of RMB196,063,000
and RMB100,111,000, respectively, were guaranteed by Dingxin and Fujian Qingtuo Nickel Industry
Co., Ltd.* (“ʮ̡”) (“Qingtuo Nickel”), a company ultimately controlled by
Mr. Xiang Guangda. During the year of 2022, the guarantees from Dingxin and Qingtuo Nickel have
been released as the Group fully repaid the bank borrowings during the year of 2022.
As at 31 December 2022 and 30 June 2023, certain of the Company’s bank borrowings with the amount
of RMB317,288,000 and RMB367,328,000 were guaranteed by BatteroTech Jiashan, a subsidiary of the
Company.
As at 30 June 2023, certain of the Group’s bank borrowings with the amounts of RMB647,751,000, were
guaranteed by the Company.
(d) As at 31 December 2022 and 30 June 2023, certain of the Group’s bank borrowings with the amounts
of RMB228,259,000 and RMB1,413,640,000 were unsecured.
(e) As at 31 December 2022 and 30 June 2023, the Group’s borrowing with the amounts of
RMB416,515,000 and RMB340,740,000, respectively, was secured by the pledge of certain of the
Group’s property, plant and equipment with carrying amount of RMB556,410,000 and
RMB505,366,000.
The Company
As at 31 December 2020 As at 31 December 2021 As at 31 December 2022 As at 30 June 2023
Notes
Effective
interest
rate Maturity
Effective
interest
rate Maturity
Effective
interest
rate Maturity
Effective
interest
rate Maturity
(%) RMB’000 (%) RMB’000 (%) RMB’000 (%) RMB’000
Current
Bank loans – pledged
and guaranteed (a) 4.00 2021 100,134 4.35 2022 160,193 – – – – – –
Bank loans – pledged (b) 2.80 2021 793 2.80 2022 14,069 3.85 2023 100,033 3.00-3.85
2023-
2024 327,111
Bank loans – guaranteed (c) – – – 4.00 2022 100,111 3.85 2023 5,005 3.85 2023 5,005
Bank loans – unsecured (d) – – – – – – 4.15-4.20 2023 200,231 – – –
Current portion of long
term bank loans –
pledged and guaranteed (a) 4.65 2021 72,278 4.65 2022 72,140 – – – – – –
Current portion of long
term bank loans –
pledged (b) – – – – – – 3.20-4.60 2023 2,662 3.20-4.30
2023-
2024 2,718
Current portion of long
term bank loans –
guaranteed (c) – – – 4.10 2022 20,623 3.90 2023 343 3.80-3.90
2023-
2024 338
Current portion of long
term bank loans –
unsecured (d) – – – – – – 3.60 2023 1,148 3.60
2023-
2024 1,147
Current portion of long
term other loans –
pledged (e) – – – – – – 4.80 2023 154,015 4.70
2023-
2024 153,240
173,205 367,136 463,437 489,559
Non-current
Bank loans – pledged
and guaranteed (a) 4.65
2022-
2023 108,000 4.65 2023 36,000 – – – – – –
Bank loans – pledged (b) – – – – – – 3.20-4.60
2024-
2028 2,100,369 3.20-4.30
2024-
2033 2,325,583
Bank loans – guaranteed (c) –– – 4 . 1 0
2023-
2026 175,440 3.90 2025 311,940 3.80-3.90
2025-
2033 311,940
Bank loans – unsecured (d) – – – – – – 3.60 2024 26,880 3.60 2024 26,320
Other loans – pledged (e) – – – – – – 4.80
2024-
2025 262,500 4.70
2024-
2025 187,500
108,000 211,440 2,701,689 2,851,343
281,205 578,576 3,165,126 3,340,902
APPENDIX I ACCOUNTANTS’ REPORT
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As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Analysed into:
Bank loans repayable:
Within one year or on demand 173,205 367,136 309,421 336,319
In the second year 72,000 38,040 275,924 723,678
In the third to fifth years, inclusive 36,000 173,400 1,719,992 702,166
Beyond five years – – 443,274 237,999
281,205 578,576 2,748,611 3,000,162
Other borrowings repayable:
Within one year or on demand – – 154,015 153,240
In the second year – – 150,000 150,000
In the third to fifth years, inclusive – – 112,500 37,500
– – 416,515 340,740
281,205 578,576 3,165,126 3,340,902
(a) As at 31 December 2020 and 2021, certain of the Company’s bank borrowings with the amounts of
RMB280,412,000, RMB268,333,000, respectively, were secured by:
– the pledge of certain of the Group’s leasehold land with a carrying amount of RMB66,237,000,
RMB64,821,000; and
– the guarantee from Dingxin, a company ultimately controlled by Mr. Xiang Guangda. During the
year of 2022, the guarantee from Dingxin has been released as the Group fully repaid the bank
borrowings.
(b) As at 31 December 2020, 2021, 2022 and 30 June 2023, certain of the Company’s bank borrowings with
the amount of RMB793,000, RMB14,069,000, RMB50,000,000 and RMB138,135,000, respectively,
were secured by the pledge of certain of the Company’s bills receivables with carrying amount of
RMB793,000, RMB14,069,000, RMB50,000,000 and RMB138,135,000.
As at 31 December 2022 and 30 June 2023, certain of the Group’s bank borrowings with the amounts
of RMB2,153,064,000 and RMB2,517,277,000, respectively, were secured by:
– the pledge of certain of the Group’s leasehold land with a carrying amount of RMB99,044,000
and RMB226,832,000
– the pledge of certain of the Group’s property, plant and equipment with a carrying amount of
RMB1,735,705,000 and RMB1,942,872,000.
(c) As at 31 December 2021, certain of the Company’s bank borrowings with the amount of
RMB196,063,000 and RMB100,111,000, respectively, were guaranteed by Dingxin and Qingtuo Nickel,
a company ultimately controlled by Mr. Xiang Guangda. During the year of 2022, the guarantees from
Dingxin and Qingtuo Nickel have been released as the Group fully repaid the bank borrowings during
the year of 2022.
As at 31 December 2022 and 30 June 2023, certain of the Company’s bank borrowings with the amount
of RMB317,288,000 and RMB317,283,000 were guaranteed by BatteroTech Jiashan, a subsidiary of the
Company.
APPENDIX I ACCOUNTANTS’ REPORT
– I-83 –


--- page 602 ---
(d) As at 31 December 2022 and 30 June 2023, certain of the Group’s bank borrowings with the amounts
of RMB228,259,000 and RMB27,467,000 were unsecured.
(e) As at 31 December 2022 and 30 June 2023, the Group’s borrowing with the amounts of
RMB416,515,000 and RMB340,740,000, respectively, was secured by the pledge of certain of the
Group’s property, plant and equipment with carrying amount of RMB556,410,000 and
RMB505,366,000.
28. DEFERRED GOVERNMENT GRANTS
The Group
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period 30,806 43,637 66,685 168,367
Addition 14,929 27,080 110,621 131,308
Amortization during the year/period (2,098) (4,032) (8,939) (8,745)
At the end of the year/period 43,637 66,685 168,367 290,930
Current portion 3,904 6,389 13,355 22,707
Non-current portion 39,733 60,296 155,012 268,223
The Company
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period 30,806 43,637 66,685 110,245
Addition 14,929 27,080 51,000 42,032
Amortization during the year/period (2,098) (4,032) (7,440) (5,256)
At the end of the year/period 43,637 66,685 110,245 147,021
Current portion 3,904 6,389 10,365 10,720
Non-current portion 39,733 60,296 99,880 136,301
APPENDIX I ACCOUNTANTS’ REPORT
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29. PROVISIONS
The Group
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period 3,820 20,729 49,958 272,077
Addition 20,060 36,653 239,078 88,946
Amount utilized during the
year/period (3,151) (7,424) (16,959) (20,740)
At the end of the year/period 20,729 49,958 272,077 340,283
Portion classified as current
liabilities 2,139 2,804 48,534 86,302
Non-current portion 18,590 47,154 223,543 253,981
The Company
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period 3,820 20,729 49,505 247,816
Addition 20,060 36,177 215,270 75,379
Amount utilized during the
year/period (3,151) (7,401) (16,959) (19,835)
At the end of the year/period 20,729 49,505 247,816 303,360
Portion classified as current
liabilities 2,139 2,744 42,719 78,898
Non-current portion 18,590 46,761 205,097 224,462
The Group provides warranties of 3 to 8 years to its customers on the battery products. The amount of the
provision for the warranties is estimated based on the Group’s recent claims, past warranty data and the weight of
all possible results and their related probabilities. As the Group continues to upgrade its product design and introduce
new models, the recent claims may not represent the claims it will face in the future for past sales. Any increase or
decrease in provision will affect the profit and loss in future years. The estimation basis is reviewed on an ongoing
basis and revised where appropriate.
APPENDIX I ACCOUNTANTS’ REPORT
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30. PAID-IN CAPITAL/SHARE CAPITAL
The paid-in capital/share capital of the Company as at the end of each Relevant Periods was RMB300,000,000,
and RMB1,463,415,000, RMB2,160,803,850 and RMB2,160,803,850, respectively. The movements are as follows:
Numbers of
ordinary
shares
Paid-in
capital/
Share capital
RMB’000
As at 1 January 2020 N/A 300,000
Capital contribution from shareholders N/A –
As at 31 December 2020 N/A 300,000
Capital contribution from shareholders (a) N/A 1,163,415
As at 31 December 2021 N/A 1,463,415
Issue of ordinary shares upon conversion into a joint
stock company (b) 1,463,414,634 –
Issue of shares (c) 697,389,216 697,389
As at 31 December 2022 2,160,803,850 2,160,804
Issue of shares – –
As at 30 June 2023 2,160,803,850 2,160,804
(a) In August 2021, the Company received capital contributions of RMB612,000,000, RMB198,000,000,
RMB72,000,000 and RMB18,000,000 in cash from Yongqing Technology, Wenzhou Jingli Business
Service Partnership (Limited Partnership) (“ਕΥྫΆุ(Υྫ)”), Wenzhou Ruili
Enterprise Development Partnership (Limited Partnership) (“ΥྫΆุ(Υྫ)”)
and Wenzhou Qingshan Metal Material Partnership (Limited Partnership) (“ΥྫΆุ
(Υྫ)”), respectively, which was fully recognized in paid-in capital.
In November 2021, the Company received capital contributions of RMB1,524,444,000 and
RMB190,556,000 in cash from Yongqing Technology and Wenzhou Zhuorui Energy Saving Technology
Partnership (Limited Partnership) (“ ๝ψՙ๿ືঐҦஔΥྫΆุ(Υྫ)”), respectively. Out of
which RMB263,415,000 was credited to the Company’s paid-in capital and RMB1,451,585,000 was
credited to the Company’s capital reserves, respectively.
(b) In April 2022, the Company converted into a joint stock company with limited liability under the
Company Law of the PRC. The net assets of the Company as of the conversion base date amounting to
RMB2,093,173,000 were converted into 1,463,414,634 ordinary shares at RMB1.00 each. The excess of
net assets converted over nominal value of the ordinary shares was credited to the Company’s capital
reserves.
(c) In April 2022, the Company issued 261,188,524 shares in total with par value of RMB1.00 each to
Wenzhou Transportation Group Co., Ltd. (“ʮ̡”) (“Wenzhou Transportation”),
Qingdao SAIC Innovation and Upgrade Industry Equity Investment Fund Partnership (Limited
Partnership) (“ΥྫΆุ(Υྫ)”), and Jiaxing SAIC Qirui
Equity Investment Partnership (Limited Partnership) (“ᛆҳ༟ΥྫΆุ(Υྫ)”).
The total proceeds of RMB2,900,000,000 were received in April and May 2022, with approximately
RMB261,188,000 and RMB2,638,812,000 credited to the Company’s share capital and capital reserves,
respectively.
In June 2022, the Company issued 39,273,141 shares in total with par value of RMB1.00 each to
Yongqing Technology. The total proceeds of RMB460,000,000 were received in July 2022 with
approximately RMB39,273,000 and RMB420,727,000 credited to the Company’s share capital and
capital reserves, respectively.
In August 2022 and September 2022, the Company issued 396,927,551 shares with par value of
RMB1.00 each to 33 investors (collectively, the “Series B Investors”) with a cash consideration of an
aggregate amount of RMB5,580,779,000. The total proceeds were received in 2022, with approximately
RMB396,928,000 and RMB5,183,851,000 credited to the Company’s share capital and capital reserves,
respectively.
APPENDIX I ACCOUNTANTS’ REPORT
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31. RESERVE
The amounts of the Group’s reserves and the movements therein are presented in the consolidated statement
of changes in equity of the Historical Financial Information.
(i) Capital reserve
The capital reserve mainly comprises the capital/share premium of the Company and the difference between
the aggregate of the then net assets of the non-controlling interests acquired and the consideration paid by the Group.
(a) In August 2021, the Company and the remaining three shareholders, Wenzhou Chenshan Enterprise
Management Partnership (Limited Partnership) (“ ๝ψԕӄΆุ၍ଣΥྫΆุ(Υྫ)”) (“Wenzhou
Chenshan”), Wenzhou Futang Enterprise Management Partnership (Limited Partnership) (“ ๝ψబੀΆ
ุ၍ଣΥྫΆุ(Υྫ)”) (“Wenzhou Futang”) and Shanghai Wanlu Investment Co., Ltd. (“ ɪऎຬ
ʮ̡”) (“Shanghai Wanlu”) of BatteroTech Shanghai made a capital contribution amounting
to RMB659,000,000, RMB114,400,000, RMB45,600,000 and RMB81,000,000 to BatteroTech Shanghai
in cash, respectively. Consequently, the Group’s proportion of ownership in BatteroTech Shanghai had
been increased from 51% to 71%, while that of Wenzhou Chenshan, Wenzhou Futang and Shanghai
Wanlu had been decreased from 49% to 29% in total. The difference between the aggregate of the then
net assets of the non-controlling interests acquired and the consideration paid by the Company
amounting to RMB21,151,000 debited to capital reserve and credited to non-controlling interest.
(b) In June 2022, the Company acquired 29% interest of Guangdong REPT BATTERO from Ruitu Energy
Co., Ltd. (“ʮ̡”) (“Ruitu Energy”). Consequently, the Group’s proportion of ownership
in Guangdong REPT BATTERO had been increased from 71% to 100%. The difference between the net
assets of the non-controlling interests acquired and the consideration paid amounting RMB339,000 was
recognized in capital reserve.
(ii) Merger reserve
BatteroTech Shanghai acquired a 100% interest in BatteroTech Jiashan on 29 June 2021 and the Company
acquired a 51% interest in BatteroTech Shanghai on 16 August 2021. After this business combination, the Company
effectively owned 51% interest in BatteroTech Shanghai and BatteroTech Jiashan. As BatteroTech Shanghai and
BatteroTech Jiashan were companies ultimately controlled by Yongqing Technology, the controlling shareholder of
the Group, the above transactions were recognized as business combination under common control.
The effects of the above-mentioned business combination under common control for the year ended 31
December 2020 represented the paid-in capital contributed by the then shareholder of BatteroTech Shanghai and
BatteroTech Jiashan as at 31 December 2020, 51% of which amounting to RMB117,817,000 was recognized in
merger reserve and the remaining 49% amounting to RMB113,197,000 was recognized in non-controlling interest.
The effects of the above-mentioned business combination under common control for the year ended 31
December 2021 represented the combination of the following items:
– On 26 June 2021, an additional paid-in capital of RMB259,724,000 was contributed by BatteroTech
Jiashan’s then shareholder, 51% of which amounting RMB132,460,000 was recognized in merger
reserve, and the remaining 49% amounting to RMB127,264,000 was recognized in non-controlling
interests;
– On 29 June 2021, BatteroTech Shanghai acquired BatteroTech Jiashan’s 100% interest with a
consideration of USD60,000,000, equivalent to RMB392,256,000, which was recorded as the deduction
of the capital reserve, merger reserve and non-controlling interests by RMB774,000, RMB199,277,000
and RMB192,205,000, respectively, according to the shareholding percentage of the Company and
non-controlling interest in BatteroTech Jiashan.
– On 16 August 2021, the Company acquired BatteroTech Shanghai’s 51% interest with a consideration
of RMB51,000,000, which was recorded as a deduction of the merger reserve.
APPENDIX I ACCOUNTANTS’ REPORT
– I-87 –


--- page 606 ---
32. SHARE INCENTIVE SCHEME
2021 Incentive Scheme
On 31 August 2021, a share incentive scheme (the “2021 Incentive Scheme”) was approved by the
shareholders.
Pursuant to the 2021 Incentive Scheme, incentives will be awarded to the eligible participants in the form of
(i) type A awarded shares; and (ii) type B awarded shares.
The scope of eligible participants for the Incentive Scheme shall include directors, senior management and
other key employees of the Group who, in the opinion of the Board, contribute directly to the overall business
performance and sustainable development of the Group. The list of eligible participants and the number of shares to
be granted shall be determined by the Board. All eligible participants must be the employees of the Group, who have
entered into labor contracts with the Company or its subsidiaries, during the appraisal period of the Incentive Scheme.
(i) 2021 Type A Awarded Shares
On 31 August 2021, a total of 112,999,000 shares of the Company were awarded to the directors of the
Company and employees of the Group at a consideration of RMB9,951 (the “Type A Awarded Shares”). 25%, 25%,
25% and 25% of the Type A Awarded Shares would be vested since the fifth, sixth, seventh and eighth anniversary
of the date of grant if they remain in office as employees of the Group at that date. The total fair value of the Type
A Awarded Shares determined at the date of grant was equivalent to RMB454,278,000, and the fair value is
determined by an external valuer using the discounted cash flow model taking into the terms and conditions upon
which the awarded share were granted. The amount of RMB24,235,000, RMB72,904,000 and RMB36,268,000,
respectively, in respect of the Type A Awarded Shares under the Incentive Scheme was recognized as an expense and
included in the staff cost for the year ended 31 December 2021, 2022 and the six months ended 30 June 2023.
Any dividends declared in respect of the Type A Awarded Shares during the lock-up restricted period belongs
to the participants. However, the participants do not have any voting right in respect of the Type A Awarded Shares
during the lock-up restricted period.
(ii) 2021 Type B Awarded Shares
On 31 August 2021, a total of 225,997,000 shares of the Company were awarded to the directors of the
Company and employees of the Group at a consideration of RMB9,748 (the “Type B Awarded Shares”). The Type
B Awarded Shares would be vested since the twentieth anniversary of the date of grant if they remain in office as
employees of the Group at that date. The total fair value of the Type B Awarded Shares determined at the date of grant
was equivalent to RMB908,565,000, and the fair value is determined by an external valuer using the discounted cash
flow model taking into the terms and conditions upon which the awarded shares were granted. The amount of
RMB18,373,000, RMB55,234,000 and RMB27,493,000, respectively, in respect of the Type B Awarded Shares under
the Incentive Scheme was recognized as an expense and included in the staff cost for the year ended 31 December
2021, 2022 and the six months ended 30 June 2023.
Any dividends declared in respect of the Type B Awarded Shares during the lock-up restricted period belongs
to the participants. However, the participants do not have any voting right in respect of the Type B Awarded Shares
during the lock-up restricted period.
2022 Incentive Scheme
In June 2022, a share incentive scheme (the “2022 Incentive Scheme”) was approved by the shareholders.
Pursuant to the 2022 Incentive Scheme, incentives will be awarded to the eligible participants in the form of
(i) type A awarded shares; and (ii) type B awarded shares.
The scope of eligible participants for the Incentive Scheme shall include directors and senior management, key
technicians and other key employees of the Group who, in the opinion of the Board, contribute directly to the overall
business performance and sustainable development of the Group. The list of eligible participants and the number of
shares to be granted shall be determined by the Board. All eligible participants must be the employees of the Group,
who have entered into labor contracts with the Company or its subsidiaries, during the appraisal period of the 2022
Incentive Scheme.
APPENDIX I ACCOUNTANTS’ REPORT
– I-88 –


--- page 607 ---
(i) 2022 Type A Awarded Shares
On 30 September 2022, a total of 6,741,000 shares of the Company were awarded to the employees of the
Group at a consideration of RMB21,000 (the “2022 Type A Awarded Shares”). 25%, 25%, 25% and 25% of the 2022
Type A Awarded Shares would be vested since the fourth, fifth, sixth and seventh anniversary of the date of grant if
they remain in office as employees of the Group at that date. The total fair value of the 2022 Type A Awarded Shares
determined at the date of grant was equivalent to RMB94,764,000, and the fair value is determined by an external
valuer using the back-solve method and adopting the equity allocation model taking into the financing price from
series B investors in August and September 2022. An amount of RMB3,555,000 and RMB8,634,000, respectively, in
respect of the Type A Awarded Shares under the Incentive Scheme was recognized as an expense and included in the
staff cost for the year ended 31 December 2022 and the six months ended 30 June 2023.
Any dividends declared in respect of the 2022 Type A Awarded Shares during the lock-up restricted period
belongs to the participants. However, the participants do not have any voting right in respect of the 2022 Type A
Awarded Shares during the lock-up restricted period.
(ii) 2022 Type B Awarded Shares
On 30 September 2022, a total of 12,283,000 shares of the Company were awarded to the employees of the
Group at a consideration of RMB39,000 (the “2022 Type B Awarded Shares”). All of the 2022 Type B Awarded Shares
would be vested since the twentieth anniversary of the date of employment if they remain in office as employees of
the Group at that date. The total fair value of the 2022 Type B Awarded Shares determined at the date of grant was
equivalent to RMB172,659,000, and the fair value is determined by an external valuer using the back-solve method
and adopting the equity allocation model taking into the financing price from series B investors in August and
September 2022. An amount of RMB1,944,000 and RMB4,732,000, respectively, in respect of the 2022 Type B
Awarded Shares was recognized for the year ended 31 December 2022 and the six months ended 30 June 2023.
Any dividends declared in respect of the 2022 Type B Awarded Shares during the lock-up restricted period
belongs to the participants. However, the participants do not have any voting right in respect of the 2022 Type B
Awarded Shares during the lock-up restricted period.
The following Type A and Type B Awarded Shares were outstanding under the share incentive scheme during
the year ended 31 December 2021 and 2022 and the six months ended 30 June 2023:
2021
Awarded
Shares
2022
Awarded
Shares Total
’000 ’000 ’000
As at 1 January, 2021 – – –
Granted during the year 338,996 – 338,996
Forfeited during the year – – –
As at 31 December, 2021 and 1 January, 2022 338,996 – 338,996
Granted during the year – 19,024 19,024
Forfeited during the year – (252) (252)
As at 31 December, 2022 and 1 January, 2023 338,996 18,772 357,768
Granted during the period – – –
Forfeited during the period – – –
As at 30 June, 2023 338,996 18,772 357,768
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 608 ---
33. PARTLY-OWNED SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS
Details of the Group’s subsidiaries that have material non-controlling interest are set out below:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Percentage of equity interest held by
non-controlling interests:
– BatteroTech Shanghai 49% 29% 29% 29%
– Guangdong REPT BATTERO N/A 29% 0% 0%
– REPT SAIC N/A N/A 49% 49%
Loss for the year allocated to non-
controlling interests:
– BatteroTech Shanghai 12,436 86,888 96,343 208,562
– Guangdong REPT BATTERO N/A 94 245 –
– REPT SAIC N/A N/A 114 957
12,436 86,982 96,702 209,519
Accumulated balances of non-
controlling at the end of each of
the Relevant Periods:
– BatteroTech Shanghai 100,761 211,083 114,739 (93,823)
– Guangdong REPT BATTERO N/A 2,806 – –
– REPT SAIC N/A N/A 587,887 586,930
100,761 213,889 702,626 493,107
The following tables illustrate the summarized financial information of the above subsidiaries. The amounts
disclosed are before any inter-company eliminations:
BatteroTech Shanghai:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Current assets 183,329 842,403 3,405,572 3,439,007
Non-current assets 166,600 1,607,958 3,808,288 4,913,632
Current liabilities (113,056) (1,697,752) (5,243,437) (6,799,394)
Non-current liabilities (31,239) (24,737) (1,574,771) (1,876,773)
APPENDIX I ACCOUNTANTS’ REPORT
– I-90 –


--- page 609 ---
Y ear ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Revenue 889 39,353 2,523,364 1,977,682
Total costs and expenses (26,269) (283,536) (2,855,583) (2,696,863)
Loss for the year/period (25,380) (244,183) (332,219) (719,181)
Total comprehensive income for the
year/period (25,380) (244,183) (332,219) (719,181)
Net cash flows used in operating
activities (40,851) (14,530) (354,797) (56,570)
Net cash flows used in investing
activities (66,885) (299,239) (1,260,811) (997,599)
Net cash flows generated from
financing activities 250,014 323,852 2,331,368 1,316,841
Net increase in cash and cash
equivalents 142,278 10,083 715,760 262,672
Guangdong REPT BATTERO:
As at 31 December
2021 2022
RMB’000 RMB’000
Current assets 8,593 79,320
Non-current assets 77,186 376,405
Current liabilities (76,105) (114,534)
Non-current liabilities – –
Y ear ended
31 December
Six
months ended
30 June
2022 2023
RMB’000 RMB’000
Revenue ––
Total expense (326) (8,483)
Loss for the year/period (326) (8,483)
Total comprehensive income for the year/period (326) (8,483)
Net cash flows (used in)/generated from operating activities (10) 9,202
Net cash flows generated from/(used in) investing activities 100 (212,309)
Net cash flows generated from financing activities – 263,989
Net increase in cash and cash equivalents 90 60,882
APPENDIX I ACCOUNTANTS’ REPORT
– I-91 –


--- page 610 ---
In June 2022, the Company acquired 29% interest of Guangdong REPT BATTERO. Consequently, the Group’s
proportion of ownership in Guangdong REPT BATTERO had been increased from 51% to 99.99%. The
non-controlling interests in Guangdong REPT BATTERO are not material for the six months ended 30 June 2023.
REPT SAIC:
As at
31 December
As at
30 June
2022 2023
RMB’000 RMB’000
Current assets 702,720 356,910
Non-current assets 585,679 2,602,134
Current liabilities (88,629) (370,227)
Non-current liabilities – (1,391,000)
Y ear ended
31 December
Six months ended
30 June
2022 2023
RMB’000 RMB’000
Revenue ––
Total expense (230) (1,953)
Loss for the year/period (230) (1,953)
Total comprehensive income for the year/period (230) (1,953)
Net cash flows used in operating activities (236) (1,991)
Net cash flows used in investing activities (456,522) (1,850,716)
Net cash flows generated from financing activities 660,000 1,865,000
Net increase in cash and cash equivalents 203,242 12,293
In April 2022, the Company, Liuzhou SAIC Technology Development Co., Ltd. (“ʮ
̡”) (“Liuzhou SAIC”) and Liuzhou Ruiyu Technology Partnership (Limited partnership) (“ҦΥྫΆุ
(Υྫ)”) (“Liuzhou Ruiyu”) jointly invested to establish REPT SAIC. Among them, the Company subscribed
RMB612,000,000 to hold 51% shares, Liuzhou SAIC subscribed RMB528,000,000 to hold 44% shares, and Liuzhou
Ruiyu subscribed RMB60,000,000 to hold 5% shares.
As at 31 December, 2022, the Company, Liuzhou SAIC, and Liuzhou Ruiyu has paid the capital contribution
of RMB350,000,000, RMB310,000,000 and nil, respectively, in cash. As at 30 June 2023, the Company, Liuzhou
SAIC, and Liuzhou Ruiyu has paid the capital contribution of RMB612,000,000, RMB528,000,000 and nil,
respectively, in cash.
APPENDIX I ACCOUNTANTS’ REPORT
– I-92 –


--- page 611 ---
34. BUSINESS COMBINATION
Acquisition of BatteroTech Wuhan
On 23 January 2021, the BatteroTech Shanghai acquired a 100% interest in BatteroTech Wuhan from Carrida
(Beijing) Technology Incubator Co., Ltd. (“ ̔ြ༺(̏ԯ)ʮ̡”), Tai’an Kaben Energy Technology
Co., Ltd. (“ʮ̡”), Shenzhen Jiawei Investment Development Co., Ltd. (“ ଉέ̹̋ਃҳ༟
ʮ̡”), which are third parties of the Group. The acquisition was made as part of the Group’s strategy to
expand its development and market share of traction battery products. The purchase consideration for the acquisition
was in the form of cash amounting RMB45,000,000 paid in July 2021.
The fair values of the identifiable assets and liabilities of BatteroTech Wuhan as at the date of acquisition were
as follows:
Fair value
recognized on
acquisition
RMB’000
Property, plant and equipment 996
Cash and cash equivalents 12,278
Prepayments, other receivables and other assets, net 32,006
Trade and bills payables (280)
Total identifiable net assets at fair value 45,000
Consideration satisfied by cash 45,000
An analysis of the cash flows in respect of the acquisition of a subsidiary is as follows:
RMB’000
Cash consideration paid 45,000
Less: cash and bank balances acquired (12,278)
Net outflow of cash and cash equivalents included
in cash flows from investing activities 32,722
No material acquisition related costs were incurred.
Since the acquisition, BatteroTech Wuhan contributed a loss of RMB271,000 to the consolidated loss for the
year ended 31 December 2021.
Had the combination taken place at the beginning of the year, the revenue of the Group and the loss of the
Group for the year would have been RMB2,118,038,000 and RMB804,209,000, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 612 ---
35. NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS
(a) Major non-cash transactions
During the year ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023,
the Group had non-cash additions to right-of-use assets and lease liabilities of RMB39,662,000, RMB7,680,000,
RMB3,681,000, RMB3,686,000 and RMB2,678,000, respectively, in respect of lease arrangements for buildings.
In June 2020, the Group signed a supplementary agreement with Huarong to terminate the lease contract in
advance and purchase certain of the leased equipment from Huarong, which resulted a non-cash addition to property,
plant and equipment of RMB217,872,000 reclassified from right-of-use assets.
(b) Changes in liabilities arising from financing activities
Year ended 31 December 2020
Due to related
parties –
borrowings Bank loans
Lease
liabilities
RMB’000 RMB’000 RMB’000
At 1 January 2020 310,000 180,369 289,341
Changes from financing cash flows 328,930 88,985 (17,732)
Additions of lease liabilities – – 39,662
Disposal as a result of early cancelation of a
lease – – (278,116)
Interest expense (note 7) – 11,851 10,924
At 31 December 2020 638,930 281,205 44,079
Year ended 31 December 2021
Due to related
parties –
borrowings Bank loans
Lease
liabilities
RMB’000 RMB’000 RMB’000
At 1 January 2021 638,930 281,205 44,079
Changes from financing cash flows 1,927,067 277,185 (12,160)
Additions of lease liabilities – – 7,680
Interest expense (note 7) 10,487 20,186 1,986
At 31 December 2021 2,576,484 578,576 41,585
Year ended 31 December 2022
Due to related
parties –
borrowings Bank loans
Lease
liabilities
RMB’000 RMB’000 RMB’000
At 1 January 2022 2,576,484 578,576 41,585
Changes from financing cash flows (2,653,697) 3,965,299 (11,636)
Interest capitalized (note 7) – (40,279) –
Additions of lease liabilities – – 3,681
Interest expense (note 7) 79,812 147,578 1,814
At 31 December 2022 2,599 4,651,174 35,444
APPENDIX I ACCOUNTANTS’ REPORT
– I-94 –


--- page 613 ---
Six months ended 30 June 2022 (unaudited)
Due to related
parties –
borrowings Bank loans
Lease
liabilities
RMB’000 RMB’000 RMB’000
At 1 January 2022 2,576,484 578,576 41,585
Changes from financing cash flows (827,374) 2,664,482 (5,777)
Interest capitalised (note 7) – (34,109) –
Additions of lease liabilities – 3,681
Interest expense (note 7) – – 935
At 30 June 2022 1,749,110 3,208,949 40,424
Six months ended 30 June 2023
Due to related
parties –
borrowings Bank loans
Lease
liabilities
RMB’000 RMB’000 RMB’000
At 1 January 2023 2,599 4,651,174 35,444
Changes from financing cash flows (2,599) 2,371,434 (5,956)
Interest capitalised (note 7) – (8,470) –
Additions of lease liabilities – – 2,678
Interest expense (note 7) – 120,774 810
At 30 June 2023 – 7,134,912 32,976
(c) Total cash outflow for leases
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited
Within operating activities (31) (524) (3,797) (932) (1,418)
Within financing activities (17,732) (12,160) (11,636) (5,777) (5,956)
(17,763) (12,684) (15,433) (6,709) (7,374)
36. COMMITMENTS
The Group had the following capital commitments at the end of each of the Relevant Periods.
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Contracted, but not provided for:
Purchase of items of property, plant
and equipment 643,398 3,679,610 5,461,749 5,104,152
APPENDIX I ACCOUNTANTS’ REPORT
– I-95 –


--- page 614 ---
37. PLEDGE OF ASSETS
Details of the Group’s financial assets at fair value through profit or loss and restricted time deposits pledged
for issuance of the Group’s bills payables to suppliers and letter of guarantee are included in notes 22 and 23 to the
Historical Financial Information.
Details of the Group’s property, plant and equipment pledged for the Group’s bank borrowings are included
in note 13 and note 27 to the Historical Financial Information.
Details of the Group’s leasehold land pledged for the Group’s bank borrowings are included in note 14 and
note 27 to the Historical Financial Information.
Details of the Group’s bills receivable pledged for the Group’s bank borrowings are included in note 20 and
note 27 to the Historical Financial Information.
38. RELATED PARTY TRANSACTIONS
(a) Name and relationship
Name of related party Relationship with the Company
Mr. Xiang Guangda Ultimate shareholder of Tsingshan
Yongqing Technology Controlling shareholder
Tsingshan Holding Group Co., Ltd.*
ʮ̡ (“Tsingshan”)
Controlling shareholder of Yongqing
Technology
SAIC Motor Corporation Limited
ʮ̡ (“SAIC Motor”)
Shareholder
Irestal Company controlled by Mr. Xiang Guangda
PT.Jiu Long Metal Industry Company controlled by Mr. Xiang Guangda
PT.Infei Metal Industry Company controlled by Mr. Xiang Guangda
PT.Maluku Utara Metal Industry Company controlled by Mr. Xiang Guangda
PT.Sunny Metal Industry Company controlled by Mr. Xiang Guangda
Shanghai Ruipu Special Steel Co., Ltd.*
ʮ̡ (“Ruipu Special Steel”)
Company controlled by Mr. Xiang Guangda
Shanghai Tsingshan Trading Co., Ltd. *
ʮ̡ (“Tsingshan Trading”)
Company controlled by Mr. Xiang Guangda
Zhejiang Tsingshan Education Technology Co., Ltd.*
ʮ̡ (“Tsingshan Education”)
Company controlled by Mr. Xiang Guangda
Zhejiang Tsingshan Enterprise Management Co., Ltd. *
ʮ̡ (“Zhejiang Tsingshan
Enterprise Management”)
Company controlled by Mr. Xiang Guangda
Dingxin Company controlled by Mr. Xiang Guangda
Qingtuo Nickel Company controlled by Mr. Xiang Guangda
PT.Weda Bay Nickel Company controlled by Yongqing Technology
PT.Indonesia Ruipu Nickel and Chrome Alloy Company controlled by Tsingshan
Tsingshan Stainless Steel Co., Ltd. *
ʮ̡ (“Tsingshan Stainless Steel”)
Company controlled by Tsingshan
Zhejiang REPT Technology Co., Ltd.
ʮ̡ (“Zhejiang REPT”)
Company controlled by Tsingshan
Fujian Qingtuo Heavy Industry Co., Ltd.*
ʮ̡ (“Qingtuo Heavy Industry”)
Company controlled by Tsingshan
Fujian Tsingtuo Equipment Manufacturing Co., Ltd.*
ʮ̡ (“Tsingtuo Equipment”)
Company controlled by Tsingshan
SAIC MAXUS Automobile Co., Ltd.
ʮ̡ (“SAIC MAXUS
Automobile”)
Company controlled by SAIC Motor
SAIC MAXUS Automotive RV Technology Co., Ltd.
ʮ̡ (“SAIC MAXUS
Automotive RV”)
Company controlled by SAIC Motor
FOXESS Co., Ltd.*ʮ̡ (“FOXESS”) Associate of Yongqing Technology
Nanjing Automobile (Group) Corporation
ʮ̡ (“NAC”)
Company controlled by SAIC Motor
APPENDIX I ACCOUNTANTS’ REPORT
– I-96 –


--- page 615 ---
Name of related party Relationship with the Company
Liuzhou Saike Technology Development Co., Ltd.
ʮ̡ (“Liuzhou SAIC”)
Company controlled by SAIC Motor
Shanghai New Power Automotive Technology Company
Limitedʮ̡
(“Shanghai New Power Automotive”)
Company controlled by SAIC Motor
Shanghai Advanced Traction Battery Systems Co., Ltd.
ʮ̡
(“Shanghai Advanced Traction”)
Company controlled by SAIC Motor
SAIC GM Wuling AUTOMOBILE Company Limited
ʮ̡
(“SAIC GM Wuling”)
Company controlled by SAIC Motor
Zhejiang Qingmowan Energy Technology Co., Ltd.*
ʮ̡ (“Qingmowan”)
Associate of Yongqing Technology
PT.Bukit Smelter Indonesia Associate of Mr. Xiang Guangda
PT.Yashi Indonesia Investment Associate of Mr. Xiang Guangda
PT.Zhao Hui Nickel Associate of Mr. Xiang Guangda
Wenzhou Longwan Jincheng Hotel (Limited
Partnership)*ֳ(Υྫ)
(“Wenzhou Longwan”)
Associate of Mr. Xiang Guangda
Zhejiang Dinson Holding Co., Ltd.
ʮ̡ (“Zhejiang Dinson”)
Associate of Mr. Xiang Guangda
FuanQingmei Energy Materials Co., Ltd.
ʮ̡ (“FuanQingmei”)
Associate of Yongqing Technology
Qingruida Associate of REPT BATTERO
SAIC REPT Joint venture of REPT BATTERO
* The English names of these companies registered in the PRC represent the translated names of these
companies as no English names have been registered.
(b) The Group had the following material related party transactions and outstanding balances during the Relevant
Periods:
The Group
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Notes RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Sales of goods to
FOXESS (i) 11,363 136,413 656,482 174,332 182,630
Yongqing Technology (i) 889 2,666 762,310 – 832,737
PT.Yashi Indonesia
Investment (i) 2 4 6–– ––
PT.Bukit Smelter Indonesia (i) 1 5 3–– ––
PT.Jiu Long Metal Industry (i) – 3,160 – – –
PT.Weda Bay Nickel (i) – 3,160 – – –
PT.Infei Metal Industry (i) – 3,160 – – –
PT.Maluku Utara Metal
Industry (i) – 3,160 – – –
SAIC REPT (i) – – 484,086 – –
PT.Zhao Hui Nickel (i) – – 77,309 77,309 –
PT.Sunny Metal Industry (i) – – 20,369 20,369 –
Qingmowan (i) –– 4 8 4 6–
SAIC GM Wuling (i) – – – – 148,420
SAIC Motor (i) – – – – 20,626
SAIC MAXUS Automotive
RV (i) – – – – 4,423
APPENDIX I ACCOUNTANTS’ REPORT
– I-97 –


--- page 616 ---
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Notes RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Shanghai New Power
Automotive (i) – – – – 1,788
Shanghai Advanced Traction (i) ––– – 3 1 4
SAIC MAXUS Automobile (i) ––– – 3 0 2
NAC (i) ––– – 1 5 2
Liuzhou SAIC (i) ––– – 7 8
12,651 151,719 2,001,040 272,016 1,191,470
Purchases of products/
services from
Tsingshan (i) 566,754 250,313 61,048 44,258 1,115
Yongqing Technology (i) 7,794 – – – –
Ruipu Special Steel (i) 1,644 1,789 1,205 1,168 1,214
Wenzhou Longwan (i) 1 36– 8 1 2
Tsingshan Education (i) – 266 – – 212
Irestal (i) – – 1,367 – –
FOXESS (i) – – 30 30 –
Tsingshan Trading (i) – – 14 14 32
FuanQingmei (i) ––– – 4 8 7
576,205 252,374 63,664 45,478 3,072
Rental expenses to related
parties
Irestal (ii) 1,777 8,463 6,770 3,385 4,109
Ruipu Special Steel (iii) 870 897 931 605 466
2,647 9,360 7,701 3,990 4,575
Rental revenue from related
parties
Tsingshan Stainless Steel – – 1,490 745 2,564
Loans received from related
parties
Yongqing Technology 340,000 1,691,000 – – –
Tsingshan 86,859 3,578,504 2,184,232 2,126,496 –
Qingtuo Nickel 36,977 – – – –
463,836 5,269,504 2,184,232 2,126,496 –
Repayment of loans from
related parties
Yongqing Technology 67,000 1,208,000 1,066,000 1,066,000 –
Qingtuo Nickel 36,977 – – – –
Tsingshan 30,929 2,134,437 3,684,232 1,999,232 –
134,906 3,342,437 4,750,232 3,065,232 –
APPENDIX I ACCOUNTANTS’ REPORT
– I-98 –


--- page 617 ---
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Notes RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Interest expenses to related
parties
Tsingshan – 7,057 76,747 57,736 –
Yongqing Technology – 3,430 3,065 390 –
– 10,487 79,812 58,126 –
* The amount represents the Group’s sales of goods to SAIC REPT, not taking into account the influence
of elimination of downstream transactions.
The Company
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Notes RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Sales of goods to
REPT Qingchuang (i) 16,338 – – – –
FOXESS (i) 11,363 133,119 472,587 141,905 75,084
PT.Indonesia Ruipu Nickel
and Chrome Alloy (i) 2 4 6–– ––
PT.Yashi Indonesia
Investment (i) 1 5 3–– ––
PT.Jiu Long Metal Industry (i) – 3,160 – – –
PT.Weda Bay Nickel (i) – 3,160 – – –
PT.Infei Metal Industry (i) – 3,160 – – –
PT.Maluku Utara Metal
Industry (i) – 3,160 – – –
SAIC REPT (i) – – 484,086 – –
PT.Zhao Hui Nickel (i) – – 77,309 77,309 –
PT.Sunny Metal Industry (i) – – 20,369 20,369 –
Qingmowan (i) –– 4 8 4 6–
Guangdong REPT
BATTERO (i) –– 3 2 – 5 7
SAIC GM Wuling (i) – – – – 148,420
REPT SAIC (i) – – – – 16,898
SAIC Motor (i) – – – – 7,096
SAIC MAXUS Automotive
RV (i) – – – – 4,423
Shanghai New Power
Automotive (i) – – – – 1,788
Wenzhou Xinke (i) ––– – 6 7 5
Shanghai Advanced Traction (i) ––– – 3 1 4
SAIC MAXUS Automobile (i) ––– – 3 0 2
NAC (i) ––– – 1 5 2
Liuzhou SAIC (i) ––– – 7 8
28,100 145,759 1,054,867 239,589 255,287
APPENDIX I ACCOUNTANTS’ REPORT
– I-99 –


--- page 618 ---
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Notes RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Purchases of products/services
from
Tsingshan (i) 566,754 250,313 61,048 44,258 1,115
REPT Qingchuang (i) 13,113 14,151 52,642 – 6,604
Yongqing Technology (i) 7,794 – – – –
Ruipu Special Steel (i) 1,644 1,789 1,205 1,168 1,466
Wenzhou Longwan (i) 1 36– – 1 2
Wenzhou Xinke (i) – – 41,252 – 12,934
FOXESS (i) – – 30 30 –
Tsingshan Trading (i) – – 14 14 18
BatteroTech Jiashan (i) – – – – 32,910
Tsingshan Education (i) ––– – 2 1 2
589,318 266,259 156,191 45,470 55,271
Rental expenses to related
parties
Ruipu Special Steel 870 897 931 605 465
Rental revenue from related
parties
Tsingshan Stainless Steel – – 1,490 745 2,564
Wenzhou Xinke – – 370 – 155
– – 1,860 745 2,719
Loans received from related
parties
Yongqing 320,000 187,057 – – –
Tsingshan Technology 57,929 3,548,634 889,232 831,496 –
Qingtuo Nickel 36,977 – – – –
414,906 3,735,691 889,232 831,496 –
Repayment of loans from
related parties
Yongqing Technology 67,000 563,000 180,000 180,000 –
Qingtuo Nickel 36,977 – – – –
Tsingshan 30,929 2,072,203 2,389,232 2,389,232 –
134,906 2,635,203 2,569,232 2,569,232 –
APPENDIX I ACCOUNTANTS’ REPORT
– I-100 –


--- page 619 ---
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Notes RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Loans provided to subsidiaries
BatteroTech Jiashan – – 1,639,000 450,000 620,000
BatteroTech Shanghai – – 420,000 300,000 –
Wenzhou Xinke – – 11,700 7,729 –
Guangdong REPT
BATTERO – – 2,000 – 145,000
Zhejiang Ruiyuan – – – – 50
– – 2,072,700 757,729 765,050
Repayment of loans to
subsidiaries
Wenzhou Xinke – – 4,000 4,000 –
Guangdong REPT
BATTERO – – 2,000 2,000 –
– – 6,000 6,000 –
Interest expenses to related
parties
Tsingshan – 3,431 21,769 20,815 –
Yongqing Technology – 927 466 390 –
– 4,358 22,235 21,205 –
Interest income from
subsidiaries
BatteroTech Jiashan – – 40,291 3,745 68,764
BatteroTech Shanghai – – 15,720 2,086 12,540
Wenzhou Xinke – – 619 254 242
Guangdong REPT
BATTERO – – 10 7 4,376
Zhejiang Ruiyuan – – – – –
– – 56,640 6,092 85,922
APPENDIX I ACCOUNTANTS’ REPORT
– I-101 –


--- page 620 ---
(c) Outstanding balances with related parties
The Group
As at 31 December
As at
30 June
2020 2021 2022 2023
Notes RMB’000 RMB’000 RMB’000 RMB’000
Trade related:
Due from related parties
FOXESS (iv) 8,492 36,741 282,936 2,282
Irestal (iv) 1,777 2,754 1,777 2,223
Yongqing Technology (iv) – 2,666 651,271 312,043
PT.Jiu Long Metal Industry (iv) – 3 0 5––
PT.Weda Bay Nickel (iv) – 3 0 5––
PT.Infei Metal Industry (iv) – 3 0 5––
PT.Maluku Utara Metal
Industry (iv) – 3 0 5––
PT.Bukit Smelter Indonesia (iv) 5,708–––
PT.Yashi Indonesia
Investment (iv) 3,019–––
Ruipu Special Steel (iv) 103 110 209 110
SAIC REPT (iv) – – 460,976 85,010
PT.Zhao Hui Nickel (iv) – – 8,308 8,620
PT.Sunny Metal Industry (iv) – – 2,293 –
Zhejiang Dinson (iv) – – – 180,000
SAIC GM Wuling (iv) – – – 164,214
SAIC Motor (iv) – – – 5,731
SAIC MAXUS Automotive
RV (iv) – – – 2,798
Shanghai New Power
Automotive (iv) – – – 2,110
Shanghai Advanced
Traction (iv) ––– 3 5 5
SAIC MAXUS Automobile (iv) ––– 3 4 1
NAC (iv) ––– 1 7 1
Liuzhou SAIC (iv) ––– 8 7
Zhejiang Tsingshan
Enterprise Management (iv) ––– 4 0
19,099 43,491 1,407,770 766,135
Trade related:
Due to related parties
Tsingshan 484,641 438,758 49,854 50,969
Yongqing Technology 8,808 8,808 – –
Ruipu Special Steel 80 330 – –
FOXESS – 5,000 20,000 9
Tsingshan Education – 199 – –
Tsingtuo Equipment – – – 1,122
Tsingshan Stainless Steel – – – 2,565
Zhejiang Tsingshan
Enterprise Management – – – 349
Qingtuo Heavy Industry – – – 170
493,529 453,095 69,854 55,184
Non-trade related:
Due to related parties
Yongqing Technology (vi) 583,000 1,073,057 2,599 –
Tsingshan (vii) 55,930 1,503,427 – –
SAIC REPT (viii)
– – 44,930 –
Qingruida (ix) – – – 36,000
638,930 2,576,484 47,529 36,000
APPENDIX I ACCOUNTANTS’ REPORT
– I-102 –


--- page 621 ---
The Company
As at 31 December
As at
30 June
2020 2021 2022 2023
Notes RMB’000 RMB’000 RMB’000 RMB’000
Trade related:
Due from related parties
FOXESS (iv) 8,492 34,829 125,360 –
PT.Jiu Long Metal Industry (iv) – 3 0 5––
PT.Weda Bay Nickel (iv) – 3 0 5––
PT.Infei Metal Industry (iv) – 3 0 5––
PT.Maluku Utara Metal
Industry (iv) – 3 0 5––
REPT Qingchuang (iv) 7,227 1,297 – –
PT.Bukit Smelter Indonesia (iv) 5,708–––
PT.Yashi Indonesia
Investment (iv) 3,019–––
Ruipu Special Steel (iv) 103 110 209 110
SAIC REPT (iv) – – 460,976 85,010
PT.Zhao Hui Nickel (iv) – – 8,308 8,620
PT.Sunny Metal Industry (iv) – – 2,293 –
Wenzhou Xinke (iv) – – 712 185
Zhejiang Dinson (iv) – – – 180,000
SAIC GM Wuling (iv) – – – 164,214
SAIC Motor (iv) – – – 5,731
REPT SAIC (iv) – – – 3,850
SAIC MAXUS Automotive
RV (iv) – – – 2,798
Shanghai New Power
Automotive (iv) – – – 2,110
Shanghai Advanced
Traction (iv) ––– 3 5 5
SAIC MAXUS Automobile (iv) ––– 3 4 1
NAC (iv) ––– 1 7 1
Liuzhou SAIC (iv) ––– 8 7
24,549 37,456 597,858 453,582
Trade related:
Due to related parties
Tsingshan 484,641 438,758 49,854 50,969
Yongqing Technology 8,808 8,808 – –
Ruipu Special Steel 80 330 – –
FOXESS – 5,000 20,000 9
REPT Qingchuang – – 13,500 –
Wenzhou Xinke – – 8,147 3,842
BatteroTech Jiashan – – – 37,187
Tsingshan Stainless Steel – – – 2,565
Tsingtuo Equipment – – – 1,122
Qingtuo Heavy Industry – – – 170
493,529 452,896 91,501 95,864
APPENDIX I ACCOUNTANTS’ REPORT
– I-103 –


--- page 622 ---
As at 31 December
As at
30 June
2020 2021 2022 2023
Notes RMB’000 RMB’000 RMB’000 RMB’000
Non-trade related:
Due from subsidiaries
BatteroTech Jiashan – – 1,679,291 2,530,045
BatteroTech Shanghai – – 435,720 449,150
Wenzhou Xinke – – 8,319 –
Guangdong REPT
BATTERO – – – 259,376
– – 2,123,330 3,238,571
Non-trade related:
Due to related parties
Yongqing Technology 563,000 180,927 – –
Tsingshan 27,000 1,503,427 – –
REPT SAIC – – 262,000 –
SAIC REPT – – 44,930 –
Chongqing REPT
BATTERO – – – 800,000
Zhejiang Qingruida – – – 36,000
590,000 1,684,354 306,930 836,000
(i) The prices are mutually agreed after taking the prevailing market prices into consideration.
(ii) The Group has entered into lease agreements in respect of buildings from Irestal. The rental fees under
the lease were RMB1,777,000, RMB8,463,000, RMB6,770,000, RMB3,385,000 and RMB4,109,000 for
the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023,
respectively. The Group recognized right-of-use assets of RMB33,608,000, RMB27,403,000,
RMB21,199,000 and RMB18,339,000, and lease liabilities of RMB34,817,000, RMB29,527,000,
RMB23,986,000 and RMB20,708,000 as at 31 December 2020, 2021, 2022 and 30 June 2023,
respectively. The transactions were made according to the prices and terms agreed with the related
parties.
(iii) The Group has entered into lease agreements in respect of buildings from Ruipu Special Steel. The
rental fees under the lease were RMB870,000, RMB897,000, RMB931,000, RMB605,000 and
RMB466,000 for the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June
2022 and 2023, respectively. The Group recognized right-of-use assets of RMB4,956,000,
RMB6,089,000, RMB5,159,000 and RMB4,651,000, and lease liabilities of RMB4,971,000,
RMB6,071,000, RMB5,409,000 and RMB4,923,000, as at 31 December 2020, 2021, 2022 and 30 June
2023, respectively. The transactions were made according to the prices and terms agreed with the related
parties.
(iv) The amounts due from related parties are unsecured, interest-free and repayable on demand. The
management of the Company considers there is no significant credit risk for amounts due from related
parties.
APPENDIX I ACCOUNTANTS’ REPORT
– I-104 –


--- page 623 ---
(v) During the years ended 31 December 2020, 2021 and 2022, Dingxing and Qingtuo Nickel provided
guarantee for the Group’s interest-bearing bank borrowings. As at 31 December 2022, Dingxing and
Qingtuo Nickel’s guarantee for the Group has been terminated, further details of which are given in note
27 to the financial statements.
– As at 31 December 2020 and 2021, Zhejiang REPT provided guarantee for the Group’s bills
payables amounting RMB16,613,000, and RMB16,660,000, respectively.
– During the years ended 31 December 2020, Qingtuo Nickel provided guarantee for the Group’s
equipment leased from Huarong.
(vi) The amounts due to the Yongqing Technology includes:
– As at 31 December 2020, loans of RMB583,000,000 were interest-free;
– As at 31 December 2021, loans of RMB76,000,000 were interest free, loans of RMB990,000,000
bore an interest rate of 6.36%, and interest payable of RMB7,057,000 was accrued on the loans;
– As at 31 December 2022, interest payable of RMB2,599,000 was accrued.
All the loans from Yongqing Technology were unsecured and repayable on demand.
The non-trade balance due to the Yongqing Technology has been fully repaid before 30 June 2023.
(vii) The amounts due to Tsingshan includes:
– As at 31 December 2020, loans of RMB55,930,000 were interest-free;
– As at 31 December 2021, loans of RMB1,500,000,000 bore an interest rate of 6.36% and interest
payable of RMB3,427,000 was accrued on the loans.
All the loans from Tsingshan were unsecured and repayable on demand. The Group fully repaid the loans
from Tsingshan during the year of 2022.
(viii) As at 31 December 2022, the Group’s equity investment payable to SAIC REPT was RMB44,930,000.
The non-trade balance represented the SAIC REPT has been fully repaid before 30 June 2023.
(ix) As at 30 June 2023, the balance of RMB36,000,000 represents the Group’s equity investment payable
to Qingruida. Pursuant to the articles of association, the payment will be made according to the actual
production capacity progress of Qingruida and no later than the end of 2030.
(d) Compensation of key management personnel of the Group:
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Salaries, allowances and
benefits in kind 1,519 2,641 3,942 2,107 1,807
Performance related
bonuses 884 1,500 6,660 2,580 3,330
Pension scheme
contributions 16 219 484 92 169
Share incentive plan
expense – 26,052 76,715 39,078 39,262
2,419 30,412 87,801 43,857 44,568
Having due regard to the substance of the relationships, the directors are of the opinion that meaningful
information relating to related party disclosures has been adequately disclosed, and the Group has complied with the
disclosure requirements in Chapter 14A of the Listing Rules.
APPENDIX I ACCOUNTANTS’ REPORT
– I-105 –


--- page 624 ---
39. TRANSFERS OF FINANCIAL ASSETS
Transferred financial assets that are not derecognized in their entirety
At 31 December 2020, 2021 and 2022 and 30 June 2023, the Group endorsed certain bills receivables accepted
by banks in Mainland China (the “Endorsed Bills”) with a carrying amount of RMB93,886,000, RMB215,762,000,
RMB602,889,000 and RMB418,573,000 respectively, to certain of its suppliers in order to settle the trade payables
due to such suppliers (the “Endorsement”). In the opinion of the directors, the Group has retained the substantial risks
and rewards, which include default risks relating to such Endorsed Bills, and accordingly, it continued to recognize
the full carrying amounts of the Endorsed Bills and the associated trade payables settled. Subsequent to the
Endorsement, the Group did not retain any rights on the use of the Endorsed Bills, including the sale, transfer or
pledge of the Endorsed Bills to any other third parties. The aggregate carrying amount of the trade payables settled
by the Endorsed Bills during the year to which the suppliers have recourse was as RMB152,633,000,
RMB744,633,000, RMB980,673,000 and RMB424,145,000 at 31 December 2020, 2021, 2022 and 30 June 2023,
respectively.
At 31 December 2020, 2021 and 2022 and 30 June 2023, the Group discounted certain bills receivables
accepted by banks in Mainland China (the “Discounted Bills”) with a carrying amount of RMB793,000,
RMB14,069,000, RMB50,000,000 and RMB138,135,000 respectively (the “Discounting”). In the opinion of the
directors, the Group has retained the substantial risks and rewards, which include default risks relating to such
Discounted Bills, and accordingly, it continued to recognize the full carrying amounts of the Discounted Bills and
the associated banking borrowings. Subsequent to the Discounting, the Group did not retain any rights on the use of
the Discounted Bills, including the sale, transfer or pledge of the Discounted Bills to any other third parties. The
aggregate carrying amount of the Discounted Bills during the year to which the banks have recourse was
RMB15,714,000, RMB19,119,000, RMB81,889,000, and RMB141,135,000 as at 31 December 2020, 2021, 2022 and
30 June 2023, respectively.
Transferred financial assets that are derecognized in their entirety
At 31 December 2020, 2021 and 2022 and 30 June 2023, the Group endorsed certain bills receivables accepted
by banks in Mainland China to certain of its suppliers in order to settle the trade payables due to such suppliers with
a carrying amount in aggregate of RMB114,733,000, RMB301,729,000, RMB4,246,010,000 and RMB3,052,279,000,
respectively, and discounted certain bills receivable accepted by banks in Mainland China (the “Derecognized Bills”)
with a carrying amount of RMB133,698,000, RMB203,689,000, nil and RMB593,172,000, respectively. The
Derecognized Bills had a maturity of one to six months at the end of each of the Relevant Periods. In accordance with
the Law of Negotiable Instruments in the PRC, the holders of the Derecognized Bills may exercise the right of
recourse against any, several or all of the persons liable for the Derecognized Bills, including the Group, in disregard
of the order of precedence (the “Continuing Involvement”). In the opinion of the directors, the risk of the Group being
claimed by the holders of the Derecognized Bills is remote in the absence of a default of the accepted banks. The
Group has transferred substantially all risks and rewards relating to the Derecognized Bills. Accordingly, it has
derecognized the full carrying amounts of the Derecognized Bills and the associated trade payables. The maximum
exposure to loss from the Group’s Continuing Involvement in the Derecognized Bills and the undiscounted cash flows
to repurchase these Derecognized Bills is equal to their carrying amounts. In the opinion of the directors, the fair
values of the Group’s Continuing Involvement in the Derecognized Bills are not significant.
During the year ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2023, the Group
has not recognized any gain or loss on the date of transfer of the Derecognized Bills. No gains or losses were
recognized from the Continuing Involvement, both during the year or cumulatively. The endorsement and discounting
have been made evenly throughout the year/period.
APPENDIX I ACCOUNTANTS’ REPORT
– I-106 –


--- page 625 ---
40. FINANCIAL INSTRUMENTS BY CATEGORY
The carrying amounts of each of the categories of financial instruments of the Group as at the end of each of
the Relevant Periods are as follows:
Financial assets
As at 31 December 2020
Financial
assets at
fair value
through
profit or loss
Financial
assets at
fair value
through other
comprehensive
income
Financial
assets at
amortized cost Total
RMB’000 RMB’000 RMB’000 RMB’000
Trade and bills receivables – 71,170 540,656 611,826
Contract assets – – 6,686 6,686
Financial assets included in
prepayments, other receivables
and other assets – – 2,395 2,395
Financial assets at fair value
through profit and loss 50,454 – – 50,454
Due from related parties – – 19,099 19,099
Restricted cash – – 40,850 40,850
Cash and cash equivalents – – 146,430 146,430
50,454 71,170 756,116 877,740
As at 31 December 2021
Financial
assets at
fair value
through
profit or loss
Financial
assets at
fair value
through other
comprehensive
income
Financial
assets at
amortized cost Total
RMB’000 RMB’000 RMB’000 RMB’000
Trade and bills receivables – 163,745 889,765 1,053,510
Contract assets – – 20,935 20,935
Financial assets included in
prepayments, other receivables
and other assets – – 14,116 14,116
Due from related parties – – 43,491 43,491
Restricted cash – – 817,327 817,327
Cash and cash equivalents – – 580,507 580,507
– 163,745 2,366,141 2,529,886
APPENDIX I ACCOUNTANTS’ REPORT
– I-107 –


--- page 626 ---
As at 31 December 2022
Financial
assets at fair
value through
profit or loss
Financial
assets at fair
value through
other
comprehensive
income
Financial
assets at
amortized cost Total
RMB’000 RMB’000 RMB’000 RMB’000
Trade and bills receivables – 11,843 4,182,214 4,194,057
Contract assets – – 113,426 113,426
Financial assets included in
prepayments, other receivables
and other assets – – 319,627 319,627
Financial assets at fair value
through profit and loss 17,186 – – 17,186
Due from related parties – – 1,407,770 1,407,770
Restricted cash – – 1,844,468 1,844,468
Cash and cash equivalents – – 4,900,122 4,900,122
17,186 11,843 12,767,627 12,796,656
As at 30 June 2023
Financial
assets at fair
value through
profit or loss
Financial
assets at fair
value through
other
comprehensive
income
Financial
assets at
amortised cost Total
RMB’000 RMB’000 RMB’000 RMB’000
Trade and bills receivables – 275,848 3,277,266 3,553,114
Contract assets – – 166,995 166,995
Financial assets included in
prepayments, other receivables
and other assets – – 111,004 111,004
Financial assets at fair value
through profit and loss 116,959 – – 116,959
Equity investments designated at
fair value through other
comprehensive income – 10,000 – 10,000
Due from related parties – – 766,135 766,135
Restricted cash – – 1,857,888 1,857,888
Cash and cash equivalents – – 4,021,452 4,021,452
116,959 285,848 10,200,740 10,603,547
APPENDIX I ACCOUNTANTS’ REPORT
– I-108 –


--- page 627 ---
Financial liabilities
As at 31 December 2020
Financial
liabilities at
amortized cost
RMB’000
Financial liabilities included in other payables and accruals 27,443
Due to related parties 1,132,459
Trade and bills payables 586,609
Interest-bearing bank borrowings 281,205
Lease liabilities 44,079
2,071,795
As at 31 December 2021
Financial
liabilities at
amortized cost
RMB’000
Financial liabilities included in other payables and accruals 147,631
Due to related parties 3,029,579
Trade and bills payables 1,660,312
Interest-bearing bank borrowings 578,576
Lease liabilities 41,585
5,457,683
As at 31 December 2022
Financial
liabilities at
amortized cost
RMB’000
Financial liabilities included in other payables and accruals 197,895
Due to related parties 117,383
Trade and bills payables 6,773,324
Interest-bearing bank and other borrowings 4,651,174
Lease liabilities 35,444
11,775,220
APPENDIX I ACCOUNTANTS’ REPORT
– I-109 –


--- page 628 ---
As at 30 June 2023
Financial
liabilities at
amortised cost
RMB’000
Financial liabilities included in other payables and accruals 145,537
Due to related parties 91,184
Trade and bills payables 5,902,947
Interest-bearing bank and other borrowings 7,134,912
Lease liabilities 32,976
13,307,556
41. FAIR V ALUE AND FAIR V ALUE HIERARCHY OF FINANCIAL INSTRUMENTS
Management has assessed that the fair values of cash and cash equivalents, time deposits, financial assets
included in prepayments and other receivables, trade and bills receivables, due from related parties, trade and bills
payables, financial liabilities included in other payables and accruals, due to related parties and current portion of
interest-bearing bank borrowings approximate to their carrying amounts largely due to the short-term maturities of
these instruments.
The Group’s finance department headed by the finance manager is responsible for determining the policies and
procedures for the fair value measurement of financial instruments. At the end of each of the Relevant Periods, the
finance department analyses the movements in the values of financial instruments and determines the major inputs
applied in the valuation. The valuation is reviewed and approved by the chief financial officer.
The fair values of the financial assets and liabilities are included at the amount at which the instrument could
be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following
methods and assumptions were used to estimate the fair values:
The fair values of the non-current portion of interest-bearing bank borrowings have been calculated by
discounting the expected future cash flows using rates currently available for instruments with similar terms, credit
risk and remaining maturities. The changes in fair value as a result of the Group’s own non-performance risk for
interest-bearing bank borrowings as at the end of each of the Relevant Periods were assessed to be insignificant.
The fair values of unlisted equity investments designated at fair value through other comprehensive income
have been estimated using a market-based valuation technique based on assumptions that are not supported by
observable market prices or rates. The directors believe that the estimated fair values resulting from the valuation
technique, which are recorded in the consolidated statement of financial position, and the related changes in fair
values, which are recorded in other comprehensive income, are reasonable, and that they were the most appropriate
values at the end of each of the Relevant Periods.
The Group invests in unlisted investments, which represent wealth management products issued by banks in
Mainland China. The Group has estimated the fair value of these unlisted investments by using a discounted cash flow
valuation model based on the market interest rates of instruments with similar terms and risks. The fair values have
been assessed to be approximate to their carrying amounts.
The discount for lack of marketability represents the amounts of premiums and discounts determined by the
Group that market participants would take into account when pricing the investments.
Fair value hierarchy
The following tables illustrate the fair value measurement hierarchy of the Group’s financial instruments.
APPENDIX I ACCOUNTANTS’ REPORT
– I-110 –


--- page 629 ---
Assets measured at fair value:
As at 31 December 2020
Fair value measurement using
Quoted prices
in active
markets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000
Bills receivables – 71,170 – 71,170
Financial assets at fair value
through profit or loss – 50,454 – 50,454
– 121,624 – 121,624
As at 31 December 2021
Fair value measurement using
Quoted prices
in active
markets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000
Bills receivables – 163,745 – 163,745
As at 31 December 2022
Fair value measurement using
Quoted prices
in active
markets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000
Bills receivables – 11,843 – 11,843
Financial assets at fair value
through profit or loss – 17,186 – 17,186
– 29,029 – 29,029
APPENDIX I ACCOUNTANTS’ REPORT
– I-111 –


--- page 630 ---
As at 30 June 2023
Fair value measurement using
Quoted prices
in active
markets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000
Bills receivables – 275,848 – 275,848
Financial assets at fair value
through profit or loss – 116,959 – 116,959
Equity investments designated at
fair value through other
comprehensive income (i) – – 10,000 10,000
– 392,807 10,000 402,807
(i) The balance of equity investments designated at fair value through other comprehensive income
represents the Company’s equity investments of RMB10,000,000 in Liuzhou Fansaike. Liuzhou
Fansaike was newly established in January 2023 and still in construction stage as at 30 June 2023. The
management estimates that the fair value of such equity investments approximates its investment cost
given consideration to the recent transaction and investee in the pre-operating stage.
The Group did not have any financial liabilities measured at fair value at the end of each of the Relevant
Periods.
During the Relevant Periods, there were no transfers of fair value measurements between Level 1 and Level 2
and no transfers into or out of Level 3 for both financial assets and financial liabilities.
42. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise cash and cash equivalents and bank borrowings. The
main purpose of these financial instruments is to support the Group’s operations. The Group has various other
financial assets and liabilities such as trade receivables, which arise directly from its operations.
The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk,
credit risk and liquidity risk. The senior management of the Company meets regularly to analyze and formulate
measures to manage the Group’s exposure to these risks. In addition, the Board holds meetings regularly to analyze
and approve the proposals made by the senior management of the Company. Generally, the Group introduces
conservative strategies on its risk management. As the Group’s exposure to these risks is kept to a minimum, the
Group has not used any derivatives and other instruments for hedging purposes. The Group does not hold or issue
derivative financial instruments for trading purposes. The Board reviews and agrees policies for managing each of
these risks and they are summarized below.
Interest rate risk
The Group’s exposure to the risk of changes in fair value relates primarily to the Group’s bank borrowings with
a floating interest rate.
APPENDIX I ACCOUNTANTS’ REPORT
– I-112 –


--- page 631 ---
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other
variables held constant, of the Group’s profit after tax through the impact on floating rate borrowings and the Group’s
equity.
Increase/
(decrease) in
basis points
(Decrease)/
increase in
profit/(loss)
after tax
(Decrease)/
increase in
equity
RMB’000 RMB’000 RMB’000
2020
RMB 100 (1,338) (1,338)
RMB (100) 1,338 1,338
2021
RMB 100 (1,790) (1,790)
RMB (100) 1,790 1,790
2022
RMB 100 (24,920) (24,920)
RMB (100) 24,920 24,920
Six months ended 30 June 2023
RMB 100 (25,192) (25,192)
RMB (100) 25,192 25,192
Foreign currency risk
Foreign currency risk is the risk of loss resulting from changes in foreign currency exchange rates. Fluctuations
in exchange rates between RMB and other currencies in which the Group conducts business may affect the Group’s
financial condition and results of operations. The Group seeks to limit its exposure to foreign currency risk by
minimising its net foreign currency position.
The following table demonstrates the sensitivity at the end of each of the Relevant Periods to a reasonably
possible change in foreign currency exchange rates, with all other variables held constant, of the Group’s loss before
tax (due to changes in the fair value of monetary assets and liabilities) and the Group’s equity.
(Decrease)/
increase in
foreign
exchange rate
(Decrease)/
increase in
profit/(loss)
after tax
(Decrease)/
increase in
equity
% RMB’000 RMB’000
2020
If RMB strengthens against US$ (5) (6,310) (6,310)
If RMB weakens against US$ 5 6,310 6,310
2021
If RMB strengthens against US$ (5) (107) (107)
If RMB weakens against US$ 5 107 107
2022
If RMB strengthens against US$ (5) (1,557) (1,557)
If RMB weakens against US$ 5 1,557 1,557
Six months ended 30 June 2023
If RMB strengthens against US$ (5) (1,857) (1,857)
If RMB weakens against US$ 5 1,857 1,857
APPENDIX I ACCOUNTANTS’ REPORT
– I-113 –


--- page 632 ---
Credit risk
The Group trades only with recognized and creditworthy third parties and there is no requirement for collateral.
It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification
procedures. In addition, receivable balances are monitored on an ongoing basis and the Group’s exposure to bad debts
is not significant. Concentrations of credit risk are managed by customer/counterparty and by industry sector.
Maximum exposure and year-end staging
The table below shows the credit quality and the maximum exposure to credit risk based on the Group’s credit
policy, which is mainly based on reasonable and supportable information that is available at the reporting date about
past events, current conditions and forecasts of future economic conditions, and year-end staging classification as at
the end of each of the Relevant Periods. The amounts presented are gross amounts for financial assets.
31 December 2020
12 months
ECLs Lifetime ECLs
Stage 1 Stage 2 Stage 3
Simplified
approach Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade and bills
receivables* – – – 613,879 613,879
Contract assets* – – – 6,686 6,686
Financial assets included
in prepayments and
other receivables and
other assets
– Normal** 2,39 5––– 2,395
Due from related parties 1,880 – – 17,219 19,099
Restricted cash 40,85 0––– 40,850
Cash and cash equivalents 146,43 0––– 146,430
191,555 – – 637,784 829,339
31 December 2021
12 months
ECLs Lifetime ECLs
Stage 1 Stage 2 Stage 3
Simplified
approach Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade and bills
receivables* – – – 1,057,148 1,057,148
Contract assets* – – – 20,935 20,935
Financial assets included
in prepayments and
other receivables and
other assets
– Normal** 14,11 6––– 14,116
Due from related parties 1,887 – – 41,604 43,491
Restricted cash 817,32 7––– 817,327
Cash and cash equivalents 580,50 7––– 580,507
1,413,837 – – 1,119,687 2,533,524
APPENDIX I ACCOUNTANTS’ REPORT
– I-114 –


--- page 633 ---
31 December 2022
12 months
ECLs Lifetime ECLs
Stage 1 Stage 2 Stage 3
Simplified
approach Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade and bills
receivables* – – – 4,278,745 4,278,745
Contract assets* – – – 113,426 113,426
Financial assets included
in prepayments and
other receivables and
other assets
– Normal** 319,62 7––– 319,627
Due from related parties 1,887 – – 1,405,883 1,407,770
Restricted cash 1,844,468 – – – 1,844,468
Cash and cash equivalents 4,900,122 – – – 4,900,122
7,066,104 – – 5,798,054 12,864,158
30 June 2023
12 months
ECLs Lifetime ECLs
Stage 1 Stage 2 Stage 3
Simplified
approach Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade and bills
receivables* – – – 3,884,877 3,884,877
Contract assets* – – – 166,995 166,995
Financial assets included
in prepayments and
other receivables and
other assets
– Normal** 111,00 4––– 1 1 1,004
Due from related parties 2,333 – – 763,802 766,135
Restricted cash 1,857,888 – – – 1,857,888
Cash and cash equivalents 4,021,452 – – – 4,021,452
5,992,677 – – 4,815,674 10,808,351
* For trade and bills receivables and contract assets to which the Group applies the simplified approach
for impairment, information based on the provision matrix is disclosed in note 20 and note 21 to the
Historical Financial Information.
** The credit quality of the financial assets included in prepayments and other receivables is considered
to be “normal” when they are not past due and there is no information indicating that the financial assets
had a significant increase in credit risk since initial recognition. Otherwise, the credit quality of the
financial assets is considered to be “doubtful”.
Further quantitative data in respect of the Group’s exposure to credit risk arising from trade receivables and
other receivables are respectively disclosed in notes 20 and 17 to the Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
– I-115 –


--- page 634 ---
Liquidity risk
The Group monitors its exposure to liquidity risk by monitoring the current ratio, which is calculated by
comparing the current assets with the current liabilities.
The liquidity of the Group is primarily dependent on its ability to maintain adequate cash inflows from
operations to meet its debt obligations as they fall due, and its ability to obtain external financing to meet its
committed future capital expenditure.
The maturity profile of the Group’s financial liabilities as at the end of each of the Relevant Periods, based
on the contractual undiscounted payments, is as follows:
As at 31 December 2020
On demand
Within
1 year 1 to 5 years Total
RMB’000 RMB’000 RMB’000 RMB’000
Lease liabilities – 8,281 39,880 48,161
Interest-bearing bank and other
borrowings – 185,048 117,602 302,650
Trade and bills payables – 586,609 – 586,609
Financial liabilities included in other
payables and accruals – 35,468 – 35,468
Due to related parties 1,132,459 – – 1,132,459
1,132,459 815,406 157,482 2,105,347
As at 31 December 2021
On demand
Within
1 year 1 to 5 years Total
RMB’000 RMB’000 RMB’000 RMB’000
Lease liabilities – 10,411 35,896 46,307
Interest-bearing bank and other
borrowings – 387,742 225,304 613,046
Trade and bills payables – 1,660,312 – 1,660,312
Financial liabilities included in other
payables and accruals – 165,472 – 165,472
Due to related parties 3,029,579 – – 3,029,579
3,029,579 2,223,937 261,200 5,514,716
As at 31 December 2022
On demand
Within
1 year 1 to 5 years
Over
5 years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Lease liabilities – 11,070 27,838 – 38,908
Interest-bearing bank and
other borrowings – 659,434 3,058,489 1,714,306 5,432,229
Trade and bills payables – 6,773,324 – – 6,773,324
Financial liabilities
included in other
payables and accruals – 197,895 – – 197,895
Due to related parties 117,38 3––– 1 17,383
117,383 7,641,723 3,086,327 1,714,306 12,559,739
APPENDIX I ACCOUNTANTS’ REPORT
– I-116 –


--- page 635 ---
As at 30 June 2023
On demand
Within
1 year 1 to 5 years
over
5 years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Lease liabilities – 12,246 22,599 – 34,845
Interest-bearing bank and
other borrowings – 742,712 5,135,739 1,819,916 7,698,367
Trade and bills payables – 5,902,947 – – 5,902,947
Financial liabilities
included in other
payables and accruals – 145,537 – – 145,537
Due to related parties 55,184 – – 36,000 91,184
55,184 6,803,442 5,158,338 1,855,916 13,872,880
Capital management
The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue as
a going concern, so that it can continue to provide returns to shareholders and benefits to other stakeholders, by
pricing services commensurately with the level of risk.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions
and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Group may adjust
the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group is not subject
to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for
managing capital during the Relevant Periods.
43. SUBSEQUENT EVENTS
There is no material subsequent event undertaken by the Group after 30 June 2023.
44. SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company, the Group or any of the companies now
comprising the Group in respect of any period subsequent to 30 June 2023.
APPENDIX I ACCOUNTANTS’ REPORT
– I-117 –


--- page 636 ---
The following information does not form part of the Accountants’ Report from Ernst &
Young, Certified Public Accountants, Hong Kong, the Company’ s reporting accountants, as set
out in Appendix I to this prospectus, and is included herein for information purpose only. The
unaudited pro forma financial information should be read in conjunction with the section
headed “Financial Information” in this prospectus, the Accountants’ Report set out in
Appendix I to this prospectus.
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
The following unaudited pro forma statement of adjusted consolidated net tangible assets
prepared in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities
on the Stock Exchange of Hong Kong Limited and with reference to Accounting Guideline 7
Preparation of Pro Forma Financial Information for inclusion in Investment Circulars issued
by the Hong Kong Institute of Certified Public Accountants for illustration purposes only, and
is set out here to illustrate the effects of the Global Offering on the consolidated net tangible
assets attributable to ordinary shareholders of the Company as of 30 June 2023 as if the Global
Offering had taken place on 30 June 2023.
The unaudited pro forma statement of adjusted consolidated net tangible assets has been
prepared for illustrative purpose only and, because of its hypothetical nature, it may not give
a true picture of the consolidated net tangible assets attributable to ordinary shareholders of the
Company had the Global Offering been completed as of 30 June 2023 or as at any future dates.
The unaudited pro forma statement of adjusted consolidated net tangible assets is
prepared based on the consolidated net tangible assets attributable to ordinary shareholders of
the Company as of 30 June 2023, as extracted from the Company’s Accountants’ Report
included in Appendix I to the prospectus and is adjusted for the effects described below.
Consolidated
net tangible
assets of the
Group
attributable to
owners of the
Company as at
30 June 2023
Estimated net
Proceeds from
the Global
Offering
Unaudited pro
forma adjusted
consolidated net
tangible assets
attributable to
owners of the
Company as at
30 June 2023
Unaudited pro forma
adjusted consolidated net
tangible assets per Share
as at 30 June 2023
RMB’000 RMB’000 RMB’000 RMB HK$
(Note 1) (Note 2) (Note 3) (Note 4)
Based on an Offer Price of
HK$18.20 per Share 10,081,033 1,823,407 11,904,440 5.23 5.75
Based on an Offer Price of
HK$19.40 per Share 10,081,033 1,946,947 12,027,980 5.28 5.81
Based on an Offer Price of
HK$20.60 per Share 10,081,033 2,070,488 12,151,521 5.34 5.87
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


--- page 637 ---
Notes:
1. The consolidated net tangible assets of the Group attributable to owners of the Company as at 30 June
2023 is arrived at after deducting other intangible assets of RMB34,826,000 as at 30 June 2023 from
the consolidated equity attributable to owners of the Company of RMB10,115,859,000 as at 30 June
2023 set out in the Accountants’ Report in Appendix I to this prospectus.
2. The estimated net proceeds from the Global Offering are based on estimated low end, mid-point and
high end offer prices of HK$18.20, HK$19.40 and HK$20.60 per Share after deduction of underwriting
fees and commissions and other related expenses payable by the Company.
3. The unaudited pro forma adjusted consolidated net tangible assets attributable to Shareholders of the
Company per Share is arrived at by dividing the unaudited pro forma adjusted net tangible assets by
2,276,874,050 shares, being the number of shares in issue assuming that the Global Offering had been
completed on 30 June 2023.
4. For the purpose of this unaudited pro forma statement of adjusted net tangible assets, the balances stated
in RMB are converted into HK$ at the rate of RMB1.0000 to HK$1.0992.
5. No other adjustment has been made to the unaudited pro forma adjusted consolidated net tangible asset
of the Group to reflect any trading result or other transactions entered into subsequent to 30 June 2023.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 638 ---
INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE
COMPILATION OF PRO FORMA FINANCIAL INFORMATION
To the Directors of REPT BATTERO Energy Co., Ltd.
We have completed our assurance engagement to report on the compilation of unaudited
pro forma financial information of REPT BATTERO Energy Co., Ltd. (the “Company”) and its
subsidiaries (hereinafter collectively referred to as the “Group”) by the directors of the
Company (the “Directors”) for illustrative purposes only. The pro forma financial information
consists of the pro forma consolidated net tangible assets as at 30 June 2023 and related notes
as set out on pages II-1 of the prospectus dated 8 December 2023 issued by the Company (the
“Unaudited Pro Forma Financial Information”). The applicable criteria on the basis of which
the Directors have compiled the Unaudited Pro Forma Financial Information are described in
note 1-5.
The Unaudited Pro Forma Financial Information has been compiled by the Directors to
illustrate the impact of the global offering of shares of the Company on the Group’s
consolidated financial position as at 30 June 2023 as if the transaction had taken place at
30 June 2023. As part of this process, information about the Group’s consolidated financial
position has been extracted by the Directors from the Group’s consolidated financial statements
for the period ended 30 June 2023, on which an accountants’ report has been published.
Directors’ responsibility for the Unaudited Pro Forma Financial Information
The Directors are responsible for compiling the Unaudited Pro Forma Financial
Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities
on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to
Accounting Guideline (“AG”) 7 Preparation of Pro Forma Financial Information for Inclusion
in Investment Circulars issued by the Hong Kong Institute of Certified Public Accountants (the
“HKICPA”).
Our independence and quality control
We have complied with the independence and other ethical requirements of the Code of
Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental
principles of integrity, objectivity, professional competence and due care, confidentiality and
professional behavior.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-3 –


--- page 639 ---
Our firm applies Hong Kong Standard on Quality Management 1 Quality Management for
Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related
Services Engagements which requires the firm to design, implement and operate a system of
quality management including policies or procedures regarding compliance with ethical
requirements, professional standards and applicable legal and regulatory requirements.
Reporting accountants’ responsibilities
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the
Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to
you. We do not accept any responsibility for any reports previously given by us on any
financial information used in the compilation of the Unaudited Pro Forma Financial
Information beyond that owed to those to whom those reports were addressed by us at the dates
of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance
Engagements 3420 Assurance Engagements to Report on the Compilation of Pro Forma
Financial Information Included in a prospectus issued by the HKICPA. This standard requires
that the reporting accountants plan and perform procedures to obtain reasonable assurance
about whether the Directors have compiled the Unaudited Pro Forma Financial Information in
accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the
HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any
reports or opinions on any historical financial information used in compiling the Unaudited Pro
Forma Financial Information, nor have we, in the course of this engagement, performed an
audit or review of the financial information used in compiling the Unaudited Pro Forma
Financial Information.
The purpose of the Unaudited Pro Forma Financial Information included in the prospectus
is solely to illustrate the impact of the global offering of shares of the Company on unadjusted
financial information of the Group as if the transaction had been undertaken at an earlier date
selected for purposes of the illustration. Accordingly, we do not provide any assurance that the
actual outcome of the transaction would have been as presented.
A reasonable assurance engagement to report on whether the Unaudited Pro Forma
Financial Information has been properly compiled on the basis of the applicable criteria
involves performing procedures to assess whether the applicable criteria used by the Directors
in the compilation of the Unaudited Pro Forma Financial Information provide a reasonable
basis for presenting the significant effects directly attributable to the transaction, and to obtain
sufficient appropriate evidence about whether:
 the related pro forma adjustments give appropriate effect to those criteria; and
 the Unaudited Pro Forma Financial Information reflects the proper application of
those adjustments to the unadjusted financial information.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-4 –


--- page 640 ---
The procedures selected depend on the reporting accountants’ judgment, having regard to
the reporting accountants’ understanding of the nature of the Group, the transaction in respect
of which the Unaudited Pro Forma Financial Information has been compiled, and other relevant
engagement circumstances.
The engagement also involves evaluating the overall presentation of the Unaudited Pro
Forma Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion:
(a) the Unaudited Pro Forma Financial Information has been properly compiled on the
basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purpose of the Unaudited Pro Forma
Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing
Rules.
Certified Public Accountants
Hong Kong
8 December 2023
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-5 –


--- page 641 ---
TAXATION OF SECURITY HOLDERS
The following summary of certain Hong Kong and PRC tax consequences of the purchase,
ownership and disposition of the H Shares is based upon the laws, regulations, rules and
decisions now in effect, all of which are subject to change (possibly with retroactive effect).
The summary does not purport to be a comprehensive description of all the tax considerations
that may be relevant to a decision to purchase, own or dispose of the H Shares and does not
purport to apply to all categories of prospective investors, some of whom may be subject to
special rules, which does not and shall not be deemed as consisting a legal or taxation
suggestion. Prospective investors should consult their own tax advisers concerning the
application of the Hong Kong and PRC tax laws to their particular situation as well as any
consequences of the purchase, ownership and disposition of the H Shares arising under the laws
of any other taxing jurisdiction.
The taxation of the Company and that of the Shareholders is described below. Where the
Hong Kong and PRC tax laws are discussed. These are merely an outline implications of such
laws. It should not be assumed that the relevant tax authorities or the PRC or Hong Kong courts
will accept or agree with the explanations or conclusions that are set out below.
Investors should note that the following statements are based on advice received by the
Company regarding taxation laws, regulations and practice in force as at the date of this
prospectus, which may be subject to change.
OVERVIEW OF TAX IMPLICATIONS OF THE PRC
Taxation on Dividends
Individual Investors
Pursuant to the Individual Income Tax Law of the PRC (੻೼
) (the “IIT Law”), which was last amended on August 31, 2018 and the Regulations on
Implementation of the Individual Income Tax Law of the PRC (੻೼
ૢԷ), which was last amended on December 18, 2018, dividends paid by PRC
enterprises are subject to individual income tax levied at a flat rate of 20%. For a foreign
individual who is not a resident of the PRC, the receipt of dividends from an enterprise in the
PRC is normally subject to individual income tax of 20% unless specifically exempted by the
tax authority of the State Council or reduced by an applicable tax treaty.
Pursuant to the Notice of the SAT on Issues Concerning Taxation and Administration of
Individual Income Tax After the Repeal of the Document Guo Shui Fa [1993] No. 45 (࢕
਷೼೯[1993]045) issued by the
SAT on June 28, 2011, domestic non-foreign-invested enterprises issuing shares in Hong Kong
may, when distributing dividends to overseas resident individuals in the jurisdiction of the tax
treaty, normally withhold individual income tax at the rate of 10%. For the individual holders
of H Shares receiving dividends who are citizens of countries that have entered into a tax treaty
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-1 –


--- page 642 ---
with the PRC with tax rates lower than 10%, the non-foreign-invested enterprise whose shares
are listed in Hong Kong may apply on behalf of such holders for enjoying the lower
preferential tax treatments, and, upon approval by the tax authorities, the excessive
withholding amount will be refunded. For the individual holders of H Shares receiving
dividends who are citizens of countries that have entered into a tax treaty with the PRC with
tax rates higher than 10% but lower than 20%, the non-foreign-invested enterprise is required
to withhold the tax at the agreed rate under the treaties, and no application procedures will be
necessary. For the individual holders of H Shares receiving dividends who are citizens of
countries without taxation treaties with the PRC or are under other situations, the non-foreign
invested enterprise is required to withhold the tax at a rate of 20%.
According to the Notice on Issues concerning the Implementation of Differential
Individual Income Tax Policies on Dividends and Bonuses of Listed Companies (ɪ̹
) (Cai Shui [2015] No. 101) issued by
the MOF on September 7, 2015, where an individual acquires the stocks of a listed company
from public offering of the company or from the stock market, if the stock holding period is
more than one year, the dividend incomes shall be exempted from personal income tax. Where
an individual acquires the stocks of a listed company from public offering of the company or
from the stock market, if the stock holding period is one month or less, the income from
dividends shall be included into the taxable incomes in full amount; if the stock holding period
is more than one month and up to one year, 50% of the dividend income shall be included into
the taxable incomes. The individual income tax rate on the aforesaid income is imposed at the
uniform rate of 20%. In practice, the withholding rate on non-resident individuals’ dividends
may be lower than 20% in certain circumstances.
Pursuant to the Arrangement between the Mainland and the Hong Kong Special
Administrative Region on the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion (τર), which
was signed on August 21, 2006, the Chinese Government may levy taxes on the dividends paid
by a Chinese company to Hong Kong residents (including natural persons and legal entities)
in an amount not exceeding 10% of the total dividends payable by the Chinese company. If a
Hong Kong resident directly holds 25% or more of the equity interest in a Chinese company,
then such tax shall not exceed 5% of the total dividends payable by the Chinese company if
the Hong Kong resident is the beneficial owner of the equity and certain other conditions are
met. The Fifth Protocol of the Arrangement between the Mainland of China and the Hong Kong
Special Administrative Region on the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion issued by the State Administration of Taxation (), which came
into effect on December 6, 2019, adds a criteria for the qualification of entitlement to enjoy
treaty benefits. Although there may be other provisions under the Arrangement, the treaty
benefits under the criteria shall not be granted in the circumstance where relevant treaty
benefits, after taking into account all relevant facts and conditions, are reasonably deemed to
be one of the main purposes for the arrangement or transactions which will bring any direct or
indirect benefits under this Arrangement, except when the grant of benefits under such
circumstance is consistent with relevant objective and goal under the Arrangement. The
application of the dividend clause of tax agreements is subject to the requirements of PRC tax
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-2 –


--- page 643 ---
law and regulation, such as the Notice of the State Administration of Taxation on the Issues
Concerning the Application of the Dividend Clauses of Tax Agreements (׵
) (Guo Shui Han [2009] No. 81).
Enterprise Investors
In accordance with the Enterprise Income Tax Law of the PRC ( ʕശɛ͏΍ձ਷Άุ
) (the“EIT Law”), which came into effect as of January 1, 2008 and was last
amended on December 29, 2018, and the Implementation provisions for the Enterprise Income
Tax Law of the PRC (ૢԷ), which came into effect as
of January 1, 2008 and was last amended on April 23, 2019, the rate of enterprise income tax
shall be 25%. A non-resident enterprise is generally subject to a 10% enterprise income tax on
PRC-sourced income (including dividends received from a PRC resident enterprise that issues
shares in Hong Kong), if such non-resident enterprise does not have an establishment or place
in the PRC or has an establishment or place in the PRC but the PRC-sourced income is not
connected to such establishment or place in the PRC. The aforesaid income tax may be reduced
pursuant to applicable treaties to avoid double taxation. Such withholding tax for non-resident
enterprises are deducted at source, where the payer of the income are required to withhold the
income tax from the amount to be paid to the non-resident enterprise when such payment is
made or due.
The Circular of the SAT on Issues Relating to the Withholding of Enterprise Income Tax
on Dividends Paid by Chinese Resident Enterprises to Overseas Non-PRC Resident Enterprise
Shareholders of H Shares (͏ΆุΣྤ̮H೯
, Guo Shui Han [2008] No. 897) which was issued
by the SAT on November 6, 2008, further clarified that a PRC-resident enterprise must
withhold enterprise income tax at a rate of 10% on dividends paid to overseas non-resident
enterprise shareholders of H Shares for 2008 and subsequent years. In addition, the Response
to Issues on Levying Enterprise Income Tax on Dividends Derived by Non-resident Enterprise
from Holding Stock such as B-shares (͏Άุ՟੻Bᅄ
ҭూ, Guo Shui Han [2009] No. 394) which was issued by the SAT and
came into effect on July 24, 2009, further provides that any PRC-resident enterprise that is
listed on overseas stock exchanges must withhold enterprise income tax at a rate of 10% on
dividends of 2008 and onwards that it distributes to non-resident enterprises. Such tax rates
may be further modified pursuant to the tax treaty or agreement that China has concluded with
a relevant jurisdiction, where applicable.
Pursuant to the Arrangement between the Mainland and the Hong Kong Special
Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion (τર) signed
on August 21, 2006, PRC Government may levy taxes on the dividends paid by a Chinese
company to Hong Kong residents (including natural persons and legal entities) in an amount
not exceeding 10% of total dividends payable by the Chinese company. If a Hong Kong
resident directly holds 25% or more of the equity interest in a Chinese company, then such tax
shall not exceed 5% of the total dividends payable by the Chinese company. The Fifth Protocol
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-3 –


--- page 644 ---
of the Arrangement between the Mainland of China and the Hong Kong Special Administrative
Region on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion issued by
the SAT () effective on December 6, 2019 states that such
provisions shall not apply to those arrangements or transactions, of which the main purpose
includes gaining such tax benefit. The application of the dividend clause of tax agreements
shall be subject to the PRC tax laws and regulations, such as the Notice of the SAT on the
Issues Concerning the Implementation of the Dividend Clauses of Tax Agreements (೼
, Guo Shui Han [2009] No. 81).
Non-PRC resident investors residing in countries which have entered into treaties for the
avoidance of double taxation with the PRC are entitled to a reduction of the withholding taxes
imposed on the dividends received from PRC companies. The PRC currently has entered into
Avoidance of Double Taxation Treaties/Arrangements with a number of countries and regions
including Hong Kong, Macau, Australia, Canada, France, Germany, Japan, Malaysia, the
Netherlands, Singapore, the United Kingdom and the United States. Non-PRC resident
enterprises entitled to preferential tax rates in accordance with the relevant income tax treaties
or arrangements are required to apply to the Chinese tax authorities for a refund of the
withholding tax in excess of the agreed tax rate, and the refund payment is subject to approval
by the Chinese tax authorities.
Taxation on Share Transfer
V alue-Added Tax and Local Surcharges
Pursuant to the Notice on the Full Implementation of Pilot Program for Transition from
Business Tax to V AT (, Cai Shui [2016] No.
36, “Circular 36”), effective from May 1, 2016, entities and individuals engaged in sales of
services within the PRC shall be subject to V AT and sales of services within the PRC refers to
the situation where either the seller or the buyer of a taxable service is located within the PRC.
Circular 36 also provides that transfer of financial products, including transfer of the
ownership of marketable securities, shall be subject to V AT at 6% on the taxable income (which
is the balance of sales price upon deduction of purchase price), for a general or a foreign V AT
taxpayer. However, individuals are exempt from V AT upon transfer of financial products.
Meanwhile, V AT taxpayers are also subject to urban maintenance and construction tax,
education surcharge and local education surcharge (collectively, “local surcharges”), which is
usually at 12% of the V AT payable, if any.
Income Tax
Individual Investors
According to the IIT Law and its implementation provisions, gains realized on the sale of
equity interests in the PRC resident enterprises are subject to the individual income tax at a rate
of 20%. Pursuant to the Circular of the MOF and the SAT on Declaring that Individual Income
Tax Continues to be Exempted over Individual Income from Transfer of Shares (௅ʿ
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-4 –


--- page 645 ---
) issued by the MOF
and the SAT on March 20, 1998, from January 1, 1997, income of individuals from the transfer
of shares of listed enterprises shall continue to be exempted from individual income tax. On
December 31, 2009, the MOF, the SAT and the CSRC jointly issued the Circular on Relevant
Issues Concerning the Collection of Individual Income Tax over the Income Received by
Individuals from Transfer of Listed Shares Subject to Sales Limitation (ɛᔷᜫɪ̹
) which states that individuals’ income
from the transfer of listed shares on Shanghai Stock Exchange or Shenzhen Stock Exchange
shall continue to be exempted from individual income tax, except for the relevant shares which
are subject to sales restriction as defined in the Supplementary Circular on Relevant Issues
Concerning the Collection of Individual Income Tax over the Income Received by Individuals
from Transfer of Listed Shares Subject to Sales Limitation (הٰ
) jointly issued by the three aforementioned
authorities on November 10, 2010.
As of the Latest Practicable Date, the aforesaid provision has not expressly provided that
individual income tax shall be collected from non-PRC resident individuals on the sale of
shares of PRC resident enterprises listed on overseas stock exchanges. To our knowledge, in
practice, the PRC tax authorities have not sought to collect income tax from non-PRC resident
individuals on gains from the sale of listed shares of PRC resident enterprises on overseas stock
exchanges. However, there is no assurance that the PRC tax authorities will not change these
practices, which could result in levying income tax on non-PRC resident individuals on gains
from the sale of our H Share.
Enterprise Investors
In accordance with the EIT Law and its implementation provisions, a non-resident
enterprise is generally subject to a 10% enterprise income tax on PRC-sourced income,
including gains derived from the disposal of equity interests in a PRC resident enterprise, if it
does not have an establishment or place in the PRC or has an establishment or premises in the
PRC but the PRC-sourced income does not have actual connection with such establishment or
premise. Such income tax for non-resident enterprises are deducted at source, where the payer
of the income are required to withhold the income tax from the amount to be paid to the
non-resident enterprise when such payment is made or due. The withholding tax may be
reduced or exempted pursuant to relevant treaties or agreements on avoidance of double
taxation.
Stamp Duty
Pursuant to the Provisional Regulations of the PRC Concerning Stamp Duty ( ʕശɛ͏
೼ᅲБૢԷ) effective as of October 1, 1988, amended on January 8, 2011 and
replaced by Stamp Duty Law () promulgated June 10, 2021 and
effective as of July 1, 2022, and the Detailed Rules for Implementation of Provisional
Regulations of the PRC Concerning Stamp Duty (Б୚
) effective as of October 1, 1988, PRC stamp duty only applies on specific proof executed
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-5 –


--- page 646 ---
or received within the PRC and legally binding force in the PRC and protected under the PRC
laws, thus the requirements of the stamp duty imposed on the transfer of shares of PRC listed
companies shall not apply to the acquisition and disposal of H Shares by non-PRC investors
outside of the PRC.
PRINCIPAL TAXATION OF THE COMPANY IN THE PRC
Enterprise Income Tax
Pursuant to EIT Law and its implementation provisions, enterprises and other
organizations which generate income within the PRC are enterprise income tax payers and shall
pay enterprise income tax at a tax rate of 25%. A foreign-invested enterprise in the PRC that
is classified as a resident enterprise shall pay enterprise income tax on its income derived from
sources within and without China at a rate of 25%.
Value-added Tax
Pursuant to Provisional Regulations of the People’s Republic of China on Value-added
Tax (೼ᅲБૢԷ) (“V AT Regulations”) and Implementation Rules for the Provisional
Regulations the People’s Republic of China on Value-added Tax (୚
) (“V AT Implementation Rules”), entities and individuals that sell goods or labor services
of processing, repair or replacement, sales, intangible assets, real estates, or import goods
within the territory of the PRC are taxpayers of value-added tax (“V AT”), and shall pay V AT
in accordance with these Regulations. Unless otherwise provided for by law, the V AT rate is:
17%, for taxpayers selling goods, labor services, or tangible movable property leasing services
or importing goods; 11%, for taxpayers selling transportation, postal, basic
telecommunications, construction, or real estates leasing services, selling real estates,
transferring the rights to use land, or selling or importing specific goods; 6%, for taxpayers
selling services or intangible assets; zero, for domestic entities and individuals selling services
or intangible assets within the scope prescribed by the State Council across national borders;
and zero, for export, (except as otherwise specified by the State Council).
Pursuant to the Circular on Comprehensively Promoting the Pilot Program of the
Collection of Value-added Tax in Lieu of Business Tax (೼༊
) (promulgated by the MOF and the SAT on March 23, 2016, came into effect on
May 1, 2016 and as amended on July 11, 2017, December 25, 2017 and March 20, 2019
respectively), the pilot program of the collection of value-added tax in lieu of business tax shall
be promoted nationwide in a comprehensive manner, and all taxpayers of business tax engaged
in the building industry, the real estate industry, the financial industry and the life service
industry shall be included in the scope of the pilot program with regard to payment of
value-added tax instead of business tax.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-6 –


--- page 647 ---
Pursuant to the Circular of the Ministry of Finance and the State Administration of
Taxation on Adjusting Value-added Tax Rates () (“cai shui
[2018] No. 32,” promulgated on April 4, 2018 and came into effect on May 1, 2018, by the
MOF and the SAT), where a taxpayer engages in a taxable sales activity for the value-added
tax purpose or imports goods, the previous applicable 17% and 11% tax rates are lowered to
16% and 10% respectively.
Pursuant to the Announcement on Relevant Policies for Deepening the Value-Added Tax
Reform (ʮѓ) (promulgated by the MOF, the SAT and
the General Administration of Customs of the PRC on March 20, 2019 and came into effect on
April 1, 2019) (“Circular 39”), tax rates of the V AT on sales and imported goods that were
previously subject to 16% and 10% were adjusted to 13% and 9% respectively.
OVERVIEW OF TAX IMPLICATIONS OF HONG KONG
Hong Kong Taxation of the Company
Profits Tax
The Company will be subject to Hong Kong profits tax in respect of profits arising in or
derived from Hong Kong at the current rate of 16.5%, unless such profits are chargeable under
the half-rate of 8.25% that may apply for the first HK$2 million of assessable profits for years
of assessment beginning on or after April 1, 2018. Dividend income derived by the Company
from its subsidiary will be excluded from Hong Kong profits tax.
Hong Kong Taxation of Shareholders
Tax on Dividends
No tax is payable in Hong Kong in respect of dividends paid by the Company.
Profits Tax
Hong Kong profits tax will not be payable by any Shareholders (other than Shareholders
carrying on a trade, profession or business in Hong Kong and holding the H Shares for trading
purposes) on any capital gains made on the sale or other disposal of the Shares. Trading gains
from the sale of H Shares by persons carrying on a trade, profession or business in Hong Kong
where such gains are derived from or arise in Hong Kong from such trade, profession or
business will be chargeable to Hong Kong income tax rates of 16.5% on corporations and
15.0% on individuals, unless such gains are chargeable under the respective half-rates of 8.25%
and 7.5% that may apply for the first HK$2 million of assessable profits for years of
assessment beginning on or after April 1, 2018. Gains from sales of H Shares effected on the
Hong Kong Stock Exchange will be considered by the Hong Kong Inland Revenue Department
to be derived from or arise in Hong Kong. Shareholders should take advice from their own
professional advisers as to their particular tax position.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-7 –


--- page 648 ---
Stamp Duty
Hong Kong stamp duty will be charged on the sale and purchase of Shares at the current
rate of 0.2% of the consideration for, or (if greater) the value of, the Shares being sold or
purchased, whether or not the sale or purchase is on or off the Hong Kong Stock Exchange. The
Shareholder selling the Shares and the purchaser will each be liable for one-half of the amount
of Hong Kong stamp duty payable upon such transfer. In addition, a fixed duty of HK$5 is
currently payable on any instrument of transfer of Shares.
Estate Duty
Hong Kong estate duty was abolished effective from February 11, 2006. No Hong Kong
estate duty is payable by Shareholders in relation to the Shares owned by them upon death.
FOREIGN EXCHANGE CONTROL OF THE PRC
The lawful currency of the PRC is Renminbi, which is currently subject to foreign
exchange controls and cannot be freely converted into foreign currency. The SAFE, under the
authority of the PBOC, is empowered with the functions of administering all matters relating
to foreign exchange, including the enforcement of foreign exchange control regulations.
According to Regulations on Foreign Exchange Administration of the PRC ( ʕശɛ͏
΍ձ਷̮ි၍ଣૢԷ) (the “Foreign Exchange Administration Regulations”), which was
promulgated by the State Council on January 29, 1996 and came into effect since 1 April 1996,
the Foreign Exchange Administration Regulations classify all international payments and
transfers into current items and capital items. Most of the current items are not subject to the
approval of foreign exchange administration agencies, while capital items are subject to such
approval. The Foreign Exchange Administration Regulations were subsequently amended on
January 14, 1997 and August 1, 2008, and came into effect on August 5, 2008. The latest
amendment to the Foreign Exchange Administration Regulations clearly states that PRC will
not impose any restriction on international current payments and transfers.
On June 20, 1996, PBOC promulgated the Regulations for the Administration of
Settlement, Sale and Payment of Foreign Exchange () (the
“Settlement Regulations”), which became effective on July 1, 1996. The Settlement
Regulations do not impose any restrictions on convertibility of foreign exchange under current
items, while imposes restrictions on foreign exchange transactions under capital items.
According to the relevant laws and regulations in the PRC, PRC enterprises (including
foreign investment enterprises) which need foreign exchange for current item transactions may,
without the approval of the foreign exchange administrative authorities, effect payment
through foreign exchange accounts opened at financial institutions that carries foreign
exchange business or operating institutions that carries settlement and sale business, on the
strength of valid receipts and proof. Foreign investment enterprises which need foreign
exchange for the distribution of profits to their shareholders and PRC enterprises which, in
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-8 –


--- page 649 ---
accordance with regulations, are required to pay dividends to their shareholders in foreign
exchange may, on the strength of resolutions of the board of directors or the shareholders’
meeting on the distribution of profits, effect payment from foreign exchange accounts opened
at financial institutions that carries foreign exchange business or institutions that carries
settlement and sale business, or effect exchange and payment at financial institutions that carry
foreign exchange business or institutions that carry settlement and sale business.
The Decisions of the State Council on Matters including Canceling and Adjusting a Batch
of Administrative Approval Items (Ӕ
) promulgated by the State Council on October 23, 2014 has canceled the approval
requirement of the SAFE and its branches for the remittance and settlement of the proceeds
raised from the overseas listing of the foreign shares into RMB domestic accounts.
On December 26, 2014, the SAFE issued the Notice of the SAFE on Issues Concerning
the Foreign Exchange Administration of Overseas Listing (ྤ̮ɪ̹̮
), pursuant to which a domestic company shall, within 15 business
days of the date of the end of its overseas listing issuance, register the overseas listing with the
SAFE’s local branch at the place of its incorporation; and the proceeds from an overseas listing
of a domestic company may be remitted to the domestic account or deposited in an overseas
account, but the use of the proceeds shall be consistent with the content of the prospectus and
other disclosure documents.
On February 13, 2015, the SAFE issued the Notice of the SAFE on Further Simplifying
and Improving Policies for the Foreign Exchange Administration of Direct Investment ( ਷
) (Hui Fa [2015] No.
13), which came into effect on June 1, 2015. The notice has canceled the confirmation of
foreign exchange registration under domestic direct investment and the confirmation of foreign
exchange registration under overseas direct investment, instead, banks shall directly examine
and handle foreign exchange registration under domestic direct investment and foreign
exchange registration under overseas direct investment, and the SAFE and its local offices shall
indirectly regulate the foreign exchange registration of direct investment through banks.
According to the Notice of the SAFE of the PRC on Revolutionize and Regulate Capital
Account Settlement Management Policies (ձ஝ᇍ༟͉ධͦഐි၍
) (Hui Fa [2016] No. 16) issued by the SAFE on June 9, 2016, foreign currency
earnings in capital account that relevant policies of willingness exchange settlement have been
clearly implemented on (including the recalling of raised capital by overseas listing) may
undertake foreign exchange settlement in the banks according to actual business needs of the
domestic institutions. The tentative percentage of foreign exchange settlement for foreign
currency earnings in capital account of domestic institutions is 100%, subject to adjust of the
SAFE in due time in accordance with international revenue and expenditure situations.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-9 –


--- page 650 ---
This Appendix summarizes certain aspects of PRC laws and regulations which are
relevant to the Company’s operations and business. Laws and regulations relating to taxation
in the PRC are discussed separately in “Appendix III – Taxation and Foreign Exchange” to this
document. This Appendix also contains a summary of certain material differences between
laws and regulatory provisions of Hong Kong and the PRC Company Law. The principal
objective of this summary is to provide potential investors with an overview of the principal
laws and regulatory provisions applicable to the Company. This summary is not intended to
include all the information which is important to the potential investors. For a discussion of
laws and regulations which are relevant to the Company’s business, see “Regulatory
Overview” in this document.
THE PRC LEGAL SYSTEM
The PRC legal system is based on the PRC Constitution ()
(hereinafter referred to as the “Constitution ()”) and is made up of written laws,
administrative regulations, local regulations, separate regulations, rules and regulations of
departments of the State Council, rules and regulations of local governments, autonomous
regulations, separate regulations of autonomous regions, special administrative region law and
international treaties and other regulatory documents signed by the PRC government. Court
decisions do not constitute binding precedents, although they are used for the purposes of
judicial reference and guidance.
According to the Constitution and the Legislation Law of the People’s Republic of China
() (the “Legislation Law ()”), which was amended by
the National People’s Congress (the “NPC”) and became effective on March 15, 2023, the NPC
and the Standing Committee of the National People’s Congress (The “SCNPC”) are empowered
to exercise the legislative power of the State. The NPC has the power to formulate and amend
basic laws governing criminal and civil matters, state organs and other matters. The SCNPC is
empowered to formulate and amend laws other than those required to be enacted by the NPC
and to supplement and amend any parts of laws enacted by the NPC during the adjournment
of the NPC, provided such supplements and amendments are not in conflict with the basic
principles of such laws.
The State Council is the highest organ of state administration and has the power to
formulate administrative regulations based on the Constitution and laws. The people’s
congresses of provinces, autonomous regions and municipalities and their respective standing
committees may formulate local regulations based on the specific circumstances and actual
needs of their respective administrative areas, provided that such local regulations do not
contravene any provision of the Constitution, laws or administrative regulations. The people’s
congresses of cities divided into districts and their standing committees may formulate local
regulations on matters such as urban and rural construction and management, environmental
protection and historical and cultural protection based on the specific circumstances and actual
needs of such cities, provided that such local regulations do not contravene any provision of
the Constitution, laws, administrative regulations and local regulations of such provinces or
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
–I V - 1–


--- page 651 ---
autonomous regions. Where laws have other stipulations on matters of local regulations
formulated by cities divided into districts, such stipulations shall prevail. The local regulations
of cities divided into districts shall be submitted to the standing committees of the people’s
congresses of provinces and autonomous regions for approval before implementation. The
standing committees of the people’s congresses of provinces or autonomous regions shall
examine the legality of local regulations submitted for approval, and such approval should be
granted within four months if they are not in conflict with the Constitution, laws,
administrative regulations and local regulations of their respective provinces or autonomous
regions. People’s congresses of national autonomous areas have the power to enact autonomous
regulations and separate regulations in the light of the political, economic and cultural
characteristics of the nationality (nationalities) in the areas concerned. The ministries,
commissions, PBOC, NAO of the State Council and institutions with administrative functions
directly under the State Council may formulate rules and regulations within the jurisdiction of
their respective departments based on the laws and the administrative regulations, decisions
and rulings of the State Council.
The Constitution has supreme legal authority and no laws, administrative regulations,
local regulations, autonomous regulations or separate regulations or rules may contravene the
Constitution. The authority of laws is greater than that of administrative regulations, local
regulations and rules. The authority of administrative regulations is greater than that of local
regulations and rules. The authority of the rules enacted by the people’s governments of the
provinces and autonomous regions is greater than that of the rules enacted by the people’s
governments of the cities divided into districts within their respective administrative regions.
The NPC has the power to alter or annul any inappropriate laws enacted by the SCNPC,
and to annul any autonomous regulations and separate regulations which have been approved
by the SCNPC but which contravene the Constitution and the Legislation Law; the SCNPC has
the power to annul administrative regulations that contravene the Constitution and laws, to
annul local regulations that contravene the Constitution, laws and administrative regulations,
and to annul autonomous regulations and separate regulations which have been approved by the
standing committees of the people’s congresses of the relevant provinces, autonomous regions
or municipalities directly under the Central Government, but which contravene the
Constitution and the Legislation Law; The State Council has the power to alter or annul any
inappropriate ministerial rules and rules of local governments; The people’s congresses of
provinces, autonomous regions and municipalities directly under the Central Government have
the power to alter or annul any inappropriate local regulations enacted or approved by their
respective standing committees; The standing committees of the local people’s congresses have
the power to annul inappropriate rules enacted by the people’s governments at the
corresponding level; The people’s governments of provinces and autonomous regions have the
power to alter or annul any inappropriate rules enacted by the people’s governments at a lower
level.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
–I V - 2–


--- page 652 ---
According to the Constitution and the Legislation Law, the power to interpret laws is
vested in the SCNPC. According to the Decision of the SCNPC Regarding the Strengthening
of Interpretation of Laws (Ӕᙄ)
passed by the SCNPC and effective on June 10, 1981, the Supreme People’s Court shall give
interpretation on questions involving the specific application of laws and decrees in court
trials. The Supreme People’s Procuratorate shall interpret all issues involving the specific
application of laws and decrees in the procuratorial work. Interpretation of questions involving
the specific application of laws and decrees in areas unrelated to judicial and procuratorial
work shall be provided by the State Council and competent authorities. Where the scope of
local regulations needs to be further defined or additional stipulations need to be made, the
standing committees of the people’s congresses of provinces, autonomous regions and
municipalities directly under the Central Government which have enacted these regulations
shall provide the interpretations or make the stipulations. Interpretation of questions involving
the specific application of local regulations shall be provided by the competent departments of
the people’s governments of provinces, autonomous regions and municipalities.
PRC JUDICIAL SYSTEM
According to the Constitution and the Law of the PRC of Organization of the People’s
Courts () amended by the SCNPC on October 26, 2018
and becoming effective on January 1, 2019, the PRC People’s Court is made up of the Supreme
People’s Court, the local people’s courts, and other special people’s courts. The local people’s
courts are divided into three levels, namely the basic people’s courts, the intermediate people’s
courts and the higher people’s courts. The basic people’s courts may set up certain people’s
tribunals based on the status of the region, population and cases. The Supreme People’s Court
shall be the highest judicial organ of the state. The Supreme People’s Court shall supervise the
administration of justice by the local people’s courts at all levels and by the special people’s
courts. The people’s courts at a higher level shall supervise the judicial work of the people’s
courts at lower levels.
According to The Constitution and d the Law of Organization of the People’s
Procuratorate of the PRC “” revised by SCNPC on
October 26, 2018 and taking effect on January 1, 2019, the People’s Procuratorate is the law
supervision organ of the state. The Supreme People’s Procuratorate shall be the highest
procuratorial organ. The Supreme People’s Procuratorate shall direct the work of the local
people’s procuratorates at all levels and of the special people’s procuratorates; the people’s
procuratorates at higher levels shall direct the work of those at lower levels.
The people’s courts employ a two-tier appellate system, i.e., judgments or rulings of the
second instance at the people’s courts are final. A party may appeal against the judgment or
ruling of the first instance of a local people’s courts. The people’s procuratorate may present
a protest to the people’s courts at the next higher level in accordance with the procedures
stipulated by the laws. In the absence of any appeal by the parties and any protest by the
people’s procuratorate within the stipulated period, the judgments or rulings of the people’s
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
–I V - 3–


--- page 653 ---
courts are final. Judgments or rulings of the second instance of the intermediate people’s
courts, the higher people’s courts and the Supreme People’s Court and those of the first
instance of the Supreme People’s Court are final. However, if the Supreme People’s Court or
the people’s courts at the next higher level finds any definite errors in a legally effective final
judgment or ruling of the people’s court at a lower level, or if the chief judge of a people’s court
at any level finds any definite errors in a legally effective final judgment or ruling of such
court, the case can be retried according to judicial supervision procedures.
The PRC Civil Procedure Law () (the “PRC Civil
Procedure Law ()”) adopted by the SCNPC on December 24, 2021 and
became effective on January 1, 2022 sets forth the requirements for instituting a civil action,
the jurisdiction of the people’s courts, the procedures to be followed for conducting a civil
action and the procedures for enforcement of a civil judgment or order. All parties to a civil
action conducted within the PRC must comply with the PRC Civil Procedure Law. Civil cases
are generally heard by the courts where the defendants are located. The court of jurisdiction in
a civil action may be chosen by express agreement between the parties, provided that the court
is located at a place that has direct connection with the dispute, such as the plaintiff’s or the
defendant’s place of domicile, the place where the contract is performed or signed or the object
of the action is located. However, the choice of the court cannot be in conflict with the
regulations of different jurisdictions and exclusive jurisdictions in any case.
A foreign individual, a person without nationality, a foreign-invested enterprise or a
foreign organization must have the same litigation rights and obligations as a PRC citizen,
legal person or other organizations when initiating or defending any proceedings at a people’s
court. If a foreign court limits the litigation rights of PRC citizens and enterprises, the PRC
court may apply the same limitations to the citizens and enterprises of such foreign country.
A foreign individual, a person without nationality, a foreign-invested enterprise or a foreign
organization must engage a PRC lawyer if such person needs to engage a lawyer in initiating
or defending any proceedings at a people’s court. Under an international treaty or the principle
of reciprocity signed or acceded to by the PRC, the people’s court and foreign courts may
require each other to act on their behalf to serve documents, conduct investigations, collect
evidence and take other actions on behalf of each other. If the request by a foreign court would
result in the violation of the PRC’s sovereignty, security or public interest, the people’s court
shall decline the request.
All parties must comply with legally effective civil judgments and rulings. If any party
to a civil action refuses to comply with a judgment or order made by a people’s court or an
award made by an arbitration tribunal in the PRC, the other party may apply to the people’s
court for enforcement within two years. Suspension or disruption of the time limit for applying
for such enforcement shall comply with the provisions of the applicable law concerning the
suspension or disruption of the time-barring of actions.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
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--- page 654 ---
When a party applies to a people’s court for enforcing an effective judgment or ruling by
a people’s court against a party who is not located within the territory of the PRC or whose
property is not within the PRC, the party may apply to a foreign court with proper jurisdiction
for recognition and enforcement of the judgment or ruling. A foreign judgment or ruling may
also be recognized and enforced by the people’s court according to the PRC enforcement
procedures if the PRC has entered into, or acceded to, an international treaty with the relevant
foreign country, which provides for such recognition and enforcement, or if the judgment or
ruling satisfies the court’s examination according to the principle of reciprocity, unless the
people’s court finds that the recognition or enforcement of such judgment or ruling will result
in a violation of the basic legal principles of the PRC, its sovereignty or security, or for reasons
of social and public interests.
THE PRC COMPANY LA W AND THE GUIDELINES FOR THE ARTICLES OF
ASSOCIATION OF LISTED COMPANIES
A joint stock limited company incorporated in the PRC seeking a list on The Stock
Exchange of Hong Kong Limited (the “Stock Exchange”) is mainly subject to the following
laws and regulations of the PRC:
The PRC Company Law () (hereinafter referred to as the
“Company Law ()”) was adopted by the Fifth Standing Committee Meeting of the
Eighth NPC on December 29, 1993 and came into effect on July 1, 1994, and was amended on
December 25, 1999, August 28, 2004, October 27, 2005, December 28, 2013 and October 26,
2018. The latest revised Company Law came into effect on October 26, 2018.
According to the Guidelines on the Application of Regulatory Rules – No. 1 for Overseas
Offering and Listing (ˏ–ྤ̮೯Бɪ̹ᗳୋ1໮) which was promulgated
by the CSRC on February 17, 2023, and came into effect on March 31, 2023, the domestic
companies that directly offer and list securities in overseas markets, shall formulate their
articles of association in line with the Guidelines for the Articles of Association of Listed
Companies (ˏ) (hereinafter referred to as the “PRC Guidelines on AoA”)
promulgated by the CSRC on March 16, 2006 and latest amended on January 5, 2022.
Set out below is a summary of the major provisions of the Company Law and the PRC
Guidelines on AoA which are applicable to the Company.
General Provisions
“A joint stock limited company” means is a corporate legal person incorporated under the
Company Law, whose registered capital is divided into shares of equal par value. The liability
of its shareholders is limited to the extent of the shares held by them and the liability of a
company is limited to the full value of all the property owned by it.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
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--- page 655 ---
A company must conduct its business in accordance with laws as well as public and
commercial ethics. A company may invest in other limited liability companies. The liabilities
of the company to such invested companies are limited to the amount invested. Unless
otherwise provided by laws, a company cannot be the capital contributor who has the joint
liabilities associated with the debts of the invested enterprises.
Incorporation
A joint stock limited company may be incorporated by promotion or subscription. A joint
stock limited company may be incorporated by a minimum of two but not more than 200
promoters, and at least half of the promoters must have residence within the PRC.
The promoters shall convene an inaugural meeting of the company within 30 days after
the share capital has been paid-up, and shall notified all subscribers the date of the meeting or
make an announcement in this regard 15 days before the meeting. The inaugural meeting may
be held only the presence of promoters and subscribers holding more than 50% of the total
number of shares. Powers to be exercised at the inaugural meeting include but not limited to
the adoption of articles of association and the election of members of the board of directors and
the supervisory committee of a company. The aforesaid matters shall be resolved by more than
50% of the votes to be casted by subscribers presented at the meeting.
Within 30 days after the conclusion of the inaugural meeting, the board of directors shall
apply to the registration authority for registration of the incorporation of the joint stock limited
company. A company is formally established and has the status of a legal person after the
business license has been issued by the relevant registration authority. A joint stock limited
company established by the subscription method shall obtain the approval for listing from the
securities regulatory authority of the State Council and submit the approval to the company
registration authority.
A joint stock limited company’s promoters shall be liable for: (1) the payment of debts
and expenses incurred in the incorporation process jointly and severally if a company cannot
be incorporated; (2) the refund of subscription monies paid by the subscribers, together with
interest, at bank rates of deposit for the same period jointly and severally if a company cannot
be incorporated; and (3) the compensation of any damages suffered by a company as a result
of the default of the promoters in the course of its establishment.
Registered Shares
Under the Company Law, shareholders may make capital contributions in cash, or with
non- monetary property that may be valued in money and legally transferred, such as
contribution in kind or with an intellectual property rights or land use rights.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
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--- page 656 ---
Under the Company Law, when a company issues shares in registered form, it shall
maintain a register of shareholders, stating the following matters: (1) the name and domicile
of a shareholder; (2) the number of shares held by each shareholder; (3) the serial number of
the shares held by each shareholder; and (4) the date on which each shareholder acquired the
shares.
Increase in Share Capital
Under the Company Law, in the case of a joint stock limited company issuing new shares,
resolutions shall be passed at the shareholders’ general meeting in respect of the class and
number of new shares, the issue price of the new shares, the commencement and end dates for
the issuance of new shares and the class and number of the new shares proposed to be issued
to existing shareholders. When a company launches a list of new shares under the permission
of the securities regulatory authority of the State Council, it must publish a document for the
new shares and financial and accounting reports, and prepare the share subscription form. After
payment in full for the new shares issued, a company must change its registration with a
company registration authority and make an announcement accordingly.
Reduction of Share Capital
A company may reduce its registered capital in accordance with the following procedures
prescribed by the Company Law:
(1) To prepare a balance sheet and a property list.
(2) A company makes a resolution at shareholders’ general meeting to reduce its
registered capital.
(3) A company shall inform its creditors within 10 days and publish an announcement
in newspapers within 30 days after the approval of resolution of reducing registered
capital.
(4) The creditors shall have the right to require a company to repay its debts or provide
corresponding guarantees within 30 days after receiving the notice or within 45 days
after the announcement if the creditors have not received the notice.
(5) When a company reduces its registered capital, it shall register the change with a
company registration authority in accordance with the law.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
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--- page 657 ---
Share Buy-Back
Under the Company Law, a company shall not purchase its own shares. Except for any
following circumstances:
(1) reducing the registered capital;
(2) merging with other company that holds the shares of the Company;
(3) using the shares for employee stocks plan or equity incentives;
(4) with respect to shareholders voting against any resolution adopted at the
shareholders’ general meeting on the merger or division of our Company, the right
to demand our Company to acquire the shares held by them;
(5) using the shares for the conversion of convertible corporate bonds issued by the
listed company;
(6) as required for maintenance of the corporate value and shareholders’ rights and
interests of a listed company.
The purchase of shares of a company for reasons specified in the case of (1) to (2) above
shall be subject to the resolution of the general meeting; the purchase of shares of a company
for reasons specified in the case of (3), (5) and (6) above shall be subject to the resolution of
the Board meeting attended by more than two-thirds of the directors in accordance with the
provisions of the Articles of Association or the authorization from the general meeting.
Following the purchase of a company’s shares by a company in accordance with the above
provisions, such shares shall be canceled within 10 days from the date of buy-back in the case
of item (1) above; such shares shall be transferred or canceled within six months in the case
of items (2) and (4) above; the total numbers of share of our Company held by a company shall
not exceed 10% of the total issued shares of a company, and shall be transferred or canceled
within three years in the case of items (3), (5) and (6) above.
Transfer of Shares
Shares held by a shareholder may be transferred according to the law. Under the Company
Law, a shareholder should effect a transfer of his shares on securities established exchange
according to the law or by any other means as required by the State Council. Registered shares
may be transferred by endorsement of shareholders or by other means stipulated by laws or
administrative regulations. After the transfer, a company shall record the name and address of
the transferee in the register of shareholders. No changes of registration in the share register
provided in the foregoing requirement shall be effected during a period of 20 days prior to the
convening of shareholder’s general meeting or 5 days prior to the record date for a company’s
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
–I V - 8–


--- page 658 ---
distribution of dividends. However, if any law provides otherwise for the registration of
changes in the register of members of a listed company, such provisions shall prevail. The
transfer of bearer share certificates shall become effective upon delivery of such share
certificates to the transferee by the shareholder.
Under the Company Law, shares in the Company held by promoters shall not be
transferred within one year after the date of establishment of a company. Shares issued by a
company prior to the listed of shares shall not be transferred within one year from the date on
which the shares of a company are listing on a securities exchange. Directors, supervisors and
senior management of a company shall declare to a company their shareholdings in a company
and any changes of such shareholdings, and the shares transferred each year during their term
of office shall not exceed 25% of the total shares they hold in a company. Shares of a company
held by its directors, supervisors and senior management shall not be transferred within one
year from the date of a company’s listed on a securities exchange, nor within six months after
their resignation from their positions with a company.
Shareholders
Under the Company Law, the rights of a shareholder of ordinary shares of a company
include:
(1) to receive dividends and other forms of distributions in proportion to their
shareholdings;
(2) to attend or appoint a proxy to attend shareholders’ general meetings and to exercise
voting rights;
(3) to supervise and manage a company’s business operations, and to present proposals
or to raise inquiries;
(4) to transfer, donate or pledge shares in accordance with laws, administrative
regulations and the provisions of the Articles of Association;
(5) to inspect the company’s Articles of Association, register of shareholders,
counterfoil of creditor’s rights, minutes of shareholders’ meeting, resolutions of the
board of directors, resolutions of the supervisory board and financial and accounting
reports;
(6) in the event of the winding-up or liquidation of a company, to participate in the
distribution of remaining property of a company in proportion to the number of
shares held;
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AND REGULATORY PROVISIONS
–I V - 9–


--- page 659 ---
(7) any shareholder who has a different view on a resolution on the merger or division
of the company made by a shareholders’ general meeting has the right to require the
company to acquire its shares; and
(8) other rights conferred by laws, administrative regulations and the Articles of
Association.
The obligations of a shareholder of ordinary shares of a company include:
(1) to comply with the Articles of Association;
(2) to pay subscription money according to the number of shares subscribed and the
method of subscription;
(3) not to abuse their shareholders’ rights to damage the interests of a company or other
shareholders; not to abuse the independent legal person status of a company and the
limited liability of shareholders to damage the interests of the creditors of a
company;
(4) other obligations conferred by laws, administrative regulations and the Articles of
Association.
Shareholder’s General Meetings
Under the Company Law, the shareholders’ general meeting of a joint stock limited
company is made up of all shareholders. The shareholders’ general meeting is the organ of
authority of a company, which exercises the following functions and powers:
(1) to decide on a company’s business policies and investment plans;
(2) to elect and replace directors and supervisors who are not representatives of the
employees and to decide on matters relating to the remuneration of directors and
supervisors;
(3) to examine and approve reports of the board of directors;
(4) to examine and approve reports of the supervisory committee or supervisors;
(5) to examine and approve a company’s annual financial budget and final accounts;
(6) to examine and approve a company’s profit distribution plans and loss recovery
plans;
(7) to resolve on the increase or reduction of a company’s registered capital;
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-10 –


--- page 660 ---
(8) to resolve on the issuance of corporate bonds;
(9) to resolve on the merger, division, dissolution, liquidation or change of corporate
form of a company;
(10) to amend the a company’s Articles of Association;
(11) other functions and powers specified in provision of the Articles of Association.
Under the Company Law, annual shareholders’ general meetings are required to be held
once every year. An extraordinary shareholders ‘general meeting is required to be held within
two months after the occurrence of any of the following circumstances:
(1) the number of directors is less than the number stipulated in the Company Law or
less than two-thirds of the number specified in the Articles of Association;
(2) when the unrecovered losses of a company amount to one-third of the total paid-up
share capital;
(3) shareholders individually or jointly holding 10% or more of the company’s shares
request;
(4) when deemed necessary by the Board;
(5) the Supervisory Committee proposes to convene the meeting;
(6) other circumstances as stipulated in the Articles of Association.
Shareholders’ general meetings shall be convened by the board of directors, and presided
over by the chairman of the board of directors. In the event that the chairman is incapable of
performing or not performing his duties, the meeting shall be presided over by the vice
chairman. In the event that the vice chairman is incapable of performing or not performing his
duties, a director nominated by more than half of directors shall preside over the meeting.
Where the board of directors is incapable of performing or is not performing its duties to
convene the general meeting, the supervisory board shall convene and preside over
shareholders’ general meeting in a timely manner. If the supervisory board fails to convene and
preside over shareholders’ general meeting, shareholders individually or in aggregate holding
10% or more of the company’s shares for 90 days or more consecutively may unilaterally
convene and preside over shareholders’ general meeting.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
–I V - 1 1–


--- page 661 ---
Notice of general meeting shall state the time and venue of and matters to be considered
at the meeting and shall be given to all shareholders 20 days before the meeting. A notice of
extraordinary general meeting shall be given to all shareholders 15 days prior to the meeting.
For the issuance of bearer share certificates, the time and venue of and matters to be considered
at the meeting shall be announced 30 days before the meeting.
Under the Company Law, a shareholder may entrust a proxy to attend a shareholders’
general meeting. The proxy shall present a written power of attorney issued by the shareholder
to a company and shall exercise his voting rights within the scope of authorization. There is
no specific provision in the Company Law regarding the number of shareholders constituting
a quorum in a shareholders ‘general meeting.
Under the Company Law, shareholders present at a shareholders’ general meeting have
one vote for each share they hold, save that shares held by a company are not entitled to any
voting rights.
The cumulative voting system may be adopted for the election of directors and
supervisors at the shareholders’ general meeting in accordance with the provisions of the
Articles of Association or the resolutions of the shareholders’ general meeting. Under the
accumulative voting system, each share shall have the same number of voting rights as the
number of directors or supervisors to be elected at the shareholders’ general meeting, and
shareholders may consolidate their voting rights when casting a vote.
Under the Company Law, the passing of any resolution requires affirmative votes of
shareholders representing more than half of the voting rights represented by the shareholders
who attend the shareholders’ general meeting. Matters relating to merger, division or
dissolution of a company, increase or reduction of registered capital, change of corporate form
or amendments to the articles of association must be approved by more than two-thirds of the
voting rights held by the shareholders present at the meeting.
Directors
Under the Company Law, a joint stock limited company shall have a board of directors,
which shall consist of five to nineteen members. The term of office of a director shall be
stipulated in the Articles of Association, but each term of office shall not exceed three years.
Directors may serve consecutive terms if re-elected.
Meetings of the board of directors shall be convened at least twice a year. All directors
and supervisors shall be noticed 10 days before the meeting for every meeting. The Board
exercises the following functions and powers:
(1) to convene shareholder’s general meetings and report its work to the shareholder’s
general meetings;
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
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– IV-12 –


--- page 662 ---
(2) to implement the resolutions of the shareholder’s general meeting;
(3) to decide on a company’s business plans and investment plans;
(4) to formulate a company’s annual financial budget and final accounts;
(5) to formulate a company’s profit distribution plan and loss recovery plan;
(6) to formulate proposals for the increase or reduction of a company’s registered
capital and the issue of corporate bonds;
(7) to formulate plans for cake, division, dissolution or change of corporate form of a
company;
(8) to decide on the internal management structure of a company;
(9) to decide on the appointment or dismissal of the manager of a company and their
remuneration;
(10) To decide on the appointment or dismissal of the deputy manager and financial
officer of a company based on the nomination of the manager and as well as
remuneration;
(11) to formulate a company’s basic management system;
(12) other functions and powers specified in the Articles of Association.
In addition, the PRC Guidelines on AoA stipulate that the board of directors shall also be
responsible for the formulation of the company’s amendment plan to the Articles of
Association. The meeting of the board of directors can be held only when half of the directors
are present. Half of the directors shall approve the resolution of the board of directors. If a
director fails to attend a meeting of the board of directors, he may entrust another director to
attend the meeting on behalf of him by a power of attorney which specifies the scope of his
authority.
If a resolution of the board of directors violates the laws, administrative regulations or the
Articles of Association or resolutions of the general meeting, and as a result of which the
company sustains serious losses, the directors participating in the resolution are liable to
compensate the company. However, if it can be proved that a director expressly objected to the
resolution when the resolution was voted on, and that such objection was recorded in the
minutes of the meeting, such director shall be relieved from that liability.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-13 –


--- page 663 ---
Under the Company Law, a person may not serve as a director of a company if he is:
(1) a person without capacity or with restricted capacity;
(2) a person who has been sentenced to criminal punishment due to corruption, bribery,
infringement of property, misappropriation of property or destruction of the socialist
market economic order, where less than five years have elapsed since the date of
completion of the sentence; or a person who has been deprived of his political rights
due to a crime, where less than five years have elapsed since the date of completion
of the sentence;
(3) a person who was a director, factory manager or manager of a company or enterprise
which has entered into insolvent liquidation and who was personally liable for the
insolvency of such company or enterprise, where less than three years have elapsed
since the date of the completion of the insolvency and liquidation of such company
or enterprise;
(4) persons who were legal representatives of a company or enterprise which had its
business license revoked due to violation of the law and had been closed down by
order, and who were personally liable, where less than three years have elapsed
since the date of the revocation of the business license of the company or enterprise;
and
(5) persons who have a relatively large amount of debts due and outstanding.
The board of directors shall have one chairman, who shall be elected by more than half
of all the directors. The chairman shall exercise the following functions and powers (including
but not limited to):
(1) to preside over shareholders’ general meetings and convene and preside over board
meetings;
(2) to examine the implementation of resolutions of the Board;
(3) to sign the securities issued by a company;
(4) to exercise other powers conferred by the Board.
According to the PRC Guidelines on AoA, the directors shall bear the responsibility of
loyalty and diligence.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-14 –


--- page 664 ---
Supervisors
Under the Company Law, a joint stock limited company shall have a supervisory
committee composed of not less than three members. The supervisory committee shall
comprise shareholder representatives and an appropriate proportion of the company’s staff
representatives, of which the proportion of staff representatives shall not be less than one-third
and the specific proportion shall be stipulated in the Articles of Association. Employee
representatives of the supervisory committee shall be democratically elected by the company’s
employees at the employee representative assembly, employee general meeting or otherwise.
Directors or senior management may not act concurrently as supervisors.
The Supervisory Committee exercises the following powers:
(1) to examine the company’s financial affairs;
(2) to supervise the directors and senior management in their performance of their
duties and to propose the removal of directors and senior management who have
violated laws, administrative regulations, the Articles of Association or resolutions
of shareholders’ general meetings;
(3) to demand rectification by a director or senior management when the acts of such
persons are harmful to the company’s interest;
(4) to propose the convening of extraordinary general meetings, and to convene and
preside over shareholders’ general meetings when the Board fails to perform the
duty of convening and presiding over shareholders’ general meetings under the
Company Law;
(5) to submit proposals to the shareholders’ general meeting;
(6) to initiate legal proceedings against directors and senior management in accordance
with the Company Law;
(7) other functions and powers specified in the Articles of Association.
According to the PRC Guidelines on AoA, the supervisors of the company shall comply
with laws, administrative regulations and the Articles of Association and bear the responsibility
of loyalty and diligence. They shall not take any bribe or other illegal gains by taking
advantage of their authority and shall not take illegal possession of the company property.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-15 –


--- page 665 ---
Managers and Senior Management
Under the Company Law, a company shall have a manager who shall be appointed or
removed by the board of directors. The manager is accountable to the board of directors and
may exercise the following powers:
(1) to be in charge of the production, operation and management of the company and to
organize the implementation of the resolutions of the board of directors;
(2) to organize the implementation of the company’s annual business plans and
investment plans;
(3) to formulate plans for the establishment of the company’s internal management
structure;
(4) to draft the company’s basic management system;
(5) to formulate the basic rules and regulations of the company;
(6) to propose the appointment or dismissal of the company’s deputy manager and
financial controller;
(7) to appoint or dismiss management personnel other than those required to be
appointed or dismissed by the board of directors; and
(8) to exercise other powers conferred by the Articles of Association and the Board.
According to the Company Law, senior management shall refer to the manager, deputy
manager(s), financial controller, secretary of the board of directors and other personnel as
stipulated in the Articles of Association of the company.
According to the PRC Guidelines on AoA, the company’s Articles of Association are
binding on the company’s managers and other management personnel. According to the PRC
Guidelines on AoA, the senior management shall have responsibility of loyalty and shall
faithfully perform their respective duties and safeguard the best interests of the company and
all the shareholders. The senior management fails to perform his/her duties faithfully or
breaches his/her obligation of good faith and causes losses to the company or public
shareholders, the senior management shall be liable for compensation.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-16 –


--- page 666 ---
Finance and Accounting
Under the Company Law, a company shall establish its financial and accounting systems
according to laws, administrative regulations and the regulations of the financial department of
the State Council. At the end of each fiscal year, the Company shall prepare a financial and
accounting reports which shall be audited by an accounting firm in accordance with the law.
The financial and accounting reports shall be prepared in accordance with the laws,
administrative regulations and the regulations of the financial department of the State Council.
A joint stock limited company shall make its financial and accounting reports available
at the company for inspection by the shareholders 20 days before the convening of an annual
general meeting of shareholders. A joint stock limited company issuing its shares in public
must publish its financial and accounting reports.
When distributing each year’s after-tax profits, the company shall set aside 10% of its
profits into its statutory reserve fund. The company can no longer withdraw statutory reserve
fund if it has accumulated to more than 50% of the registered capital. If the statutory reserve
fund of the company is insufficient to make up for the losses of the previous years, the current
year profits shall be used to make up for the losses before making allocations to the statutory
reserve in accordance with the preceding paragraph. After the company has made an allocation
to the statutory reserve fund from its after-tax profit, it may also make an allocation to the
discretionary reserve fund from its after-tax profit upon a resolution of the general meeting or
the shareholders’ general meeting.
A joint stock limited company may distribute profits in proportion to the number of shares
held by its shareholders, except for profit distributions that are not in proportion to the number
of shares held in accordance with the provisions of the Articles of Association of the joint stock
limited company.
The premium over the nominal value of the shares of a joint stock limited company from
the issue of shares and other incomes required by the financial department of the State Council
to be treated as the capital reserve fund shall be accounted for as the capital reserve fund of
the company.
The reserve fund of the company shall be used to make up losses of the company, expand
the production and operation of the company or increase the capital of the company. However,
the capital reserve shall not be used to make up the company’s losses. When the statutory
reserve fund is converted into capital, the balance of the statutory reserve shall not be less than
25% of the registered capital before such conversion.
The company shall not keep accounts other than those provided by law.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-17 –


--- page 667 ---
Appointment and Dismissal of Accounting Firms
Pursuant to the Company Law, the engagement or dismissal of an accounting firm
responsible for the company’s auditing shall be determined by a shareholders’ general meeting
or the board of directors in accordance with the articles of association. The accounting firm
should be allowed to make representations when the general meeting or the board of directors
conduct a vote on the dismissal of the accounting firm. The company should provide true and
complete accounting evidence, accounting books, financial and accounting reports and other
accounting information to the engaged accounting firm without any refusal or withholding or
falsification of information.
According to the PRC Guidelines on AoA, a company shall engage an accounting firm
which is qualified with The Securities Law to provide services including the audit of financial
statements, the verification of net assets and other relevant consultancy services. The term of
engagement is one year and may be extended.
Profit Distribution
Under the Company Law, a company shall not distribute profits before losses are covered
and the statutory reserve fund is drawn.
Dissolution and Liquidation
According to the Company Law, a company shall be dissolved for the following reasons:
(1) the term of business stipulated in the Articles of Association has expired or other
events of dissolution specified in the Articles of Association have occurred;
(2) the general meeting or the shareholders’ general meeting resolves to dissolve the
company;
(3) dissolution is necessary due to a merger or division of the company;
(4) the business license is revoked, or the business license is ordered to be closed or
revoked in accordance with laws;
(5) where the company encounters serious difficulties in its operation and management
and its continuance shall cause a significant loss in the interest of shareholders, and
where this cannot be resolved through other means, shareholders who hold more
than 10% of the total shareholders’ voting rights of the company may present a
petition to a people’s court for the dissolution of the company with the support of
the judgment.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-18 –


--- page 668 ---
Where the company is dissolved in accordance with sub-paragraph (1) above, it may carry
on its existence by amending its articles of association, which must be approved by more than
two-thirds of the voting rights held by the shareholders present at the shareholders’ general
meeting. Where the Company is dissolved pursuant to sub-paragraphs (1), (2), (4) or (5) above,
a liquidation committee shall be established and the liquidation shall commence within 15 days
after the occurrence of an event of dissolution. The liquidation committee of a joint stock
limited company shall be composed of directors or the personnel determined by a shareholders’
general meeting. If a liquidation committee is not established within the stipulated period to
conduct liquidation, the creditors may apply to the people’s court to appoint relevant personnel
to form a liquidation committee to conduct liquidation. The people’s court should accept such
application and form a liquidation committee to conduct liquidation in a timely manner.
The liquidation committee shall exercise the following functions and powers during the
liquidation period:
(1) to liquidate the company’s property and respectively prepare balance sheet and list
of property;
(2) to notify creditors by notice or public announcement;
(3) to deal with the outstanding business of the company involved in the liquidation;
(4) to pay all outstanding taxes and taxes arising in the course of liquidation;
(5) to liquidate claims and debts;
(6) to deal with the remaining property of the company after paying off debts;
(7) to participate in civil litigations on behalf of the company.
The remaining property of the company after the payment of liquidation expenses,
employees’ wages, social insurance expenses and statutory compensation, outstanding taxes
and the company’s debts, shall be distributed to shareholders in proportion to their
shareholdings.
During the liquidation period, the company shall continue to exist but shall not carry out
any business activities unrelated to the liquidation. The company’s assets shall not be
distributed to the shareholders before the liquidation in accordance with the preceding
paragraph.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-19 –


--- page 669 ---
If the liquidation committee, having thoroughly examined the company’s assets and
having prepared a balance sheet and an inventory of assets, discovers that the company’s assets
are insufficient to pay its debts in full, it shall apply to the people’s court for a declaration of
insolvency. After the people’s court has declared the company bankrupt, the liquidation
committee shall hand over the affairs of the liquidation to the people’s court.
Upon completion of the liquidation, the liquidation committee shall prepare a liquidation
report to be submitted to the shareholders’ general meeting or the people’s court for
confirmation, and submit to the company registration authority to apply for cancelation of the
company’s registration and to announce the termination of the company.
Members of the liquidation committee are required to discharge their duties honestly and
in compliance with laws. Members of the liquidation committee shall be prohibited from
abusing their authority in accepting bribes or other unlawful income and from misappropriating
the company’s properties. A member of the liquidation committee is liable to indemnify the
company and its creditors in respect of any loss arising from his willful or material default.
Loss of Share Certificates
A shareholder may, in accordance with the public notice procedures set out in the PRC
Civil Procedure Law, apply to a people’s court if his share certificate(s) in registered form is
either stolen, lost or destroyed, for a declaration that such certificate(s) will no longer be valid.
After the people’s court declared that such certificate(s) will no longer be valid, the shareholder
may apply to the company for the issue of a replacement certificate(s).
Securities Laws and Regulations
In October 1992, the State Council established the Securities Committee and the CSRC.
The Securities Committee is responsible for coordinating the drafting of securities regulations,
formulating securities-related policies, planning the development of securities markets,
directing, coordinating and supervising all securities-related institutions in the PRC and
administering the CSRC. The CSRC is the regulatory arm of the Securities Committee and is
responsible for the drafting of regulatory provisions of securities markets, supervising
securities companies, regulating listing of securities by PRC companies in the PRC or
overseas, regulating the trading of securities, compiling securities-related statistics and
undertaking research and analysis. On March 29, 1998, the State Council consolidated the
above two departments and reformed the CSRC.
The Provisional Regulations Concerning the Issue and Trading of Shares (ୃ೯Бၾ
၍ଣᅲБૢԷ) promulgated by the State Council and effective on April 22, 1993
provide the application and approval procedures for listing of shares, trading in shares, the
acquisition of listed companies, the deposit, settlement and transfer of listed shares, the
disclosure of information with respect to a listed company, investigation and penalties and
dispute arbitration.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-20 –


--- page 670 ---
The Regulations of the State Council Concerning the Domestic Listed Foreign Shares of
Joint Stock Limited Companies (), which
were promulgated by the State Council and came into effect on December 25, 1995, mainly
provide for the issue, subscription, trading and payment of dividends of domestic listed foreign
shares and disclosure of information of joint stock limited companies with domestic listed
foreign shares.
The Securities Law of the People’s Republic of China ()
(hereinafter referred to as the “PRC Securities Law”), which was amended by the Standing
Committee of the NPC on December 28, 2019 and came into effect on March 1, 2020, provides
a series of provisions regulating, among other things, the issue and trading of securities,
takeovers by listed companies, securities exchanges, securities companies and the duties and
responsibilities of the State Council’s securities regulatory authorities in the PRC, and
comprehensively regulates activities in the PRC securities market. The PRC Securities Law
provides that a domestic enterprise must comply with the relevant provisions of the State
Council in issuing securities directly or indirectly outside the PRC or listing and trading its
securities outside the PRC. Currently, the issue and trading of foreign issued shares are mainly
governed by the rules and regulations promulgated by the State Council and the CSRC.
The Guidelines for the Application for “Full Circulation” of Domestic Unlisted Shares of
H Share Companies ( H΅͡ሗ“ஷ”ˏ) issued by the
CSRC and came into effect on August 10, 2023 regulates the list and circulation (hereinafter
referred to as “Full Circulation”) of Domestic Unlisted Shares of domestic stock companies
(hereinafter referred to as “H share companies”) listed on the Hong Kong Stock Exchange
(including domestic unlisted shares held by domestic shareholders prior to overseas listing,
domestic unlisted shares issued in China upon overseas listing and unlisted shares held by
overseas shareholders). The application for “full circulation” by H share companies shall be
filed to the CSRC. A domestic joint stock limited company whose shares are unlisted may
simultaneously make an application for “full circulation” at the time of applying for an
overseas list.
Overseas Listing
According to the Trial Administrative Measures of Overseas Securities Offering and
Listing by Domestic Companies ()
(hereinafter referred to as the “Overseas Listing Trial Measures”) and five relevant guidelines,
which promulgated by the CSRC on February 17, 2023, and came into effect on March 31,
2023, PRC domestic companies shall register their direct and indirect overseas listings and
securities offerings with the CSRC by filing materials on key compliance issues.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-21 –


--- page 671 ---
Summary of Material Differences between Hong Kong and the PRC Company Law
The Hong Kong law applicable to a company incorporated in Hong Kong is based on the
Hong Kong Companies Ordinance and is supplemented by common law and the rules of equity
that apply to Hong Kong. As a joint stock limited company established in the PRC that is
seeking an list of shares on the Stock Exchange, we are subject to the Company Law and all
other rules and regulations promulgated pursuant to the Company Law.
Set out below is a summary of certain material differences between Hong Kong Company
Law applicable to a company incorporated in Hong Kong and the Company Law applicable to
a joint stock limited company incorporated and existing under the Company Law. This
summary is, however, not intended to be an exhaustive comparison.
Corporate Existence
Under the Hong Kong Companies Ordinance, a company with share capital must be
incorporated by the Registrar of Companies in Hong Kong, which will grant a registration
certificate to the company upon its incorporation, and the company will acquire an independent
corporate existence. A company may be incorporated as a public company or a private
company.
Under the Company Law, a joint stock limited company may be incorporated by
promotion or public subscription. The minimum registered capital of a joint stock limited
company is not required, unless otherwise provided by laws, administrative regulations and the
decisions of the State Council, for the paid-up registered capital and the minimum registered
capital of a joint stock limited company.
The Hong Kong Company Law does not prescribe any minimum registered capital
requirements for a Hong Kong company.
Share Capital
Under Hong Kong law, the concept of the nominal value of a share capital in a Hong Kong
company has been abolished, and the companies have greater flexibility to alter its share
capital by:
(1) increasing its share capital; (2) capitalizing its profits; (3) allotting and issuing bonus
shares with or without increasing its share capital; (4) increasing or decreasing the number of
shares; and (5) canceling its shares. Hence, the directors of a Hong Kong company may, with
the prior approval of the shareholders, if required, cause the company to issue new shares. The
Company Law does not provide for authorized share capital.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-22 –


--- page 672 ---
Under the PRC Securities Law, an application for listing shall comply with the listing
rules of the stock exchange. Hong Kong law does not prescribe any minimum capital
requirements for companies incorporated in Hong Kong.
Under the Company Law, shareholders may provide capital contribution in the form of
money or non-monetary assets (other than assets not entitled to be used as capital contributions
under relevant laws and administrative regulations). For non-monetary assets to be used as
capital contributions, appraisals and assets verification must be carried out to ensure no
overvaluation or under-valuation of the assets. There is no such restriction on a Hong Kong
company under Hong Kong law.
Restrictions on Shareholding and Transfer of Shares
Under PRC law, the Domestic Unlisted Shares, which are denominated and subscribed for
in Renminbi, can only be subscribed for and traded by PRC investors, designated qualified
overseas institutional investors or qualified overseas strategic investors. Overseas listed shares,
which are denominated in Renminbi and subscribed for in a foreign currency, may only be
subscribed for, and traded by, investors from countries and regions outside the PRC or other
qualified PRC institutional investors. If the H Shares are eligible securities under the
Southbound Trading Link, they are also available for subscription and trading by domestic
investors in the PRC pursuant to the rules and restrictions of Shanghai-Hong Kong Stock
Connect and Shenzhen-Hong Kong Stock Connect.
Under the Company Law, a promoter of a joint stock limited company is not allowed to
transfer the shares it holds for a period of one year after the date of establishment of the
company. Shares in a joint stock limited company held by its directors, supervisors and senior
management transferred each year during their term of office shall not exceed 25% of the total
shares they held in the company, and the shares they held in the company cannot be transferred
within one year from the listing of the shares, and also cannot be transferred within half a year
after the said personnel has left office. There are no such restrictions on shareholdings and
transfers of shares under Hong Kong law.
Financial Assistance for Acquisition of Shares
Although the Company Law does not prohibit or restrict a joint stock limited company or
its subsidiaries from providing financial assistance for the purpose of an acquisition of its own
or its holding company’s shares, the PRC Guidelines on AoA contain certain restrictions on a
company and its subsidiaries on providing such financial assistance similar to those under
Hong Kong company law.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-23 –


--- page 673 ---
Notice of Shareholders’ General Meeting
Under the Company Law, notice of a shareholders’ general meeting must be given not less
than 20 days before the meeting, while notice of an extraordinary general meeting must be
given not less than 15 days before the meeting. If a company has bearer shares, a public
announcement of a shareholders’ general meeting must be made at least 30 days prior to the
meeting.
For a limited company incorporated in Hong Kong, the minimum period of notice of a
shareholders’ general meeting is 14 days. In addition, where a meeting involves consideration
of a resolution requiring special notice, the company must also give its shareholders notice of
the resolution 14 days before the meeting. The notice period for an annual general meeting is
21 days.
Quorum for Shareholders’ General Meetings
The Company Law does not specify any quorum requirement for a shareholders’ general
meeting. Under Hong Kong law, the quorum for a shareholders’ general meeting is two
members unless the articles of association of the company otherwise provide. For a single
member company, one member is a quorum.
Voting at Shareholders’ General Meetings
Under the Company Law, the passing of any resolution requires more than half of the
votes held by the shareholders present in person or by proxy. Amendments to the articles of
association, change of corporate form, increase or decrease of registered capital and merger,
division or dissolution must be approved by shareholders or proxies representing more than
two-thirds of the voting rights being present in shareholders’ general meeting.
Under Hong Kong law, (1) an ordinary resolution is passed by a simple majority of votes
cast by members present in person or by proxy at a shareholders’ general meeting and (2) a
special resolution is passed by a majority of not less than three-fourths of votes cast by
members present in person or by proxy at a shareholders’ general meeting.
Variation of Class Rights
The Company Law has no special provision relating to variation of class rights.
Under the Hong Kong Companies Ordinance, no rights attached to any class of shares can
be varied except (1) with the approval of a special resolution of the holders of the relevant class
at a separate meeting; (2) with the consent in writing of the holders of at least three-fourths of
the total voting rights of holders of shares in the class in question; (3) by agreement of all the
members of a Hong Kong company or (4) if there are provisions in the articles of association
relating to the variation of those rights, then in accordance with those provisions.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-24 –


--- page 674 ---
Directors, Senior Management and Supervisors
The Company Law, unlike Hong Kong Companies Ordinance, does not contain any
requirements relating to the declaration of directors’ interests in material contracts, restrictions
on directors’ authority in making major dispositions, restrictions on companies providing
certain benefits to directors and guarantees in respect of directors’ liability and prohibitions
against compensation for loss of office without shareholders’ approval.
Supervisory Committee
Under the Company Law, a joint stock limited company’s directors and senior
management are subject to the supervision of a supervisory committee. There is no mandatory
requirement for the establishment of a supervisory committee for a company incorporated in
Hong Kong.
Derivative Action by Minority Shareholders
Under Hong Kong law, a shareholder may, with the leave of the court, bring a derivative
action on behalf of a company against our directors for any misconduct.
Under the Company Law, if the directors and senior management of a joint stock limited
company violate laws, administrative regulations or its articles of association, resulting in
losses to the company, shareholders individually or jointly holding over 1% of the shares in the
company for more than 180 consecutive days may request in writing the supervisory committee
to initiate proceedings in the people’s court. If the supervisors violate the relevant provisions
of the Company Law, the above shareholders may request in writing the board of directors to
initiate litigation at the people’s court. Upon receipt of such written request from the
shareholders, if the supervisory committee or the board of directors refuses to initiate such
proceedings, or has not initiated proceedings within 30 days upon receipt of the request, or if
under urgent situations, failure of initiating immediate proceeding may cause irremediable
damages to the company, the above said shareholders shall, for the benefit of the company’s
interests, have the right to initiate proceedings directly to the people’s court in their own name.
Protection of Minorities
Under Hong Kong law, a shareholder who complains that the affairs of a company
incorporated in Hong Kong are conducted in a manner unfairly prejudicial to his interests may
petition to court to either wind up the company or make an appropriate order regulating the
affairs of the company. In addition, on the application of a specified number of members, the
Financial Secretary of Hong Kong may appoint inspectors who are given extensive statutory
powers to investigate the affairs of a company incorporated in Hong Kong.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-25 –


--- page 675 ---
The Company Law provides that any shareholders holding 10% or more of the voting
rights of all issued shares of a company may request a People’s Court to dissolve the company
to the extent that the operation or management of the company experiences any serious
difficulties and the company continues to suffer serious losses and no other alternatives can
resolve.
Financial Disclosure
Under the Company Law, a joint stock limited company is required to make available at
the company for inspection by shareholders its financial report 20 days before its shareholders’
general meeting. In addition, a joint stock limited company of which the listed Shares are
offered must publish its financial report. The Hong Kong Companies Ordinance requires a
company incorporated in Hong Kong to send to every shareholder a copy of its financial report,
auditors’ report and directors’ report, which are to be presented before the company in its
annual general meeting, not less than 21 days before such meeting.
Information on Directors and Shareholders
The Company Law gives shareholders the right to inspect the articles of association,
minutes of the shareholders’ general meetings and financial and accounting reports. Under the
articles of association, shareholders have the right to inspect and copy (at reasonable fee)
certain information on shareholders and on directors similar to that available to shareholders
of Hong Kong companies under the Hong Kong Companies Ordinance.
Receiving Agents
Under the Company Law and Hong Kong law, dividends once declared are debts payable
to shareholders. Under Hong Kong law, the limitation period for an action to demand
repayment of a debt is six years, whereas the PRC Civil Code (Պ)
provides that the limitation period for an action to be taken is three years.
Corporate Reorganization
Corporate reorganization involving a company incorporated in Hong Kong may be
effected in a number of ways, such as a transfer of the whole or part of the business or property
of the company in the course of voluntary winding up to another company pursuant to the Hong
Kong Companies Ordinance or a compromise or arrangement between the company and its
creditors or between the company and its members, which requires the sanction of the court.
In addition, subject to shareholders’ approval, a wholly owned subsidiary within the Group
may also be horizontally or vertically consolidated under the Hong Kong Companies
Ordinance.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-26 –


--- page 676 ---
Under the Company Law, the merger, demerger, dissolution or change to the forms of a
joint stock limited company has to be approved by shareholders in shareholders’ general
meeting.
Statutory Deductions
Under the Company Law, a company shall draw 10% of the profits as its statutory reserve
fund before it distributes any profits after taxation. When the aggregate amount of the
company’s statutory reserve fund reaches 50% of the company’s registered capital, the
company may no longer make allocations from the statutory reserve fund. After a company has
made an allocation to its statutory reserve fund from its after-tax profit, it may make an
allocation to its discretionary reserve fund from its after-tax profit upon a resolution approved
at the shareholders’ general meeting. There are no such requirements under Hong Kong law.
Dispute Arbitration
Under Hong Kong law, disputes between shareholders and a company or its directors,
managers or other senior management may be resolved through the courts.
Remedies of Company
Under the Company Law, if a director, supervisor or senior management in carrying out
his duties infringes any law, administrative regulation or the articles of association of a
company, which results in damage to the company, that director, supervisor or senior
management should be responsible to the company for such damages.
The Hong Kong Listing Rules require listing companies’ articles of association to provide
for remedies of the company (including rescission of the relevant contract and recovery of
profits from a director, supervisor or senior management).
Dividend
The company has the power in certain circumstances to withhold, and pay to the relevant
tax authorities, any tax payable under PRC law on any dividends or other distributions payable
to a shareholder.
Under Hong Kong law, the limitation period for an action to recover a debt (including the
recovery of dividends) is six years, whereas under PRC laws, the relevant limitation period is
three years. The company shall not exercise its powers to forfeit any unclaimed dividend after
the expiry of the applicable limitation period.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-27 –


--- page 677 ---
Fiduciary Duties
In Hong Kong, directors owe a fiduciary duty to the company, including a duty not to
conflict with the company’s interests. In addition, the Hong Kong Companies Ordinance has
taken into account the statutory duty of care of directors.
Closure of Register of Members
The Hong Kong Companies Ordinance requires that the register of shareholders of a
company must not generally be closed for the registration of transfers of shares for more than
30 days (extendable to 60 days in certain circumstances) in a year.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-28 –


--- page 678 ---
This appendix contains a summary of the Articles of Association. As the information
set out below is in summary form, it does not contain all of the information that may be
important to potential investors.
This appendix sets out the summary of the principal provisions of the Articles of
Association and its subsequent amendments which will be effective on the date of the Listing
of H Shares on the Hong Kong Stock Exchange. The principal objective of this appendix is to
provide potential investors with an overview of the Articles of Association, hence it does not
contain all information that may be important to potential investors. As stated in “Appendix VII
– Documents Delivered to the Registrar of Companies in Hong Kong and Available on
Display,” the full Chinese text of the Articles of Association is available on display.
SHARES
Issuance of shares
The shares of the Company shall take the form of share certificates. The Company shall
have ordinary shares at all times. Ordinary shares issued by the Company include both
domestic and foreign shares shares.
The Company shall issue shares in an open, fair and just manner, and each share of the
same class shall rank pari passu with each other.
Shares of the same class in the same issue shall be listed under the same conditions and
at the same price; any entity or individual shall pay the same price for each share subscribed.
Subject to the record of the securities regulatory authority of the State Council, the
Company may issue shares to domestic and foreign investors.
After the Company’s overseas issuing shares and listing, subject to the record of the
securities regulatory authorities of the State Council, shareholders holding unlisted shares of
the Company may transfer all or part of their shares to overseas investors for listing and trading
on overseas stock exchanges.
The Company’s plan to issue overseas listing foreign shares and domestic shares, the
Board of the Company may make implementation arrangements for separate issuance. If the
Company separately issues overseas listing foreign shares and domestic shares within the total
number of shares specified in the issuance plan, the shares shall be fully subscribed for at one
time; if the shares cannot be fully subscribed for at one time under special circumstances, the
shares may be issued in several tranches subject to the approval of the securities regulatory
authority of the State Council.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-1 –


--- page 679 ---
Increase/Decrease of Shares
The Company may, based on its operation and development needs and in accordance with
laws and administrative regulations, increase its registered capital in the following ways in
accordance with the provisions of the Articles of Association:
(1) Public offering of shares;
(2) Non-public offering of shares;
(3) distributing bonus shares to its existing shareholders;
(4) conversion of capital reserve into share capital;
(5) other means approved by the PRC laws and regulations, the securities regulatory
authorities of the place where the shares of the Company are listed and the Hong
Kong Stock Exchange.
After the Company’s increase of share capital by means of the issuance of new shares has
been approved in accordance with the provisions of the Articles of Association, it shall be made
in accordance with the procedures set out in the relevant laws and administrative regulations
of the PRC and the regulatory rules in the place where the Company’s shares are listed.
According to the Articles of Association, the Company may reduce its registered capital.
The Company shall reduce its registered capital in accordance with the Company Law, other
relevant regulations and the procedures stipulated in the Articles of Association.
Share Repurchase
The Company may, in accordance with the procedures set out in the Articles of
Association and with the approval of the relevant governing authority of the State, repurchase
its outstanding shares under the following circumstances:
(1) The Company decreases its registered capital;
(2) merging with another company that holds shares in the Company;
(3) using the shares for employee stock ownership plan or equity incentives;
(4) acquiring shares held by shareholders (upon their request) who vote against any
resolution proposed in any Shareholders’ General Meeting on the merger or division
of the Company;
(5) using the shares for conversion of corporate bonds issued by the listed company that
are convertible into shares;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-2 –


--- page 680 ---
(6) it is necessary for the listed company to safeguard its corporate value and
shareholders’ interests;
(7) other circumstances stipulated by the laws and regulations of the PRC, the securities
regulatory authorities of the place where the shares of the Company are listing and
the Hong Kong Stock Exchange.
Where the Company acquires its own shares under the circumstances set out in items (1)
and (2) above, it shall be subject to the resolution of the Shareholders’ General Meeting; where
the Company acquires its own shares under the circumstances set out in items (3), (5) and (6)
above, it shall be subject to the resolution of the Board meeting attended by more than
two-thirds of the Directors.
After the Company has bought back its own shares, such shares shall be canceled within
ten days from the date of buy-back in the case of item (1); such shares shall be transferred or
canceled within six months in the case of items (2) and (4); such shares shall not exceed 10%
of the total issued shares of the Company in the case of items (3), (5) and (6), and shall be
transferred or canceled within three years.
A company may purchase its shares in the manner of centralized public trading, or other
methods approved by the PRC laws and regulations, the securities regulatory authorities of the
place where the Company’s shares are listing and the Hong Kong Stock Exchange.
Where the Company purchases its shares under the circumstance set forth in subparagraph
(3), (5) or (6), paragraph 1 of Article 24 of these Bylaws, it shall conduct trading in the manner
of centralized public trading.
Transfer of Shares
Unless otherwise provided by the PRC laws and regulations, the securities regulatory
authorities of the place where the Company’s shares are listing and the Hong Kong Stock
Exchange, fully-paid shares of the Company are free from any restriction on the right of
transfer and are freely transferable without any lien attached. Transfer of overseas listing
foreign shares listed in Hong Kong shall be made to the local share registrar in Hong Kong
appointed by the Company.
The Company shall not accept its own shares as the subject matter of a pledge.
Shares of the Company held by the promoters shall not be transferred within one year
from the date of establishment of the Company. Directors, Supervisors and Senior Management
of the Company shall report to the Company their shareholdings in the Company and changes
thereof and shall not transfer more than 25% of the total number of shares of the Company held
by them each year during their term of office. The aforementioned personnel shall not transfer
the shares of the Company held by them within half a year after they leave the Company.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-3 –


--- page 681 ---
Any gains from the sale of shares of the Company by any Director, Supervisor, Senior
Management or shareholders holding more than 5% of the shares of the Company, sell shares
or other securities with an equity nature within six months after buying the same or buy shares
or securities within six months after selling the same, the earnings arising therefrom shall
belong to the Company and the Company’s Board shall recover such earnings. However, the
restriction shall not be applicable to any sale of shares by a securities company holding 5% or
above of the Company’s shares as a result of its purchase and underwriting of the untaken
shares after offering and other circumstances stipulated by the CSRC.
SHAREHOLDERS AND SHAREHOLDERS’ GENERAL MEETINGS
Share Register
The Company shall create a register of shareholders based on the documents provided by
the securities depository institution, and the register of shareholders is sufficient evidence of
shareholders’ holding of shares of the Company. The register of shareholders shall be kept at
the company and shareholders shall have the right to inspect it. The Company shall manage the
register of shareholders in accordance with the Company Law and other laws and
administrative regulations and the requirements of the relevant regulatory bodies.
When the Company convenes the general meeting, pays dividends, goes into liquidation
or is involved in other actions that require the confirmation of shareholders’ identity, the Board
or the convenor of the general meeting shall fix a date as the equity registration date, upon
expiration of which the shareholders whose names appear on the register of members shall be
the shareholders entitled to relevant rights and interests.
Rights and Obligations of Shareholders
A shareholder of the Company is a person who lawfully holds shares of the Company and
whose name is entered in the register of shareholders. A shareholder shall enjoy rights and
assume obligations according to the class and number of shares held by him. Shareholders
holding the same class of shares shall enjoy the same rights and assume the same obligations.
The ordinary shareholders of the Company shall enjoy the following rights:
(1) to receive dividends and other distributions in proportion to the number of shares
held;
(2) to request, convene, preside over, attend or appoint a proxy to attend Shareholders’
General Meetings and to exercise the corresponding voting rights in accordance with
the laws;
(3) to supervise the Company’s operations, and to put forward proposals or raise
inquiries;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-4 –


--- page 682 ---
(4) the right to transfer, give or pledge shares held by them in accordance with laws,
administrative regulations and the Articles of Association;
(5) to obtain relevant information in accordance with the Articles of Association,
including:
1. the right to obtain the Articles of Association upon payment of the cost thereof;
2. The right to inspect for free and copy upon payment of a reasonable fee:
(1) all parts of the register of shareholders;
(2) personal particulars of each of the Company’s Directors, Supervisors,
General managers and other Senior Management officers, including:
(a) present and former names and aliases;
(b) principal address (residence);
(c) nationality;
(d) primary and all other part-time occupations and duties;
(e) identification document and its number;
(3) status of the Company’s share capital;
(4) the latest audited financial statements of the Company and the reports of
the Board, auditors and the Supervisory Committee;
(5) reports showing the aggregate par value, quantity, highest and lowest
price paid in respect of each class of shares repurchased by the Company
since the end of the last accounting year and the aggregate amount paid
by the Company for this purpose;
(6) a copy of the latest annual inspection report filed with the competent
administration for industry and commerce or other competent authorities;
(7) minutes of Shareholders’ General Meetings (for shareholders’ review
only) and special resolutions of the Company.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-5 –


--- page 683 ---
The Company shall make the documents mentioned in the preceding paragraph (2)
and other applicable documents available at the Company’s Hong Kong address in
accordance with the requirements of the Hong Kong Listing Rules for inspection by
the public and holders of overseas listing shares free of charge (except for the
minutes of Shareholders’ General Meetings which are available for inspection by
shareholders only).
The Company may refuse to provide any of the information it has inspected and
photocopied that involves commercial secrets and inside information of the
Company as well as personal privacy of relevant personnel.
(6) in the event of the termination or liquidation of the Company, to participate in the
distribution of remaining assets of the Company in accordance with the number of
shares held;
(7) to request the Company to purchase the shares held by shareholders who vote
against any resolution proposed in any Shareholders’ General Meeting on the merger
or division of the Company;
(8) Shareholders individually or jointly holding more than 3% of the Company’s shares
shall have the right to propose extraordinary resolutions in writing to the Board ten
days prior to the convening of the Shareholders’ General Meeting;
(9) other rights conferred by laws, administrative regulations, departmental rules or the
Articles of Association.
The shareholders the ordinary shares of the Company shall assume the following
obligations:
(1) to abide by laws, administrative regulations and the Articles of Association;
(2) to pay subscription monies according to the number of shares subscribed and the
method of subscription;
(3) not to withdraw their shares unless required by laws and administrative regulations;
(4) not to abuse their shareholders’ rights to damage the interests of the Company or
other shareholders; not to abuse the independent legal person status of the Company
and the limited liability of shareholders to damage the interests of the creditors of
the Company; where a shareholder of the Company abuses his/her shareholder’s
rights and causes losses to the Company or other shareholders, he/she shall be liable
for compensation in accordance with the law; where a shareholder of the Company
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-6 –


--- page 684 ---
abuses the independent legal person status of the Company and the limited liability
of shareholders to evade repayment of debts and seriously damage the interests of
the creditors of the Company, he/she shall be jointly and severally liable for the
debts of the Company;
(5) other obligations imposed by laws, administrative regulations and the Articles of
Association.
Shareholders are not liable to make any further contribution to the share capital other than
as agreed by subscribers of relevant shares on subscription unless otherwise provided.
Shareholders’ General Meetings
The Shareholders’ General Meeting is the organ of authority of the Company and shall
exercise the following functions and powers in accordance with laws:
(1) to decide on the Company’s business policies and investment plans;
(2) to elect and replace Directors, and Supervisors who are not representatives of the
employees and to decide on matters relating to the remuneration of Directors and
Supervisors;
(3) to examine and approve reports of the Board of Directors;
(4) to examine and approve reports of the Supervisory Committee;
(5) to examine and approve the Company’s annual financial budget and final accounts;
(6) to examine and approve the Company’s profit distribution plans and loss recovery
plans;
(7) to resolve on the increase or reduction of the Company’s registered capital;
(8) to resolve on the issue of bonds, issue of shares of any class, warrants and other
similar securities and listing of the Company;
(9) to resolve on the merger, division, dissolution, liquidation or change of corporate
form of the Company;
(10) to amend the Articles of Association;
(11) to resolve on the appointment, dismissal or non-reappointment of the accounting
firm of the Company;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-7 –


--- page 685 ---
(12) to examine and approve guarantees which shall be approved by the Shareholders’
General Meeting;
(13) to consider and approve matters relating to the Company’s purchase or disposal of
material asset guarantees with an amount exceeding 30% of the total assets of the
Company within one year;
(14) Deliberating and approving matters concerning the changes of uses of the funds
raised.
(15) to consider share incentive plans and employee stock option plans;
(16) to consider other matters required by the laws, administrative regulations, the
securities regulatory authorities of the place where the Company’s shares are listing
or the Articles of Association to be decided by the Shareholders’ General Meeting;
The above matters within the terms of reference of the general meeting shall be
considered and decided by the general meeting. The above-mentioned powers of general
meeting shall not be exercised by the Board or other institutions or individuals by way of
authorization. In addition to the above matters, the general meeting may authorize or entrust
the Board and/or its authorized persons to handle the matters authorized or entrusted by it
without violating the laws and regulations and the mandatory provisions of the relevant laws,
regulations and regulatory rules of the place where the Company’s shares are listing, and the
delegation of authority shall be clear and specific and shall be made in writing, but shall not
delegate to the Board of Directors powers and functions that are legally exercised by the
general meeting of shareholders.
Any external guarantee of the Company shall be considered and approved by the Board.
Any guarantee provided by the Company to its shareholders or de facto controllers shall be
subject to the resolution of the Shareholders’ General Meeting.
Under the following circumstances, the external guarantees of the Company must be
deliberated and adopted at the shareholders’ meeting:
(1) Guarantees provided after the total amount of external guarantees provided by the
Company and its controlled subsidiary companies exceeds 50% of the Company’s
audited net assets of the last period;
(2) Guarantees provided after the total amount of external guarantees provided by the
Company exceeds 30% of the Company’s audited net assets of the last period;
(3) Guarantees provided by the Company within one year exceed 30% of the Company’s
audited total assets of the last period;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-8 –


--- page 686 ---
(4) Guarantees provided for a party whose liability-asset ratio exceeds 70%;
(5) A single guarantee which exceeds 10% of the Company’s audited net assets of the
last period;
(6) Guarantees provided for shareholders, the actual controller, and the affiliates
thereof.
Except in exceptional circumstances such as a crisis, the Company will not enter into a
contract with a person other than a director, general manager or other senior manager to whom
the management of the whole or significant part of the business of the Company is entrusted,
except with the approval of a special resolution of the general meeting.
The Shareholders’ General Meetings are divided into annual Shareholders’ General
Meetings and extraordinary Shareholders’ General Meetings. The annual Shareholders’
General Meeting shall be held once every year within six months after the end of the previous
accounting year.
Extraordinary Shareholders’ General Meetings shall be convened when necessary. The
Board shall convene an extraordinary Shareholders’ General Meeting within two months from
the date of occurrence of any of the following circumstances:
(1) the number of Directors is less than the number stipulated in the Company Law or
less than two-thirds of the number specified in the Articles of Association;
(2) when the unrecovered losses of the Company amount to one-third of the total
amount of its paid-up share capital;
(3) shareholders individually or jointly holding more than 10% of the Company’s shares
request in writing;
(4) when deemed necessary by the Board or as proposed by the Supervisory Committee;
(5) when proposed by more than two independent non-executive Directors;
(6) other circumstances stipulated by the laws and regulations of the PRC, the securities
regulatory authorities of the place where the shares of the Company are listed and
the Hong Kong Stock Exchange.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-9 –


--- page 687 ---
Convening of Shareholders’ General Meetings
Shareholders’ General Meetings shall be convened by the Board in accordance with laws.
Shareholders who request to convene an extraordinary Shareholders’ General Meeting or
class Shareholders’ General Meeting shall follow the following procedures:
(1) Shareholders individually or jointly holding more than 10% of the shares carrying
the right to vote at the meeting sought to be held may sign one or more written
requests of identical form and substance requesting the Board to convene an
extraordinary Shareholders’ General Meeting or a class meeting and stating the
subject of the meeting. The Board shall convene an extraordinary Shareholders’
General Meeting or a class Shareholders’ General Meeting as soon as possible upon
receipt of the aforesaid written request. The aforesaid number of shares held shall
be calculated as at the date of the written request.
(2) If the board of directors agrees to hold the meeting, the board of directors shall issue
a notice of holding a shareholder’s meeting within five days after a resolution is
made at a meeting of the board of directors, but any modification to the original
request in the notice shall be subject to the consent of the relevant shareholder or
shareholders.
(3) If the board of directors disagrees to hold the meeting or no feedback is provided
within 10 days after the request is received, the shareholder holding or shareholders
aggregately holding 10% or more of the shares of the Company shall have the right
to propose the holding of a special shareholders’ meeting to the board of
supervisors, but shall request it in writing.
(4) If the board of supervisors agrees to hold the meeting, it shall issue a notice of
holding a shareholder’s meeting within five days after receiving the request, but any
modification to the original request in the notice shall be subject to the consent of
the relevant shareholder or shareholders.
(5) If the board of supervisors fails to issue a notice of holding a shareholders’ meeting
within the prescribed time limit, it shall be deemed that the board of supervisors fails
to convene and preside over the shareholders’ meeting, and a shareholding holding
or shareholders aggregately holding 10% or more of the shares of the Company for
90 consecutive days may convene and preside over the meeting on its or their own
initiative.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-10 –


--- page 688 ---
Proposals at Shareholders’ General Meetings
When a company convenes a Shareholders’ General Meeting, shareholders individually or
jointly holding more than 3% of a company’s shares may submit ad hoc proposals in writing
to the convener 10 days before the Shareholders’ General Meeting is convened. The convener
shall issue a supplementary notice of the Shareholders’ General Meeting to other shareholders
within two days after receipt of the proposal, and include the matters in the proposal which are
within the scope of duties of the Shareholders’ General Meeting into the agenda of the meeting
and submit it to the Shareholders’ General Meeting for consideration.
Except for the circumstances specified above, the convener shall not amend the proposals
set out in the notice of the Shareholders’ General Meeting or add new proposals after the
issuance of the notice of the Shareholders’ General Meeting.
Proposals not set out in the notice of the Shareholders’ General Meeting or not complying
with the Articles of Association shall not be voted on or resolved at the Shareholders’ General
Meeting.
Proposals of the Shareholders’ General Meeting shall meet the following conditions:
(1) the content does not conflict with the laws, regulations and the Articles of
Association, and is within the scope of business of the Company and the terms of
reference of the Shareholders’ General Meeting;
(2) it shall have definite topics to discuss and specific matters to resolve;
(3) it shall be submitted to the Board in writing.
Notice of Shareholders’ General Meeting
When the Company is to hold an annual Shareholders’ General Meeting, it shall issue a
written notice 20 days (excluding the date of the notice and the meeting) prior to the meeting
informing all the registered shareholders of the matters to be considered at the meeting as well
as the date and place of the meeting by way of an announcement. Notice of an extraordinary
Shareholders’ General Meeting shall be given by way of an announcement to all shareholders
whose names appear on the register of shareholders 15 days before the meeting (excluding the
date of the notice and the meeting).
An extraordinary Shareholders’ General Meeting shall not decide on matters not stated in
the notice.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-11 –


--- page 689 ---
The notice of a Shareholders’ General Meeting shall be made in writing and include the
following:
(1) be made in writing;
(2) the time, place and date of the meeting;
(3) The matters and proposals submitted to the meeting for deliberation;
(4) provide such information and explanation as are necessary for the shareholders to
exercise an informed judgment on the proposals before them. This principle includes
(but not limited to), where a proposal is made to amalgamate the Company with
another, to repurchase shares, to reorganize the share capital, or to restructure the
Company in any other way, the terms of the proposed transaction must be provided
in detail together with copies of the proposed agreement, if any, and the cause and
effect of such proposal must be properly explained;
(5) contain a disclosure of the nature and extent, if any, of the material interests of any
Director, Supervisor, general manager or other Senior Management in the proposed
transaction;
(6) contain the full text of any special resolution proposed to be passed at the meeting;
(7) contain conspicuously a statement that a shareholder entitled to attend and vote is
entitled to appoint one or more proxies to attend and vote on his behalf and that a
proxy need not be a shareholder of the Company;
(8) specify the time and place for lodging proxy forms for voting at the meeting;
(9) contain the registration date of shareholders entitled to attend the General Meeting;
(10) contain the name and telephone number of the permanent contact person of the
meeting;
(11) V oting time and voting procedures by online or other means;
(12) other matters stipulated by laws, administrative regulations and regulatory
documents.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-12 –


--- page 690 ---
Convening of Shareholders’ General Meetings
Any shareholder entitled to attend and vote at a Shareholders’ General Meeting shall be
entitled to appoint one or more persons (whether a shareholder or not) as his proxy to attend
and vote on his behalf. A proxy so appointed shall be entitled to exercise the following rights
in accordance with the authorization from that shareholder:
(1) have the same right as the shareholder to speak at the Shareholders’ General
Meeting;
(2) have authority to demand or join in demanding a poll;
(3) Unless otherwise required by the laws and regulations of the PRC, the requirements
of the securities regulatory authorities of the place where the shares of the Company
are listing and the requirements of the Hong Kong Stock Exchange, exercise the
right to vote by hand or on a poll, but when more than one proxy is appointed, the
proxies may only vote on a poll.
The instrument appointing a proxy shall be in writing under the hand of the principal or
his attorney duly authorized in writing, or if the principal is a legal person either under seal or
under the hand of a Director or attorney duly authorized.
The instrument appointing a voting proxy shall be placed at the domicile of the Company
or at such other place as specified in the notice of meeting at least 24 hours prior to the meeting
at which the proxy is authorized to vote or 24 hours prior to the specified time of the voting.
If the proxy form is signed by a person authorized by the principal, the power of attorney or
other authorization documents shall be notarized. The notarized power of attorney or other
authorization documents shall, together with the instrument appointing the voting proxy, be
deposited at the Company’s domicile or at such other place as specified in the notice of the
meeting.
If the principal is a legal person, its legal representative or such person as is authorized
by resolution of its Board of Directors or other governing body to act as its representative may
attend at the Shareholders’ General Meeting of the Company, and if such corporate member has
appointed a proxy to attend any meeting, such corporate member shall be deemed to be present
in person. A corporate shareholder may sign a voting proxy by a person duly authorized by him.
Such a form shall contain a statement that in the absence of instructions from the
shareholder, the proxy may vote as he thinks fit.
A vote given in accordance with the terms of an instrument of proxy shall be valid
notwithstanding the previous death or loss of capacity of the principal or revocation of the
proxy or of the authority under which the proxy was executed, or the transfer of the share in
respect of which the proxy is given, provided that no notice in writing of such death, loss of
capacity, revocation or transfer as aforesaid shall have been received by the Company before
the commencement of the meeting at which the proxy is used.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-13 –


--- page 691 ---
Resolutions of Shareholders’ General Meetings
Resolutions of the Shareholders’ General Meeting shall be divided into ordinary
resolutions and special resolutions. To adopt an ordinary resolution, votes representing more
than one-half of the voting rights represented by the shareholders (including proxies) present
at the meeting must be exercised in favor of the resolution in order for it to be passed. To adopt
a special resolution, votes representing more than two-thirds of the voting rights represented
by the shareholders (including proxies) present at the meeting must be exercised in favor of the
resolution in order for it to be passed.
The following shall be resolved by an ordinary resolution at a Shareholders’ General
Meeting:
(1) work reports of the Board and the Supervisory Committee;
(2) profit distribution plans and loss recovery plans formulated by the Board;
(3) appointment and removal of the members of the Board and the Supervisory
Committee (except for the employee representative Supervisors) and their
remuneration and method of payment;
(4) annual financial budgets, final accounts, balance sheets, income statements and
other financial statements of the Company;
(5) The annual report of the company;
(6) Resolution on the employment, dismissal or non-renewal of the company’s
accounting firm and its remuneration;
(7) other matters other than those required by the laws, administrative regulations, the
requirements of the securities regulatory authorities of the place where the shares of
the Company are listing, or the Articles of Association to be adopted by special
resolutions.
The following shall be resolved by a special resolution at a Shareholders’ General
Meeting:
(1) the increase in or decrease of the Company’s registered capital;
(2) division, merger, splitting, dissolution, liquidation and change of corporate form of
the Company;
(3) amendments to the Articles of Association;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-14 –


--- page 692 ---
(4) the Company’s purchase or sale of material assets with a guaranteed amount
exceeding 30% of the Company’s total assets within one year;
(5) Equity incentive plans;
(6) any other matters required by the laws, administrative regulations or the Articles of
Association, and matters considered by the Shareholders’ General Meeting, by way
of an ordinary resolution, to be of a nature which may have a material impact on the
Company and should be adopted by a special resolution;
(7) other matters required by the requirements of the securities regulatory authorities of
the place where the shares of the Company are listing to be approved by special
resolutions.
The nomination methods and procedures for the election of Directors and Supervisors
(excluding employee representative Supervisors) at the Shareholders’ General Meeting are as
follows:
(1) Shareholders who hold or jointly hold more than 3% of the Company’s total
outstanding shares with voting rights may propose candidates for Directors and
non-employee representative Supervisors to the Shareholders’ General Meeting by
way of written proposal, provided that the number of candidates nominated shall
comply with the provisions of the Articles of Association and shall not exceed the
number of candidates to be elected. The aforesaid proposal made by shareholders to
the Company shall be delivered to the Company at least seven days prior to the date
of the Shareholders’ General Meeting.
(2) The Directors and Supervisors may, within the number specified in the Articles of
Association and based on the number of candidates to be elected, propose a list of
candidates for Directors and Supervisors, and submit the list to the Board of
Directors and the Supervisory Committee for review. After the Board of Directors
and the Supervisory Committee have reviewed and resolved to determine the
candidates for Directors and Supervisors, they shall submit a written proposal to the
Shareholders’ General Meeting.
(3) A written notice of the intention to nominate a candidate for election as a Director
or a Supervisor who is not an employee representative, the acceptance of nomination
by such candidate and the relevant written materials of the nominated candidate
shall be given to the Company not less than ten days prior to the date of the
Shareholders’ General Meeting (such ten-day period shall commence no earlier than
the second day after the issue of the notice of the meeting at which the election shall
be conducted and end no later than ten days prior to the date of the Shareholders’
General Meeting). The Board of Directors and the Supervisory Committee shall
provide shareholders with the resumes and basic information of the candidates for
Directors and Supervisors.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-15 –


--- page 693 ---
(4) The period given to the Company for nominating candidates for Directors and
Supervisors and the period for the nominees to submit the aforesaid notice and
documents (such period shall commence from the day following the date of the
notice of the Shareholders’ General Meeting) shall be no less than ten days.
(5) The Shareholders’ General Meeting shall vote on each candidate for Director or
Supervisor one by one.
DIRECTORS AND BOARD OF DIRECTORS
Directors
Directors shall be elected or replaced at Shareholders’ General Meetings and shall each
serve a term of three years, subject to re-election upon expiry of the said term.
If the number of Directors falls below the minimum quorum as a result of a Director’s
resignation, such Director shall continue to perform his/her duties as a Director in accordance
with the laws, administrative regulations, departmental rules and the Articles of Association
until a new Director is elected.
The directors shall comply with the laws, administrative regulations and the articles of
association of the company, and shall owe a duty of loyalty and diligence to the company.
The Board
The Company has a Board of Directors, which is accountable to the Shareholders’
General Meeting. The Board of Directors shall comprise twelve (12) directors. The Board shall
have a chairman. The chairman shall be elected and removed by more than half of all the
Directors for a term of three years and may be re-elected.
The Board is held accountable to Shareholders’ General Meeting and exercises the
following powers:
(1) to convene Shareholders’ General Meetings and report its work to the Shareholders’
General Meetings;
(2) to implement the resolutions of the Shareholders’ General Meeting;
(3) to decide on the Company’s business plans and investment plans;
(4) to formulate the Company’s annual financial budget and final accounts;
(5) to formulate the Company’s profit distribution plan and loss recovery plan;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-16 –


--- page 694 ---
(6) to formulate the proposals for increase or reduction of the Company’s registered
capital and the issue and listing of shares, bonds or other securities of the Company;
(7) to formulate plans for material acquisitions, purchase of the Company’s shares,
merger, division, dissolution and change of corporate form of the Company;
(8) to decide on the Company’s external investment, acquisition and disposal of assets,
pledge of assets, external guarantees, entrusted financial management, connected
transactions, external donations and other matters within the scope authorized by the
general meeting;
(9) to determine the establishment of the Company’s internal management structure;
(10) to decide on the appointment or dismissal of the Company’s general manager,
secretary to the Board; to appoint or dismiss the Company’s deputy general manager
(refer to the president, vice president or other senior management personnel
appointed by the board of directors), chief financial officer, board secretary and
other Senior Management as nominated by the general manager, and to decide on
their remuneration, rewards and punishments;
(11) to formulate the Company’s basic management system;
(12) to formulate proposals for any amendment to the Articles of Association;
(13) investment, acquisition or disposal of assets, financing, connected transactions and
other matters required to be decided by the Board in accordance with the Listing
Rules of the Hong Kong Stock Exchange;
(14) to manage the information disclosure of the Company;
(15) to propose to the general meeting the appointment or replacement of the accounting
firm that provides audit service of annual financial statements to the Company;
(16) to listen to the work report of the general manager of the Company and inspect the
work of the general manager;
(17) to authorize the chairman of the board to exercise certain powers;
(18) to exercise other functions and powers conferred by laws, administrative
regulations, departmental rules or the Articles of Association.
The Board of Directors shall approve the above resolutions by more than half of all
Directors.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-17 –


--- page 695 ---
The chairman of the Board of Directors exercises the following powers:
(1) to preside over Shareholders’ General Meetings and convene and preside over
meetings of the Board;
(2) to inspect the implementation of resolutions of the Board;
(3) other powers stipulated by laws and regulations or the Articles of Association and
authorized by the Board.
Where the chairman is unable to perform his/her duties, a Director nominated by more
than half of the Directors shall perform his/her duties.
Board meetings comprise regular meetings and ad hoc meetings. Board meetings shall be
held at least four times a year and shall be convened by the chairman of the Board.
Under any of the following circumstances, the chairman of the Board shall convene an
extraordinary meeting of the Board within ten days after receipt of the proposal:
(1) proposed by shareholders representing more than one tenth of the voting rights;
(2) jointly proposed by more than one-third of the Directors;
(3) proposed by the Supervisory Committee.
Board Secretary
The Company shall have a secretary to the Board. The secretary to the Board is a member
of the Senior Management of the Company.
The secretary to the Board shall be a natural person who has the requisite professional
knowledge and experience, and shall be appointed or dismissed by the Board. His/her primary
responsibilities are:
(1) to responsible for the preparations for the meetings of the shareholders’ meeting and
the board of directors;
(2) to ensure that the Company has complete organizational documents and records;
(3) to ensure that the Company prepares and submits the reports and documents required
by the competent authorities in accordance with the laws;
(4) to ensure that the register of shareholders of the Company is properly maintained
and that persons entitled to the relevant records and documents of the Company are
furnished with such records and documents without delay;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-18 –


--- page 696 ---
(5) handling of information disclosure;
(6) to perform other functions and powers conferred by the Board and required by laws,
regulations and the stock exchange where the Company’s shares are listed.
Directors or other Senior Management personnel of the Company may concurrently serve
as the secretary to the Board. The accountant of the accounting firm engaged by the Company
shall not act as the secretary to the Board.
When a Director serves concurrently as the secretary to the Board, such Director may not,
in his/her or her dual capacity, take any action which is required to be taken separately by a
Director and the secretary to the Board.
General Manager and Other Senior Management
The Company shall have one general manager, several deputy general managers and other
Senior Management officers, one secretary to the Board, who shall be appointed or dismissed
by the Board. The general manager, deputy general manager, chief financial officer, secretary
to the Board and other personnel determined by the Board are the Senior Management of the
Company.
A person who holds an administrative position other than director and supervisor in an
entity where the Company holds controlling shares may not serve as an officer of the company.
An officer of the Company only receive salaries from the Company and the controlling
shareholder shall not pay salaries thereto on behalf of the Company.
The general manager shall be accountable to the Board and exercise the following
functions and powers:
(1) to be in charge of the production, operation and management of the Company, to
organize the implementation of the resolutions of the Board and to report to the
Board;
(2) to organize the implementation of the Company’s annual business plans and
investment plans;
(3) to formulate plans for the establishment of the Company’s internal management
structure;
(4) to draft the Company’s basic management system;
(5) to formulate the specific rules and regulations of the Company;
(6) to propose the appointment or dismissal of the deputy general manager, chief
financial officer and other Senior Management of the Company;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-19 –


--- page 697 ---
(7) to appoint or dismiss management personnel other than those required to be
appointed or dismissed by the Board;
(8) to propose to convene an extraordinary meeting of the Board;
(9) to decide on other matters of the Company within the scope of authorization of the
Board;
(10) to decide on investment, acquisition or disposal, financing and other projects other
than those that must be decided by the Board and the Shareholders’ General
Meeting;
(11) other powers conferred by the Articles of Association or the Board.
SUPERVISORS AND THE SUPERVISORY COMMITTEE
Supervisors
The Supervisory Committee consists of three Supervisors, one of whom shall be the
chairman of the Supervisory Committee. The term of office of Supervisors shall be three years,
renewable upon re-election.
The Supervisory Committee consists of shareholder representative Supervisors and
employee representative Supervisors, and the number of employee representative Supervisors
shall not be less than one-third of the members of the Supervisory Committee. Among them,
shareholder representative Supervisors shall be elected and removed by the Shareholders’
General Meeting, and employee representative Supervisors shall be elected democratically
through the employee representatives’ meeting, employee meeting or otherwise.
Directors and Senior Management shall not act concurrently as Supervisors.
The Supervisory Committee
The Supervisory Committee shall be accountable to the Shareholders’ General Meeting
and exercise the following powers:
(1) to examine the Company’s financial affairs;
(2) to supervise the Directors and Senior Management in their performance of their
duties and to propose the removal of Directors and Senior Management who have
violated laws, administrative regulations, the Articles of Association or resolutions
of Shareholders’ General Meetings;
(3) to demand rectification by a Director or Senior Management when the acts of such
persons are harmful to the Company’s interest;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-20 –


--- page 698 ---
(4) to propose the convening of extraordinary general meetings and to convene and
preside over Shareholders’ General Meetings when the Board fails to perform the
duty of convening and presiding over Shareholders’ General Meetings under the
Company Law;
(5) to submit proposals to the Shareholders’ General Meeting;
(6) to propose to convene an extraordinary meeting of the Board;
(7) to initiate proceedings against Directors and senior management in accordance with
the relevant laws;
(8) to investigate any irregularities identified in the operation of the Company; if
necessary, to engage professional institutions such as accounting firms and law firms
to assist its work at the expense of the Company;
(9) other functions and powers stipulated by laws and regulations, the securities
regulatory authorities of the place where the Company’s shares are listing.
Supervisors shall be present at meetings of the Board.
Meetings of the Supervisory Committee shall be held at least once every six months and
convened by the chairman of the Supervisory Committee. If the chairman of the Supervisory
Committee is unable or fails to perform his/her duties, a Supervisor nominated by more than
half of the Supervisors shall convene and preside over the meetings of the Supervisory
Committee.
Notice of at least 10 days in advance shall be given for a regular meeting of the
Supervisory Committee and at least 5 days in advance shall be given for an extraordinary
meeting of the Supervisory Committee to all Supervisors. The staff of the Supervisory
Committee shall deliver the written notice of the meeting to all Supervisors by direct delivery,
fax, express mail or other electronic means. If service is made indirectly, confirmation shall
additionally be made by telephone and the appropriate record thereof shall be made. Where an
extraordinary meeting of the Supervisory Committee needs to be convened in emergency, the
notice of meeting may be sent by telephone or other verbal means at any time, but the convener
shall make explanations at the meeting.
Financial and Accounting System
The Company shall establish its financial and accounting system in accordance with the
laws, administrative regulations as well as the regulations formulated by the relevant
departments of the State.
The Company shall prepare a financial report at the end of each fiscal year, which shall
be reviewed and verified in accordance with the laws.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-21 –


--- page 699 ---
The financial statements of the Company shall, in addition to being prepared in
accordance with PRC accounting standards and regulations, be prepared in accordance with
either international accounting standards or that of the overseas place where the Company’s
shares are listed. If there is any material difference between the financial statements prepared
respectively in accordance with the two accounting standards, such difference shall be stated
in the notes to the financial statements. When the Company is to distribute its after-tax profits,
the lower of the after-tax profits as shown in the two financial statements shall be adopted.
The Board of Directors of the Company shall place before the shareholders at every
annual general meeting such financial reports as are required by any laws, administrative
regulations or directives promulgated by competent regional and central governmental
authorities to be prepared by the Company.
The Company shall not keep accounts other than those provided by law. The assets of the
Company shall not be deposited in any account opened in the name of any individual.
The interim results or financial information published or disclosed by the Company shall
be prepared in accordance with the PRC accounting standards and regulations as well as the
international accounting standards or the accounting standards of the overseas listing place.
The Company shall publish its financial reports twice every fiscal year in accordance with
the international accounting standards or the accounting standards of the overseas listing place,
that is, the interim financial report shall be published within 60 days after the end of the first
six months of each fiscal year and the annual financial report shall be published within 120
days after the end of each fiscal year.
The Company’s financial reports shall be made available for shareholders’ inspection at
the Company 20 days before the date of every annual general meeting. Each shareholder of the
Company shall be entitled to obtaining the financial reports mentioned above.
The Company shall deliver or send to each shareholder of overseas listed shares by
prepaid mail at the address registered in the register of shareholders the aforesaid financial
reports not less than 21 days before the date of every annual general meeting. Subject to the
laws, administrative regulations, departmental rules and the relevant requirements of the
securities regulatory authorities of the place where the Company’s shares are listed, the
Company may make announcements (including publication on the Company’s website).
Profit Distribution
When distributing each year’s after-tax profits, it shall set aside 10% of its profits into its
statutory reserve fund. It may not be set aside where the fund has over 50% of its registered
capital.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-22 –


--- page 700 ---
If its statutory reserve fund is not sufficient to make up losses of the previous year, profits
of the current year shall be applied to make up losses before allocation is made to the statutory
reserve fund pursuant to the above provisions.
After allocation of the statutory reserve fund from after-tax profits, it may, upon a
resolution passed at the Shareholders’ General Meeting, allocate discretionary reserve fund
from after-tax profits.
After the Company has made good its losses and made allocations to its statutory reserve
fund, the remaining profits are distributed in proportion to the number of shares held by the
shareholders.
If the Shareholders’ General Meeting distributes profits to shareholders before the
Company has made up for losses and made allocations to the statutory statutory reserve fund
in violation of the above provisions, the profits distributed in violation of the provisions must
be returned to the Company. Shares held by the Company shall not be entitled to any profit
distribution. The capital reserve fund comprises the following:
(1) any premium above the proceeds from share issuance at nominal value;
(2) other income required by the financial authority of the State Council to be included
in the capital reserve fund.
The premium received through issuance of shares at prices above par value and other
income required by the financial department of the State Council to be included as the capital
reserve fund shall be accounted for as the capital reserve fund of the Company.
The Company’s reserve fund shall be applied to make up losses of the Company, expand
its business operations or be converted to increase the registered capital of the Company.
However, the capital reserve fund may not be applied to make up the Company’s losses. Upon
the conversion of statutory reserve fund into capital, the balance of the statutory reserve fund
shall not be less than 25% of the registered capital of the Company before such conversion.
The Company may distribute dividends in either or both of the following ways:
(1) cash;
(2) shares.
After a resolution of the shareholders’ meeting of the Company is made regarding its
profit distribution plan, the board of directors must complete the distribution of dividends (or
shares) within two months after the shareholders’ meeting is held.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-23 –


--- page 701 ---
The Company shall appoint receiving agents for shareholders of overseas listing shares.
The receiving agents shall receive on behalf of such shareholders dividends declared and all
other monies owing by the Company in respect of the overseas listing shares, and hold such
monies on behalf of such shareholders pending payment to such shareholders.
The receiving agents appointed by the Company shall meet the requirements of the laws
or relevant regulations of the security exchange in the place of listing.
The receiving agents appointed on behalf of shareholders of overseas listing shares listed
on the Hong Kong Stock Exchange shall be the Company registered as a trust company under
the Trustee Ordinance of Hong Kong.
Accounting Firm
The Company shall engage an accounting firm in compliance with the provisions of the
Securities Law to audit its accounting statements to audit the Company’s annual financial
reports and review the Company’s other financial reports.
The period of engagement of the Company’s accounting firm shall commence at the
conclusion of this Annual General Meeting of the Company and end at the conclusion of the
next Annual General Meeting of the Company.
The auditing fees payable to the accounting firm shall be subject to the decision of the
shareholders’ meeting.
The engagement of an accounting firm must be subject to the decision of the
shareholders’ meeting, and the board of directors may not appoint any accounting firm before
the shareholders’ meeting makes the decision.
Where the Company dismisses or does not renew the engagement of an accounting firm,
the Company shall notify the accounting firm in advance, but when the dismissal of the
accounting firm is voted at a shareholders’ meeting, the accounting firm shall be allowed to
present its opinion.
Merger and Division of the Company
The Company may undergo combination in the form of merger or consolidation.
Where the Company undergoes combination, all parties to the combination shall enter
into a combination agreement, and prepare balance sheets and property checklists. The
Company shall, within 10 days after making the decision of combination, notify the creditors,
and shall make a public announcement on newspapers within 30 days.
Where the Company undergoes division, the property of the Company shall be divided
accordingly.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-24 –


--- page 702 ---
If undergoing division, the Company shall prepare a balance sheet and a property
checklist. After making a resolution on division, the Company shall notify creditors within ten
days, and publish an announcement on newspapers within 30 days.
When the Company reduces its registered capital, it must prepare a balance sheet and an
inventory of assets.
The Company shall notify its creditors within ten days and publish an announcement in
newspapers within 30 days after the resolution approving the reduction has been made. The
creditors shall have the right to require the Company to repay its debts within 30 days after
receiving the notice, or provide corresponding repayment guarantees within 45 days after the
announcement if the creditors have not received the notice.
Dissolution and Liquidation of the Company
The Company shall be dissolved and liquidated according to law in any of the following
circumstances:
(1) the term of business stipulated in the Articles of Association has expired or other
events of dissolution specified in the Articles of Association have occurred;
(2) the Shareholders’ General Meeting resolves to dissolve the Company;
(3) dissolution is necessary due to a merger or division of the Company;
(4) the business license is revoked, or the business is ordered to close down or is
revoked;
(5) where the Company encounters serious difficulties in its operation and management
and its continuance shall cause a significant loss to the interest of shareholders, and
where this cannot be resolved through other means, shareholders who hold more
than 10% of the total shareholders’ voting rights of the Company may present a
petition to the People’s Court for the dissolution of the Company, the People’s Court
dissolves in accordance with the law.
In the event of (1) above, the Company may carry on its existence by amending its
Articles of Association.
Where the Company is dissolved under the provisions of (1), (2), (4), (5) above, a
liquidation committee shall be established and the liquidation shall commence within 15 days
after the occurrence of an event of dissolution. The liquidation committee shall be composed
of the persons determined by the Directors or the Shareholders’ General Meeting. If a
liquidation committee is not established within the stipulated period to conduct liquidation, the
creditors may apply to the People’s Court to appoint relevant personnel to form a liquidation
committee to conduct liquidation.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-25 –


--- page 703 ---
The liquidation committee shall exercise the following functions and powers during the
liquidation period:
(1) to sort out the Company’s assets and prepare a balance sheet and an inventory of
assets respectively;
(2) to notify the creditors and make announcements;
(3) to deal with and settle the outstanding business of the Company;
(4) to pay all outstanding taxes and taxes arising in the course of liquidation;
(5) to settle claims and debts;
(6) to deal with the surplus assets of the Company after its debts have been paid off;
(7) to participation in civil lawsuits on behalf of the Company.
The liquidation committee shall notify creditors within ten days after its establishment
and shall make announcements in newspapers within 60 days. A creditor shall lodge his/her
claim with the liquidation committee within 30 days after receiving the notice or within 45
days after the date of announcement if he/she did not receive the notice.
When declaring their claims, the creditors shall explain the matters related to their claims
and provide supporting materials. The liquidation committee shall register the creditor’s rights.
During the period of declaration of claims, the liquidation committee shall not settle any
debts to creditors.
Upon liquidation of the Company’s properties and the preparation of the balance sheet
and inventory of assets, the liquidation committee shall draw up a liquidation plan and submit
it to the Shareholders’ General Meeting or the competent authority for confirmation.
The remaining assets of the Company after payment of liquidation expenses, wages,
social insurance expenses and statutory compensation of employees, outstanding taxes and the
Company’s debts shall be distributed to shareholders in proportion to their shareholdings.
During the liquidation period, the Company shall continue to exist but shall not carry out
any business activities unrelated to the liquidation. The assets of the Company shall not be
distributed to the shareholders before the settlements are made in accordance with the above
provisions.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-26 –


--- page 704 ---
The liquidation committee, having thoroughly examined the Company’s assets and having
prepared a balance sheet and an inventory of assets, discovers that the Company’s assets are
insufficient to pay its debts in full, it shall apply to the People’s Court for a declaration of
insolvency in accordance with law.
After the People’s Court has declared the Company bankrupt, the liquidation committee
shall hand over the affairs of the liquidation to the People’s Court.
Upon completion of the liquidation, the liquidation committee shall prepare a liquidation
report, shall be submitted to the Shareholders’ General Meeting or the competent authority for
confirmation. Within 30 days upon confirmation by the Shareholders’ General Meeting or the
competent authority, the liquidation committee shall submit the aforesaid documents to the
Company registration authority, applying for cancelation of the Company’s registration and
announce the termination of the Company.
Amendments to the Articles of Association
The Company may amend the Articles of Association in accordance with the laws,
administrative regulations, the securities regulatory authority at the place where the Company’s
shares are listing, and the Articles of Association.
The Company shall amend the Articles of Association in any of the following
circumstances:
(1) After the amendment of the Company Law or any other relevant law or
administrative regulation, any provisions of these Bylaws are in conflict with the
amended law or administrative regulation;
(2) Any changes of the Company result in inconsistency with the relevant provisions of
these Bylaws;
(3) The shareholders’ meeting decides to amend these Bylaws.
The amendments to the Articles of Association, if there is any change relating to the
registered particulars of the Company, application shall be made for registration of the changes
in accordance with law. The Board of Directors shall amend these Articles of Association in
accordance with the resolution of the General Meeting of Shareholders to amend the Articles
of Association and the approval of the relevant competent authorities. Amendments to the
Articles are information required to be disclosed by laws and regulations and shall be
announced in accordance with the provisions.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-27 –


--- page 705 ---
FURTHER INFORMATION ABOUT THE COMPANY
Incorporation
The Company was established as a limited liability company under the laws of the PRC
on October 25, 2017 and was converted into a joint stock company with limited liability on
April 7, 2022.
The Company has established a place of business in Hong Kong at Unit 2 LG 1 Mirror
Tower 61, Mody Road, Tsim Sha Tsui, Kowloon, Hong Kong. The Company was registered as
a non-Hong Kong company in Hong Kong under Part 16 of the Companies Ordinance and the
Companies (Non-Hong Kong Companies) Regulation (Chapter 622J of the Laws of Hong
Kong) on June 8, 2022, with Ms. Zhang Xiao of 40th Floor, Dah Sing Financial Centre, No.
248 Queen’s Road East, Wanchai, Hong Kong appointed as the Hong Kong authorized
representative of the Company for acceptance of the service of process and any notices
required to be served on the Company in Hong Kong.
As the Company was incorporated in the PRC, its operations are subject to the relevant
laws and regulations of the PRC. A summary of the relevant aspects of laws and regulations
of the PRC and the Articles of Association is set out in Appendix IV and Appendix V ,
respectively.
Changes in the Share Capital of the Company
On October 25, 2017, the predecessor of the Company was established as a limited
liability company under the laws of the PRC with a registered capital of RMB100,000,000.
Major changes to the share capital of the Company are summarized as follows:
On July 28, 2018, the registered capital of the Company was increased from
RMB100,000,000 to RMB300,000,000, the increased registered capital of which was
contributed by Yongqing Technology and Shanghai Fuqin.
On August 16, 2021, the registered capital of the Company was increased from
RMB300,000,000 to RMB1,200,000,000, the increased registered capital of which was
contributed by Yongqing Technology, Wenzhou Jingli, Wenzhou Ruili and Wenzhou Qingshan.
On November 22, 2021, the registered capital of the Company was increased from
RMB1,200,000,000 to RMB1,463,414,634, the increased registered capital of which was
contributed by Yongqing Technology and Wenzhou Zhuorui.
On April 7, 2022, the Company was converted into a joint stock company with limited
liability with its total registered capital of RMB1,463,414,634 converted into share capital with
an amount of RMB1,463,414,634.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-1 –


--- page 706 ---
On April 11, 2022, the registered capital of the Company was increased from
RMB1,463,414,634 to RMB1,724,603,158, the increased registered capital of which was
contributed by Qingdao SAIC, Jiaxing SAIC and Wenzhou Transportation Group.
On June 14, 2022, the registered capital of the Company was increased from
RMB1,724,603,158 to RMB1,763,876,299, the increased registered capital of which was
contributed by Yongqing Technology.
On August 4, 2022, the registered capital of the Company was increased from
RMB1,763,876,299 to RMB2,009,240,027, the increased registered capital of which was
contributed by Tianjin Hexie Haihe, Wuhu Wenming, Pingan Investment, CNGR, Wenzhou
Chengyuan, Jiaxing Yuzhi, Guangdong Guangxin Private Equity, Wenzhou Zhenxu, CITICS
Investment, Guangdong Jiarui, XCMG No. 1 Fund, Jiaxing Rongpu, Wuhan Yunshang, Jiaxing
Aohao, Junying Changhong, Mr. Zhang Xiangkang, Huzhou Lianjie, Silver Saddle Fund and
Zhejiang University Education Foundation.
On October 25, 2022 the registered capital of the Company was increased from
RMB2,009,240,027 to RMB2,160,803,850, the increased registered capital of which was
contributed by Foshan Manufacturing Transformation & Development Fund, SCGC, HOPU
Orient, Longwan Financial Holdings, Wenzhou Gongchuang, Chuangyi Chengtun, Zhongyuan
Hejia, Suzhou NewMargin, Hangzhou Longqi, Guangdong Guangxin Equity Investment,
Xiamen Fuxinrui, Qingdao Heaven-Sent, Lishui Xiangxi and 3W Global I.
Save as disclosed above, there has been no alteration in the share capital of the Company
within two years immediately preceding the date of this prospectus.
Resolutions Passed by Our Shareholders’ General Meetings in Relation to the Global
Offering
At the extraordinary general meeting of the Shareholders held on November 11, 2022, the
following resolutions, among other things, were duly passed:
(i) the issue by the Company of H Shares with a nominal value of RMB1.00 each and
such H Shares be listed on the Hong Kong Stock Exchange;
(ii) the number of H shares to be issued shall be up to 25% of the enlarged issued share
capital of the Company upon the completion of the Global Offering;
(iii) subjects to the filing procedure with the CSRC, upon completion of the Global
Offering, 9,778,041 Domestic Unlisted Shares in aggregate held by 3W Global I will
be converted into H Shares on a one-for-one basis;
(iv) authorization of the Board or its authorized individual to handle all matters relating
to, among other things, the Global Offering, the issue and listing of H Shares on the
Hong Kong Stock Exchange; and
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-2 –


--- page 707 ---
(v) subject to the completion of the Global Offering, the conditional adoption of the
revised Articles of Association, which shall become effective on the Listing Date.
At the extraordinary general meeting of the Shareholders held on June 9, 2023, the
following resolutions, among other things, were duly passed:
(i) subjects to the filing procedure with the CSRC, upon completion of the Global
Offering, 181,529,897 Domestic Unlisted Shares in aggregate held by 23
Shareholders will be converted into H Shares on a one-for-one basis; and
(ii) the further revision of the Articles of Association, which shall become effective on
the Listing Date.
Our Subsidiaries
A summary of the corporate information and the particulars of our subsidiaries are set out
in Note 1 to the Accountants’ Report as set out in Appendix I.
The following subsidiaries of the Company were incorporated within two years
immediately preceding the date of this prospectus:
No. Name Place of Incorporation Date of Incorporation
1 Guangdong REPT
BATTERO
PRC July 27, 2021
2 REPT SAIC PRC April 15, 2022
3 Zhejiang Ruiyuan PRC June 6, 2022
4 Wenzhou Qianshi PRC November 15, 2021
5 Chongqing REPT
BATTERO
PRC March 1, 2023
6 BatteroTech Jiaxing PRC April 11, 2023
7 Foshan REPT BATTERO PRC October 13, 2023
8 REPT Battero Germany Germany November 3, 2023
9 Infinitude Holding Cayman Islands November 15, 2023
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-3 –


--- page 708 ---
The following sets out the changes in the registered capital of subsidiaries of our Group
within the two years immediately preceding the date of this prospectus:
No. Name Change
Registered Capital
After Change Date of Change
1 BatteroTech
Shanghai
increased RMB1,000 million August 23, 2021
2 BatteroTech
Jiashan
increased RMB600 million September 2, 2021
increased RMB820 million June 16, 2022
3 Guangdong
REPT
BATTERO
increased RMB500 million June 17, 2022
Save as disclosed above, there has been no alteration in the registered capital of
subsidiaries of the Company within two years immediately preceding the date of this
prospectus.
So far as is known to any Director or chief executive of the Company, as at the Latest
Practicable Date, the following persons are directly or indirectly interested in 10% or more of
the issued voting shares of the following subsidiaries of the Company:
No.
Name of
Subsidiary Name of Shareholder
Amount of
Registered
Capital Held
Approximate
Percentage of
Interest as of the
Latest
Practicable Date
1 Guangdong REPT
BATTERO
Wenzhou Qianshi RMB100.0 million 20.0%
2 BatteroTech
Shanghai
Wenzhou Chenshan RMB143.0 million 14.3%
3 REPT SAIC Liuzhou SAIC
Technology
Development Co., Ltd.
RMB528.0 million 44.0%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-4 –


--- page 709 ---
FURTHER INFORMATION ABOUT THE BUSINESS
Summary of Material Contract
The Group has entered into the following contract (not being contract entered into in the
ordinary course of business) within the two years immediately preceding the date of this
prospectus that is or may be material:
(a) the Hong Kong Underwriting Agreement.
Intellectual Property
As at the Latest Practicable Date, the following intellectual property rights are material
to the Group’s business:
Trademarks
As at the Latest Practicable Date, the Group had registered the following trademarks
which are material to its business:
No. Trademark Class
Registered
Owner
Place of
Registration
Registration
Number Expiry Date
1.
 37 the Company PRC 31348178 June 6, 2029
2.
 9 the Company PRC 31353778 March 27, 2030
3.
 7 BatteroTech
Shanghai
PRC 52711059 August 27, 2031
4.
 9 BatteroTech
Shanghai
PRC 52694890 August 20, 2031
5.
 12 BatteroTech
Shanghai
PRC 52699601 August 20, 2031
6.
 42 BatteroTech
Shanghai
PRC 52699610 August 27, 2031
7.
 9 BatteroTech
Shanghai
PRC 49206722 July 20, 2032
8.
 7 BatteroTech
Shanghai
PRC 49216683 March 27, 2031
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-5 –


--- page 710 ---
No. Trademark Class
Registered
Owner
Place of
Registration
Registration
Number Expiry Date
9.
 9 BatteroTech
Shanghai
PRC 49204230 March 27, 2031
10.
 12 BatteroTech
Shanghai
PRC 49223139 March 27, 2031
11.
 42 BatteroTech
Shanghai
PRC 49198094 March 27, 2031
12.
 7 BatteroTech
Shanghai
PRC 49222324 June 13, 2031
13.
 9 BatteroTech
Shanghai
PRC 49205803 June 13, 2031
14.
 12 BatteroTech
Shanghai
PRC 49214536 June 13, 2031
15.
 7 BatteroTech
Shanghai
PRC 40909128 July 20, 2030
16.
 9, 35,
40, 42
the Company Hong Kong 305975722 June 3, 2032
17.
 7 the Company PRC 67743768 April 6, 2033
18.
 4 the Company PRC 66800627 February 27,
2033
19.
 6 the Company PRC 66806688 February 27,
2033
20.
 7 the Company PRC 66797154 February 27,
2033
21.
 9 the Company PRC 66813500 February 27,
2033
22.
 12 the Company PRC 66801767 February 27,
2033
23.
 35 the Company PRC 66795307 February 27,
2033
24.
 36 the Company PRC 66793614 February 27,
2033
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-6 –


--- page 711 ---
No. Trademark Class
Registered
Owner
Place of
Registration
Registration
Number Expiry Date
25.
 37 the Company PRC 66800922 February 27,
2033
26.
 39 the Company PRC 66795001 February 27,
2033
27.
 40 the Company PRC 66809606 February 27,
2033
28.
 42 the Company PRC 66805079 February 27,
2033
29.
 9 the Company the UK WO000000
1715845
October 7, 2032
30.
 35 the Company the UK WO000000
1715845
October 7, 2032
31.
 40 the Company the UK WO000000
1715845
October 7, 2032
32.
 42 the Company the UK WO000000
1715845
October 7, 2032
33.
 9 the Company Australia 2338468 October 7, 2032
34.
 35 the Company Australia 2338468 October 7, 2032
35.
 40 the Company Australia 2338468 October 7, 2032
36.
 42 the Company Australia 2338468 October 7, 2032
37.
 9 the Company PRC 66790646 May 13, 2033
38.
 4 the Company PRC 67734642 April 6, 2033
39.
 6 the Company PRC 67725429 April 6, 2033
40.
 12 the Company PRC 67727978 April 6, 2033
41.
 35 the Company PRC 67734628 April 6, 2033
42.
 36 the Company PRC 67725423 April 6, 2033
43.
 39 the Company PRC 67750653 April 6, 2033
44.
 4 the Company PRC 64751595 November 13,
2032
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-7 –


--- page 712 ---
No. Trademark Class
Registered
Owner
Place of
Registration
Registration
Number Expiry Date
45.
 6 the Company PRC 64735008 November 13,
2032
46.
 9 the Company PRC 64734970 November 13,
2032
47.
 12 the Company PRC 64751617 November 13,
2032
48.
 35 the Company PRC 64733450 November 13,
2032
49.
 36 the Company PRC 64729911 November 13,
2032
50.
 37 the Company PRC 64724312 November 13,
2032
51.
 39 the Company PRC 64734982 November 13,
2032
52.
 40 the Company PRC 64740631 November 13,
2032
53.
 42 the Company PRC 64747795 November 13,
2032
54.
 4 the Company PRC 66800627 February 27,
2033
55.
 6 the Company PRC 64800601 November 6,
2032
56.
 9 the Company PRC 66813500 February 27,
2033
57.
 12 the Company PRC 66801767 February 27,
2033
58.
 35 the Company PRC 66795307 February 27,
2033
59.
 36 the Company PRC 64817215 November 6,
2032
60.
 37 the Company PRC 64818010 November 13,
2032
61.
 39 the Company PRC 64807397 November 6,
2032
62.
 40 the Company PRC 66809606 February 27,
2033
63.
 42 the Company PRC 66805079 February 27,
2033
64.
 4 the Company PRC 64877292 November 20,
2032
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-8 –


--- page 713 ---
No. Trademark Class
Registered
Owner
Place of
Registration
Registration
Number Expiry Date
65.
 6 the Company PRC 64855631 November 13,
2032
66.
 9 the Company PRC 64870945 January 26, 2033
67.
 12 the Company PRC 64878572 November 20,
2032
68.
 36 the Company PRC 64855622 November 13,
2032
69.
 37 the Company PRC 64866658 January 26, 2033
70.
 39 the Company PRC 64877236 November 20,
2032
71.
 40 the Company PRC 64878549 January 19, 2033
72.
 42 the Company PRC 64855036 January 26, 2033
73.
 9 BatteroTech
Shanghai
PRC 65016128 November 13,
2032
74.
 12 BatteroTech
Shanghai
PRC 65039837 November 13,
2032
75.
 7 BatteroTech
Shanghai
PRC 65039828 November 13,
2032
76.
 42 BatteroTech
Shanghai
PRC 65025100 November 13,
2032
77.
 9 the Company European
Union
1715845 July 23, 2033
78.
 35 the Company European
Union
1715845 July 23, 2033
79.
 40 the Company European
Union
1715845 July 23, 2033
80.
 42 the Company European
Union
1715845 July 23, 2033
81.
 9 the Company Taiwan 2319365 August 31, 2033
82.
 35 the Company Taiwan 2319365 August 31, 2033
83.
 40 the Company Taiwan 2319365 August 31, 2033
84.
 42 the Company Taiwan 2319365 August 31, 2033
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-9 –


--- page 714 ---
No. Trademark Class
Registered
Owner
Place of
Registration
Registration
Number Expiry Date
85.
 9 the Company Philippines 1715845 September 27,
2033
86.
 35 the Company Philippines 1715845 September 27,
2033
87.
 40 the Company Philippines 1715845 September 27,
2033
88.
 42 the Company Philippines 1715845 September 27,
2033
89.
 40 the Company PRC 68216624 July 20, 2033
90.
 40 the Company PRC 68219292 July 20, 2033
91.
 9 the Company PRC 67637524 July 27, 2033
92.
 40 the Company PRC 67645966 June 27, 2033
93.
 9 the Company PRC 67712489 August 20, 2033
94.
 35 the Company PRC 67705661 July 6, 2033
95.
 40 the Company PRC 67750693 July 20, 2033
96.
 9 the Company Australia 2359361 August 13, 2033
97.
 35 the Company Australia 2359361 August 13, 2033
98.
 40 the Company Australia 2359361 August 13, 2033
99.
 42 the Company Australia 2359361 August 13, 2033
100.
 9 the Company the UK 1731664 August 14, 2033
101.
 35 the Company the UK 1731664 August 14, 2033
102.
 40 the Company the UK 1731664 August 14, 2033
103.
 42 the Company the UK 1731664 August 14, 2033
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-10 –


--- page 715 ---
No. Trademark Class
Registered
Owner
Place of
Registration
Registration
Number Expiry Date
104.
 9 the Company the UK UK000038
91951
September 5,
2033
105.
 9 the Company European
Union
18851919 July 4, 2033
106.
 9 the Company European
Union
18841431 July 28, 2033
107.
 35 the Company European
Union
18841431 July 28, 2033
108.
 40 the Company European
Union
18841431 July 28, 2033
109.
 42 the Company European
Union
18841431 July 28, 2033
110.
 9 the Company Australia 2344983 March 27, 2033
111.
 9 the Company Taiwan 111073945 August 31, 2033
112.
 35 the Company Taiwan 111073945 August 31, 2033
113.
 40 the Company Taiwan 111073945 August 31, 2033
114.
 42 the Company Taiwan 111073945 August 31, 2033
115.
 9 the Company PRC 71023487 October 27, 2033
116.
 40 the Company PRC 71019792 October 27, 2033
117.
 42 the Company PRC 71016421 October 27, 2033
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-11 –


--- page 716 ---
Domain Names
As at the Latest Practicable Date, the Group had registered the following domain name
which are material to its business:
No. Domain Name Registered Owner Expiry Date
1. www.chinarept.com the Company October 18, 2028
Patents
As at the Latest Practicable Date, the Group had registered the following patents which
are material to its business:
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
1. Cell of Coiled
Lithium-ion Battery
(ɓ၇જᔎό቞ᕎɿ
ڃ)
Invention the
Company
and REPT
Qingchuang
PRC ZL2018108062131 July 20, 2018 July 19, 2038
2. Electrode and Cell for
Coiled Lithium-ion
Battery (׵
જᔎό቞ᕎɿཥϫ
ڃ)
Invention the
Company
and REPT
Qingchuang
PRC ZL2018108061853 July 20, 2018 July 19, 2038
3. Current Control
Method Based on
Battery Load State
(༱
છՓ˙
ج)
Invention the
Company
and REPT
Qingchuang
PRC ZL201811417204X November 26,
2018
November 25,
2038
4. Method for Adjusting
the Alignment of
the Pole Lugs,
Coiled Cell of
Power Battery and
Preparation Method
(ɓ၇ሜ዆฽Ѐ࿁ᄁ
eਗɢཥ
ج)
Invention the
Company
PRC ZL2019108649060 September 9,
2019
September 8,
2039
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-12 –


--- page 717 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
5. Method and System
for Detecting the
Decay Degree of
Secondary Storage
Battery and Series
Module ( ɓ၇Ꮸ಻
ɚϣႅཥϫʿЕᑌ
˙
ʿӻ୕)
Invention the
Company
and REPT
Qingchuang
PRC ZL2020101046949 February 20,
2020
February 19,
2040
6. Storage Battery
Regulation Method,
Electronic Device
and Storage
Medium ( ɓ၇ႅཥ
eཥ
ɿண௪ձπᎷʧሯ)
Invention the
Company
and REPT
Qingchuang
PRC ZL202010402466X May 13,
2020
May 12,
2030
7. Lithium-ion Battery
Capacity Prediction
Method and System
(ඎཫ
ʿӻ୕)
Invention the
Company
and REPT
Qingchuang
PRC ZL2020112266726 November 6,
2020
November 5,
2030
8. Preparation of Silicon
Composite Material
and Anode
Electrode
Containing it
(ٙࣘ
฽
˪)
Invention the
Company
and REPT
Qingchuang
PRC ZL2020115471864 December 24,
2020
December 23,
2040
9. Method for Improving
Reliability of Power
Battery Pole Lug
Welding ( ౤৷ਗɢ
ཥϫ฽Ѐଔટ̙ቦ
ج)
Invention the
Company
and REPT
Qingchuang
PRC ZL2021100449434 January 13,
2021
January 12,
2041
10. Safety-type Lithium-
ion Battery and its
Preparation Method
(቞ᕎɿ
ج)
Invention the
Company
and REPT
Qingchuang
PRC ZL2021101145830 January 28,
2021
January 27,
2041
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-13 –


--- page 718 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
11. Method of Dry
Preparation of
Lithium
Replenishment
Anode Electrode for
Lithium Battery
(Ⴁ௪቞ཥ
˙
ج)
Invention the
Company
and REPT
Qingchuang
PRC ZL2021106635766 June 16,
2021
June 15,
2041
12. Method of Radiation
Lithium
Replenishment and
Electrode, Coiled
Cell and Battery
Included therein
(˙
ཥ
ձཥϫ)
Invention the
Company
and REPT
Qingchuang
PRC ZL2021106827713 June 21,
2021
June 20,
2041
13. Pomegranate-type
Silicon-based
Anode Material and
its Preparation
Method ( ɓ၇ᗳͩ
ࣘ
ج)
Invention the
Company
and REPT
Qingchuang
PRC ZL2021110001655 August 30,
2021
August 29,
2041
14. Battery Box and its
Heat Dissipation
Method ( ɓ၇ཥϫ
ج)
Invention the
Company
and REPT
Qingchuang
PRC ZL2021115589610 December 20,
2021
December 19,
2041
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-14 –


--- page 719 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
15. Low Cobalt Ternary
Cathode Material
for Lithium-ion
Battery and its
Preparation Method,
Cathode Electrode
of Lithium-ion
Battery and
Lithium-ion Battery
(ɓ၇቞ᕎɿཥϫ͜
ࣘ
e቞
ᕎɿཥϫ͍฽฽˪
ձ቞ᕎɿཥϫ)
Invention the
Company
and REPT
Qingchuang
PRC ZL2022100890347 January 26,
2022
January 25,
2042
16. Lithium
Replenishment
Isolation Film and
its Preparation
Method, Cell
Containing Lithium
Replenishment
Isolation Film and
its Preparation
Method ( ໾቞ཞᕎ
e
ཥ
ج)
Invention REPT
Qingchuang
PRC ZL2022101351669 February 15,
2022
February 14,
2042
17. Method of Secondary
Liquid Injection for
High Power
Lithium-ion Power
Battery (ۨ
ٙ
ج)
Invention the
Company
and REPT
Qingchuang
PRC ZL2022102497761 March 15,
2022
March 14,
2042
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-15 –


--- page 720 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
18. Current Collector,
Electrode and
Lithium-ion Battery
with Pore-Making
Function Coating
(ɓ၇ՈϞிˆ̌ঐ
᜗e฽
˪˸ʿ቞ᕎɿཥϫ)
Invention the
Company
and REPT
Qingchuang
PRC ZL2022103771439 April 12,
2022
April 11,
2042
19. Welding Method of
Secondary Battery
Pole Lugs and its
Battery ( ɓ၇ɚϣ
ଔટ˙
ʿՉཥϫ)
Invention the
Company
PRC ZL2022104663022 April 29,
2022
April 28,
2042
20. High-safety Ternary
Cathode Material
(ɧ
ࣘ)
Invention the
Company
and REPT
Qingchuang
PRC ZL2022105414421 May 19,
2022
May 18,
2042
21. Electrode and Cell for
Coiled Lithium-ion
Battery and its
Preparation Method
(
ぁ㙝㘴㘙㙓㘗
㘝㙦ཥϫ㗮ཥ฽㘪
㖽㘻ʿ㗳ཥϫ㘮㙞
Ԩ㗳㗫㗝㗮Ⴁி˙
ج)
Invention the
Company
Japan JP7132672B2 February 28,
2019
February 27,
2039
22. Electrode Plate and
Battery Cell of
Wound Lithium-Ion
Battery and Method
for Manufacturing
Same
Invention the
Company
U.S. US11322807B2 February 28,
2019
February 27,
2039
23. Secondary Battery
(ɚϣཥϫ)
Utility
Model
REPT
Qingchuang
PRC ZL2021227726332 November 12,
2021
November 11,
2031
24. Battery Module and
its Battery Pack ( ཥ
ϫᅼଡ଼ʿՉཥϫ̍)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL202121612263X July 15, 2021 July 14, 2031
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-16 –


--- page 721 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
25. Battery Pack Based
on Square-case
Coiled Cell (˙
ཥϫ
̍)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2021216906539 July 23, 2021 July 22, 2031
26. Electrode, Cell and
Lithium-ion Battery
for Coiled Lithium-
ion Battery ( ɓ၇͜
જᔎό቞ᕎɿཥ
ʿ
቞ᕎɿཥϫ)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2018211555820 July 20, 2018 July 19, 2028
27. Lithium-ion Battery
Top Cover and
Lithium-ion Battery
(ɓ၇቞ᕎɿཥϫ௟
ႊʿ቞ᕎɿཥϫ)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2019223445559 December 24,
2019
December 23,
2029
28. Power Battery Top
Cover and Power
Battery ( ਗɢཥϫ
௟ႊʿਗɢཥϫ)
Utility
Model
the
Company
PRC ZL2020214380929 July 21, 2020 July 20, 2030
29. Electrode and Cell of
Coiled Lithium-ion
Battery ( ɓ၇જᔎ
฽
ڃ)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2018211613614 July 23, 2018 July 22, 2028
30. High-integrity Box-
type Energy Storage
Battery System
(ᇌό
Ꮇঐཥϫӻ୕)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2018215425794 September 20,
2018
September 19,
2028
31. High-safety Energy
Storage Battery
System ( ɓ၇৷τΌ
Ꮇঐཥϫӻ୕)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2018216424958 October 10,
2018
October 9,
2028
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-17 –


--- page 722 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
32. Power Battery Top
Cover and Power
Battery with Liquid
Injection through-
hole Seal Protection
Structure (૰
ᚐഐ
ਗɢཥϫ௟ႊ
ʿਗɢཥϫ)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2019205131958 April 16,
2019
April 15,
2029
33. Power Battery Top
Cover and Power
Battery with Pole
Liquid Injection
through-hole
Structure (ݒ
ਗ
ɢཥϫ௟ႊʿਗɢ
ཥϫ)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2019205132024 April 16,
2019
April 15,
2029
34. New Type of Battery
Cell (ཥϫ
ڃ)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2019214231103 August 29,
2019
August 28,
2029
35. Power Battery Top
Cover, Adapter
Sheet and Power
Battery ( ਗɢཥϫ
௟ႊeᔷટ˪ʿਗ
ɢཥϫ)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL201922346021X December 24,
2019
December 23,
2029
36. Anti-collision Block
Structure of High-
voltage Cathode
and Anode
Terminals of
Battery Pack ( ɓ၇
฽
ԣᅜ෯ഐ࿴)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2020233029660 December 30,
2020
December 29,
2030
37. Integrated Liquid
Cooling Battery
Case Tray ( ණϓό
૰иཥϫᇌ᜗ৄᆵ)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2021206150192 March 25,
2021
March 24,
2031
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-18 –


--- page 723 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
38. Battery Module Outer
Frame and Battery
Module ( ཥϫᅼଡ଼
ձཥϫᅼଡ଼)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2021206709820 April 1, 2021 March 31,
2031
39. Air-cooling
Mechanism for
Battery Pack Heat
Dissipation ( ɓ၇͜
ࠬٙ
иዚ࿴)
Utility
Model
REPT
Qingchuang
PRC ZL2021228153535 November 17,
2021
November 16,
2031
40. Battery Case and
Battery Pack of
Integrated Cooling
System ( ɓ၇ණϓи
ཥϫᇌ᜗
ʿཥϫ̍)
Utility
Model
REPT
Qingchuang
PRC ZL2021233749914 December 29,
2021
December 28,
2031
41. Easy-to-stack Multi-
row Battery Module
(ε
રཥϫᅼଡ଼)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2021225286342 October 20,
2021
October 19,
2031
42. Battery Module and
Electrical
Equipment ( ཥϫᅼ
ଡ଼ձཥंண௪)
Utility
Model
the
Company
PRC ZL2022211980520 May 17,
2022
May 16,
2032
43. Sealing Component
for Battery Liquid
Injection Hole and
Secondary Battery
(૰ˆ੗
ଡ଼΁ʿɚϣཥϫ)
Utility
Model
REPT
Qingchuang
PRC ZL2021229095147 November 25,
2021
November 24,
2031
44. Power Battery Top
Cover and Power
Battery ( ਗɢཥϫ
௟ႊ˸ʿਗɢཥϫ)
Utility
Model
REPT
Qingchuang
PRC ZL2021232133892 December 20,
2021
December 19,
2031
45. Secondary Battery and
its Current
Collector ( ɚϣཥϫ
˪)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2022204561556 February 28,
2022
February 27,
2032
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-19 –


--- page 724 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
46. Holder for Electrode
Pole Pieces ( ɓ၇ཥ
ݖ)
Invention BatteroTech
Shanghai
PRC ZL2019101044955 February 1,
2019
January 31,
2039
47. Secondary Batter, Top
Cover Assembly
and the Assembly
Method ( ɚϣཥ
ϫe௟ႊଡ଼΁ʿՉ
ج)
Invention BatteroTech
Shanghai
PRC ZL2020110898986 October 13,
2020
October 12,
2040
48. Lithium-ion Square
Modules and
Electric Vehicles
(቞ᕎɿ˙Җᅼଡ଼ձ
ཥਗԓሿ)
Invention BatteroTech
Shanghai
PRC ZL202011107382X October 16,
2020
October 15,
2040
49. Composite Substrates
and Their
Preparation
Methods, Batteries
and Electric
Vehicles ( ልΥਿҿ
eཥ
ϫձཥਗԓሿ)
Invention BatteroTech
Shanghai
PRC ZL2020111330829 October 21,
2020
October 20,
2040
50. Composite Substrates,
Composite
Substrate
Preparation
Methods, Batteries
and Electric
Vehicles ( ልΥਿ
ҿeልΥਿҿႡ௪
eཥϫձཥਗ
ԓሿ)
Invention BatteroTech
Shanghai
PRC ZL2020112635788 November 12,
2020
November 11,
2040
51. Embossing Device
(ༀໄ)
Invention BatteroTech
Shanghai
PRC ZL2021214491574 June 28,
2021
June 27,
2041
52. Lithium-ion Batteries
and Electric
Vehicles ( ቞ᕎɿཥ
ϫձཥਗӛԓ)
Utility
Model
BatteroTech
Shanghai
PRC ZL2020211446197 June 18,
2020
June 17,
2040
53. Cells and Batteries
(ձཥϫ)
Utility
Model
BatteroTech
Shanghai
PRC ZL2020211773803 June 22,
2020
June 21,
2040
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-20 –


--- page 725 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
54. Cell Structure and
Electric Vehicles
(ഐ࿴ձཥਗԓ
ሿ)
Utility
Model
BatteroTech
Shanghai
PRC ZL2020218202598 August 26,
2020
August 25,
2040
55. Cell Structure,
Traction Battery
and Electric
Vehicles (ഐ
࿴eਗɢཥϫձཥ
ਗԓሿ)
Utility
Model
BatteroTech
Shanghai
PRC ZL2020218842950 September 1,
2020
August 31,
2040
56. Energy Storage
Modules and
Electric Vehicles
(Ꮇঐᅼଡ଼ձཥਗԓ
ሿ)
Utility
Model
BatteroTech
Shanghai
PRC ZL2020223792082 October 22,
2020
October 21,
2040
57. Secondary Batteries
and Electric
Vehicles ( ɚϣཥϫ
ʿཥਗԓሿ)
Utility
Model
BatteroTech
Shanghai
PRC ZL2020225259641 November 4,
2020
November 3,
2040
58. New Explosion-proof
Valve Structure for
Secondary Battery
(ۨ
ԣᖑუഐ࿴)
Utility
Model
BatteroTech
Shanghai
PRC ZL2020226694768 November 17,
2020
November 16,
2040
59. Top Cover Structure
and Battery ( ௟ႊഐ
࿴ʿཥϫ)
Utility
Model
BatteroTech
Shanghai
PRC ZL2020230436025 December 16,
2020
December 15,
2040
60. Bare Cell Structure,
Battery Module and
Automotive (ڃ
ഐ࿴eཥϫᅼଡ଼ձ
ӛԓ)
Utility
Model
BatteroTech
Shanghai
PRC ZL2020229890515 December 11,
2020
December 10,
2040
61. Cell Structure,
Secondary Battery
and Automotive ( ཥ
ഐ࿴eɚϣཥϫ
ձӛԓ)
Utility
Model
BatteroTech
Shanghai
PRC ZL202022989824X December 11,
2020
December 10,
2040
62. Hot-swap Structure
and Battery ( ᆠ౬ഐ
࿴ၾཥϫ)
Utility
Model
BatteroTech
Shanghai
PRC ZL2020231461058 December 23,
2020
December 22,
2040
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-21 –


--- page 726 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
63. Self-heating Battery
and Battery Pack
(І̋ᆠཥϫʿཥϫ
̍)
Utility
Model
BatteroTech
Shanghai
PRC ZL2021204570781 March 2,
2021
March 1,
2041
64. Secondary Battery
with Positioning
Side Plate Structure
(֛
ഐ࿴)
Utility
Model
BatteroTech
Shanghai
PRC ZL2021204884789 March 8,
2021
March 7,
2041
65. Top Cover Structure
and Secondary
Battery ( ௟ႊഐ࿴
ձɚϣཥϫ)
Utility
Model
BatteroTech
Shanghai
PRC ZL2021234394539 December 31,
2021
December 30,
2041
66. Secondary Battery and
Battery Module ( ɓ
၇ɚϣཥϫʿཥϫ
ᅼଡ଼)
Utility
Model
BatteroTech
Shanghai
PRC ZL2021234398667 December 31,
2021
December 30,
2041
67. Tab-top-cover
Connection
Structure and
Secondary Battery
(ɓ၇฽Ѐၾ௟ႊஹ
ટഐ࿴ʿɚϣཥϫ)
Utility
Model
BatteroTech
Shanghai
PRC ZL2021234390275 December 31,
2021
December 30,
2041
68. Secondary Battery
Explosion-proof
Valve Cover
Insulated Plastic
(ɓ၇ɚϣཥϫԣᖑ
უ໅ႊഒᇝ෧ᇭ)
Utility
Model
BatteroTech
Shanghai
PRC ZL2021234383801 December 31,
2021
December 30,
2041
69. Double Cooling
Battery Pack
Structure, Battery
Cooling System and
Vehicles (ۍ
ཥϫ̍ഐ࿴eཥϫ
ӻ୕ʿԓሿ)
Utility
Model
BatteroTech
Shanghai
PRC ZL2022203580117 February 22,
2022
February 21,
2042
70. On-board Equipment
and Vehicles ( ԓ༱
ண௪ձԓሿ)
Utility
Model
BatteroTech
Shanghai
PRC ZL2022202504883 January 28,
2022
January 27,
2042
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-22 –


--- page 727 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
71. Hybrid Power Battery
Module and Battery
Pack ( ૿ༀਗɢཥϫ
ᅼଡ଼ʿཥϫ̍)
Utility
Model
BatteroTech
Shanghai
PRC ZL2022202349905 January 27,
2022
January 26,
2042
72. Battery Modules ( ཥ
ϫᅼଡ଼)
Utility
Model
BatteroTech
Shanghai
PRC ZL2022212238665 May 19,
2022
May 18,
2042
73. Liquid-cooling
Battery Pack
Temperature
Sampling Method
(ɓ၇૰иཥϫ̍๝
મᅵ˙ό)
Utility
Model
BatteroTech
Shanghai
PRC ZL2022217905684 July 11, 2022 July 10, 2042
74. Lithium-ion Batteries
and Protection
Methods to Improve
the Safety
Performance of
Lithium-ion
Batteries ( ቞ᕎɿཥ
ϫʿ౤৷቞ᕎɿཥ
ԣᚐ
ج)
Invention REPT
Qingchuang
and REPT
Energy
PRC ZL2021100422060 January 13,
2021
January 12,
2041
75. Square Lithium-ion
Battery ( ɓ၇˙Җ
቞ᕎɿཥϫ)
Invention REPT
Qingchuang
PRC ZL2021115647955 December 20,
2021
December 19,
2041
76. Rapid Determination
Method of Cycle
Life of LFP Battery
Products ( ɓ၇ᐟა
᚛቞ཥϫృᐑྪն
ج)
Invention the
Company
PRC ZL202210462529X April 29,
2022
April 28,
2042
77. Ternary Cathode
Material and
Applications ( ɓ၇
ձᏐ
͜)
Invention REPT
Qingchuang
PRC ZL202210590035X May 26,
2022
May 25,
2042
78. Secondary Batter
(ɚϣཥϫ)
Invention the
Company
PRC ZL2022114036516 November 10,
2022
November 9,
2042
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-23 –


--- page 728 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
79. Adapter Sheet of
Secondary Batter
(ᔷટ˪)
Invention the
Company
PRC ZL2022114028115 November 10,
2022
November 9,
2042
80. Fault Self-diagnosis
System, Method
and Energy Storage
system for High
V oltage Interlock
Circuits ( ৷Ꮐʝᕁ
ღІൢᓙ
ձᎷঐ
ӻ୕)
Invention the
Company
PRC ZL202211506811X November 29,
2022
November 28,
2042
81. Welding Method of
Secondary Battery
and the Battery
(ଔ
ʿՉཥϫ)
Invention the
Company
PRC ZL202211507692X November 29,
2022
November 28,
2042
82. Preparation Method of
in situ Polymerized
Semi-solid State
Battery (З
ٙ
ج)
Invention the
Company
PRC ZL2022115059248 November 29,
2022
November 28,
2042
83. Battery Cell, Battery
and Power-using
Devices ( ཥϫཥ
eཥϫʿ͜ཥༀ
ໄ)
Invention the
Company
PRC ZL2022115079152 November 29,
2022
November 28,
2042
84. Welding Method of
Battery and the
Battery ( ɓ၇ཥϫ
ʿՉཥ
ϫ)
Invention the
Company
PRC ZL2022115076756 November 29,
2022
November 28,
2042
85. A Silicon Negative
Electrode Material
and its Preparation
Method and
Application ( ɓ၇ᾼ
ʿՉႡ௪
ձᏐ͜)
Invention the
Company
PRC ZL2022115065997 November 29,
2022
November 28,
2042
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-24 –


--- page 729 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
86. Battery Cell,
Secondary Battery
and Welding
Method of
Secondary Battery
(eɚ
ϣཥϫʿɚϣཥϫ
ج)
Invention the
Company
PRC ZL2022115076915 November 29,
2022
November 28,
2042
87. Secondary Batter
(ɓ၇ɚϣཥϫ)
Utility
Model
the
Company
PRC ZL2022216839295 June 30,
2022
June 29,
2032
88. Secondary Battery
Assembly
Components and
Secondary Battery
(ༀ
ৣଡ଼΁ձɚϣཥϫ)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2022230001304 November 10,
2022
November 9,
2032
89. Insulation Gaskets for
Secondary Batter
(ഒᇝྦ
˪)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2022229950553 November 10,
2022
November 9,
2032
90. Secondary Batter
(ɚϣཥϫ)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL202222987617X November 10,
2022
November 9,
2032
91. Top Cover of
Secondary Batter
and Secondary
Batter
(௟ႊଡ଼
΁ձɚϣཥϫ)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2022232718928 December 6,
2022
December 5,
2032
92. Online Calibration
Method, System,
Equipment and
Medium for
Electronic Control
Units (ཥɿ
ίᇞᅺ
eӻ୕eண
௪ʿʧሯ)
Invention the
Company
PRC ZL2021105674975 May 24,
2021
May 23,
2041
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-25 –


--- page 730 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
93. Secondary Battery
Component and
Secondary Battery
(ɓ၇ɚϣཥϫଡ଼΁
ʿɚϣཥϫ)
Utility
Model
REPT
Qingchuang
PRC ZL2022212793216 May 25,
2022
May 24,
2032
94. Top Cover Structure
for Secondary
Battery and
Secondary Battery
(௟
ႊഐ࿴ʿɚϣཥϫ)
Utility
Model
REPT
Qingchuang
PRC ZL2022204366888 March 1,
2022
May 24,
2032
95. Energy Storage
System with
Backup Fire
Fighting Device
(ɓ၇ՈϞ௪͜ऊԣ
Ꮇঐӻ୕)
Utility
Model
the
Company
PRC ZL2022215974425 June 23,
2022
June 22,
2032
96. Integrated Liquid
Cooling Plate and
Battery Pack
(ʿ
ɓ၇ཥϫ̍)
Utility
Model
REPT
Qingchuang
PRC ZL2022214510762 June 10,
2022
June 9, 2032
97. Three-side Liquid
Cooling Structure
for Battery Module
and Battery Module
(ɧ
૰иഐ࿴ʿཥϫ
ᅼଡ଼)
Utility
Model
the
Company
and REPT
Qingchuang
PRC ZL2022211821365 May 17,
2022
May 16,
2032
98. Secondary Battery
Assembly Structure
and Secondary
Battery ( ɓ၇ɚϣ
ཥϫༀৣഐ࿴ձɚ
ϣཥϫ)
Utility
Model
REPT
Qingchuang
PRC ZL2022212951633 May 25,
2022
May 24,
2032
99. Winding Coiled Cell
and Battery ( ɓ၇જ
ʿཥϫ)
Utility
Model
BatteroTech
Shanghai
PRC 2022202340332 January 28,
2022
January 27,
2032
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-26 –


--- page 731 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
100. Coiled Cell and
Battery (ڃ
ʿཥϫ)
Utility
Model
BatteroTech
Shanghai
PRC 2022200701158 January 12,
2022
January 11,
2032
101. Battery Case
(ɓ၇ཥϫᇌ᜗)
Utility
Model
BatteroTech
Shanghai
PRC 2022216493850 June 28,
2022
June 27,
2032
102. Battery Pack
(ɓ၇ཥϫ̍)
Utility
Model
BatteroTech
Shanghai
PRC 2022217940372 July 12, 2022 July 11, 2032
103. Battery Module and
Battery Pack
(ཥϫᅼଡ଼ձཥϫ̍)
Utility
Model
BatteroTech
Shanghai
PRC 2022225000763 September 21,
2022
September 20,
2032
104. New Type of Power
Battery Insulation
Mat (ਗɢ
ཥϫཞᆠྦ)
Utility
Model
BatteroTech
Shanghai
PRC 202222354169X September 5,
2022
September 4,
2032
105. Module Method for
New Type of Power
Battery Cell
(ਗɢཥϫ
ϓଡ଼˙ό)
Utility
Model
BatteroTech
Shanghai
PRC 2022223359358 September 2,
2022
September 1,
2032
106. A Stepped Charging
Method and
Charging Device
and its Use ( ɓ၇ච
ၾ̂
ཥༀໄʿՉ͜௄)
Invention REPT
Qingchuang
PRC ZL2021114496638 November 30,
2021
November 29,
2041
107. Method and System
for Online
Detection of
Battery Abnormality
Based on Big Data
(ίᇞ
˙
ʿӻ୕)
Invention REPT
Qingchuang
PRC ZL202111444679X November 30,
2021
November 29,
2041
108. A Lithium Iron
Phosphate
Secondary Battery
(ɓ၇ᐟა᚛቞ɚϣ
ཥϫ)
Invention REPT
Qingchuang
PRC ZL202111519175X December 13,
2021
December 12,
2041
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-27 –


--- page 732 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
109. A Ternary Lithium-
Ion Secondary
Battery ( ɓ၇ɧʩ
቞ᕎɿɚϣཥϫ)
Invention REPT
Qingchuang
PRC ZL2021115216386 December 13,
2021
December 12,
2041
110. A V oltage
Measurement
Circuit ( ɓ၇ཥᏀ಻
ඎཥ༩)
Invention REPT
Qingchuang
PRC ZL2021115647476 December 20,
2021
December 19,
2041
111. A Positive Electrode
Material and its
Stability
Determination
Method and Use
(ʿՉ
ج
ձ͜௄)
Invention REPT
Qingchuang
PRC ZL2021115882442 December 23,
2021
December 22,
2041
112. A Ternary Cathode
Material Having a
Double Oxide
Surface Coating and
a Preparation
Method thereof,
Cathode Wafers and
Lithium Ion
Batteries ( ɓ၇ՈϞ
෩ᄴ
ʿ
e͍฽
˪ʿ቞ᕎɿཥϫ)
Invention REPT
Qingchuang
PRC ZL2022101699906 February 23,
2022
February 22,
2042
113. A Multi-Stage Roller
Edge Leveling
Mechanism ( ɓ၇
̻
ዚ࿴)
Invention REPT
Qingchuang
PRC ZL2022104310707 April 22,
2022
April 21,
2042
114. A Gel Electrolyte and
a Battery
Comprising it ( ɓ၇
ኑᇭཥ༆ሯʿ̍ў
ཥϫ)
Invention the
Company
and REPT
Qingchuang
PRC ZL2023104099532 April 18,
2023
April 17,
2043
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-28 –


--- page 733 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
115. Management Methods
and Management
Systems for
Secondary Batteries
(၍ଣ˙
ձ၍ଣӻ୕)
Invention the
Company
and REPT
Qingchuang
PRC ZL2023106520668 June 2, 2023 June 1, 2043
116. A Secondary Battery
Cathode Material,
Secondary Battery
Cathode Pole Piece
and Secondary
Battery ( ɓ၇ɚϣ
eɚ
ϣཥϫ͍฽฽˪ʿ
ɚϣཥϫ)
Invention the
Company
and REPT
Qingchuang
PRC ZL202310647480X June 2, 2023 June 1, 2043
117. A Composite Fluid
Collector and its
Preparation Method,
Electrode Sheet and
Battery ( ɓ၇ልΥ
᜗ʿՉႡ௪˙
eཥ฽˪ʿཥϫ)
Invention the
Company
and REPT
Qingchuang
PRC ZL202310659854X June 6, 2023 June 5, 2043
118. Energy Storage
Devices ( Ꮇঐༀໄ)
Invention REPT
Qingchuang
PRC ZL2023107973059 July 3, 2023 July 2, 2043
119. A Rapid
Determination
Method of Lithium
Iron Phosphate
Battery Cycle Life
(ɓ၇ᐟა᚛቞ཥϫ
Ҟ஺к
ج)
Invention the
Company
Hong Kong HK40075371 November 29,
2022
April 28,
2042
120. Adapter Tabs for
Secondary Batteries
(ᔷટ˪)
Invention the
Company
Hong Kong HK40077991 January 18,
2023
November 9,
2042
121. A Welding Method of
Secondary Battery
and its Battery
(ଔ
ʿՉཥϫ)
Invention the
Company
Hong Kong HK40077990 January 18,
2023
November 28,
2042
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-29 –


--- page 734 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
122. Battery Cells,
Batteries and
Electrical Devices
(eཥϫʿ
͜ཥༀໄ)
Invention the
Company
Hong Kong HK40077987 January 18,
2023
November 28,
2042
123. A Silicon Negative
Electrode Material
and its Preparation
Method and
Application ( ɓ၇ᾼ
ʿՉႡ௪
ձᏐ͜)
Invention the
Company
Hong Kong HK40077989 January 18,
2023
November 28,
2042
124. Secondary Battery
(ɚϣཥϫ)
Invention the
Company
Hong Kong HK40077993 January 18,
2023
November 9,
2042
125. A Preparation Method
of in Situ
Polymerized Semi-
Solid State Battery
(ЗၳΥ̒ո
ج)
Invention the
Company
Hong Kong HK40077992 January 18,
2023
November 28,
2042
126. A Method of
Soldering a Battery
and its Battery
(ଔટ˙
ʿՉཥϫ)
Invention the
Company
Hong Kong HK40079337 February 21,
2023
November 28,
2042
127. Fault Self-Diagnostic
Systems, Methods
and Energy Storage
Systems for High-
V oltage Interlocking
Circuits ( ৷Ꮐʝᕁ
ღІൢᓙ
ձᎷঐ
ӻ୕)
Invention the
Company
Hong Kong HK40081264 March 10,
2023
November 28,
2042
128. A Semi-solid State
Battery and its
Preparation Method
(ɓ၇̒ո࿒ཥϫʿ
ج)
Invention the
Company
and REPT
Qingchuang
PRC ZL2023110362154 August 17,
2023
August 16,
2043
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-30 –


--- page 735 ---
No Patent Name Type
Patent
Holder
Jurisdiction
of
Registration Patent Number
Date of
Application Expiry Date
129. A Battery Device
(ɓ၇ཥϫༀໄ)
Utility
Model
BatteroTech
Shanghai
PRC ZL2023205950522 March 23,
2023
March 23,
2033
130. Battery Cells,
Batteries and
Electrical Devices
(ཥϫఊ᜗eཥϫʿ
͜ཥༀໄ)
Utility
Model
BatteroTech
Jiashan
PRC ZL2023205981215 March 23,
2023
March 23,
2033
131. Battery Cells,
Batteries and
Electrical Devices
(ཥϫఊ᜗eཥϫʿ
͜ཥༀໄ)
Utility
Model
BatteroTech
Shanghai
PRC ZL2023202582124 February 18,
2023
February 18,
2033
132. Battery Cells,
Batteries and
Electrical Devices
(ཥϫఊ᜗eཥϫʿ
͜ཥༀໄ)
Utility
Model
BatteroTech
Shanghai
PRC ZL2023201881133 June 26,
2023
June 26,
2033
133. Battery Pack Case and
Power Battery Pack
(ཥϫ̍ᇌ᜗ʿਗɢ
ཥϫ̍)
Utility
Model
BatteroTech
Shanghai
PRC ZL2023216401618 June 26,
2023
June 26,
2033
134. Battery Insertion
Boxes and Clusters
(ཥϫౢᇌʿཥϫᐨ)
Utility
Model
BatteroTech
Jiashan
PRC ZL2023215893066 June 20,
2023
June 20,
2033
135. Battery pack ( ཥϫ̍) Utility
Model
BatteroTech
Jiashan
PRC ZL2023215592904 June 19,
2023
June 19,
2033
136. A Battery System and
Energy Storage
Container ( ɓ၇ཥ
ϫӻ୕ʿᎷঐණༀ
ᇌ)
Utility
Model
BatteroTech
Jiashan
PRC ZL2023215192704 June 14,
2023
June 14,
2033
137. A Battery Module and
Battery Pack ( ɓ၇
ཥϫᅼଡ଼ʿཥϫ̍)
Utility
Model
BatteroTech
Jiashan
PRC ZL2023211989924 May 15,
2023
May 15,
2033
138. A Sealing Nails,
Battery Cover and
Sealing Method
(ᇭ৥eཥ
ج)
Invention BatteroTech
Shanghai
PRC ZL2021115902272 December
23, 2021
December
23, 2041
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-31 –


--- page 736 ---
As at the Latest Practicable Date, the Group had applied for registration the following
patents which are material to its business:
No Patent Name Type Applicant
Jurisdiction
of
Registration
Application
Number
Date of
Application
1. Multi-pole Lugs Coiled Cell
and Battery (ڃ
ձཥϫ)
Utility
Model
BatteroTech
Shanghai
PRC 202123243390X December 22,
2021
2. Double-layer Cooling Battery
Pack Structure, Battery
Cooling System and Vehicle
(ཥϫ̍ഐ࿴eཥϫ
ӻ୕ʿԓሿ)
Invention BatteroTech
Shanghai
PRC 2022101623199 February 22,
2022
3. Vehicle V oltage Control System
and its Control Method ( ԓ༱
ج)
Invention BatteroTech
Shanghai
PRC 2022102784836 March 21, 2022
4. Cell and Battery (ձཥϫ) Invention BatteroTech
Shanghai
PRC 2022104294969 April 22, 2022
5. Battery Pack ( ɓ၇ཥϫ̍) Invention BatteroTech
Shanghai
PRC 2022104666798 April 29, 2022
6. Active Substance, Cathode
Material, Cathode, Battery,
Battery Device and Method
(considering PCT) (ي׌ݺ
e͍฽eཥϫe
ج(ϽᅇPCT))
Invention BatteroTech
Shanghai
PRC 2022110198846 August 24, 2022
7. Active Substance, Cathode
Material, Cathode, Battery,
Battery Device and Method
(e͍
ج)
Invention BatteroTech
Shanghai
PRC 2022110211658 August 24, 2022
8. Beam Component and Module
Battery Pack ( ɓ၇૑ʩ΁ʿ
ϓଡ଼ཥϫ̍)
Invention BatteroTech
Shanghai
PRC 2022111519045 September 21,
2022
9. Module Battery Pack of New
Type of Battery (ཥ
ϫϓଡ଼ཥϫ̍)
Utility
Model
BatteroTech
Shanghai
PRC 2022225056059 September 21,
2022
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-32 –


--- page 737 ---
Software copyrights
As of the Latest Practicable Date, the Group had registered the following software
copyrights which are material to its business:
No Software Name Registrant
Registration
Number
Date of
Registration
1. MES System for Energy Storage Lithium
Battery Based on Digital Workshop
Transformation V1.0 (ᅰοʷԓගҷி
Ꮇঐ቞ཥϫMESӻ୕V1.0)
the Company 2020SR1532672 October 30, 2020
2. PACK Electrical Box EOL Automatic Test
System V1.0 (PACK ཥᇌEOLІਗ಻༊ӻ୕
V1.0)
the Company 2020SR1656039 November 26,
2020
3. Battery Module Fully Automatic Assembly
and Welding Control Platform V1.0 ( ཥϫ
ᅼଡ଼ΌІਗༀৣଔટછՓ̨̻V1.0)
the Company 2020SR1655952 November 26,
2020
4. Battery Module Intelligent Test System V1.0
(ཥϫᅼଡ଼౽ঐ಻༊ӻ୕V1.0)
the Company 2020SR1655953 November 26,
2020
5. Traction Battery Industrial Internet Big Data
Analysis System V1.0 ( ਗɢཥϫʈุʝᑌ
ӻ୕V1.0)
the Company 2020SR1655016 November 26,
2020
6. High-speed Winding Intelligent Control
System V1.0 ( ৷஺՜ᔎ౽ঐછՓӻ୕V1.0)
the Company 2020SR1656038 November 26,
2020
7. High Vacuum Cell Oven Drying Intelligent
Management System V1.0 (ञ
ट౽ঐ၍ଣӻ୕V1.0)
the Company 2020SR1655017 November 26,
2020
8. Continuous Multi-tab Die Cutting Intelligent
Control System V1.0 ( ஹᚃε฽Ѐᅼʲ౽ঐ
છՓӻ୕V1.0)
the Company 2020SR1655001 November 26,
2020
9. Fully Automatic Battery Forming System
V1.0 ( ΌІਗཥϫʷϓӻ୕V1.0)
the Company 2020SR1656342 November 26,
2020
10. Fully Automatic Battery Filling and Sealing
Control System V1.0 (ɹ
છՓӻ୕V1.0)
the Company 2020SR1656427 November 26,
2020
11. Fully Automatic High-speed Extrusion
Coating System V1.0 ( ΌІਗ৷஺ᏚᏀ෩̺
ӻ୕V1.0)
the Company 2020SR1656345 November 26,
2020
12. Artificial Intelligence Traction Battery Big
Data Platform V1.0 ( ɛʈ౽ঐਗɢཥϫɽ
ᅰኽ̨̻V1.0)
the Company 2020SR1656344 November 26,
2020
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-33 –


--- page 738 ---
No Software Name Registrant
Registration
Number
Date of
Registration
13. IoT Intelligent BMS Battery Management
System V1.0 (ᑌၣ౽ঐBMSཥϫ၍ଣӻ
୕V1.0)
the Company 2020SR1656343 November 26,
2020
14. Fully Automatic Battery Capacity Grading
System V1.0 (ӻ୕V1.0)
the Company 2020SR1667124 November 27,
2020
15. REPT Factory Power Meter Riding
Management System ( ๿ऌᅀਕཥඎમණ၍
ଣӻ୕)
the Company 2021SR1066510 July 20, 2021
16. REPT Lithium Battery Secondary Frequency
Modulation Software ( ๿ऌঐ๕቞ཥϫɚϣ
ሜ᎖ழ΁)
the Company and
REPT
Qingchuang
2021SR1018603 July 12, 2021
17. REPT Battery Monitoring Software ( ๿ऌঐ
๕ཥϫ္છழ΁)
the Company and
REPT
Qingchuang
2021SR1014059 July 9, 2021
18. REPT Global Data Monitoring Software V1.1
(๿ऌঐ๕Όଢᅰኽ္છழ΁V1.1)
the Company and
REPT
Qingchuang
2021SR1022659 July 12, 2021
19. REPT Format Converter Software V1.0 ( ๿ऌ
όᔷ౬ኜழ΁V1.0)
the Company and
REPT
Qingchuang
2021SR1018602 July 12, 2021
20. Test Management Platform Software ( ๿ऌঐ
๕಻༊၍ଣ̻ၽழ΁)
the Company and
REPT
Qingchuang
2021SR1131565 July 30, 2021
21. BTL Data Platform V1.0 (BTL ᅰኽ̨̻V1.0) BatteroTech
Shanghai
2023SR0910036 August 9, 2023
22. BTL Electrical Selection System V1.0
(BTLӻ୕V1.0)
BatteroTech
Shanghai
2023SR1053697 September 13,
2023
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-34 –


--- page 739 ---
DISCLOSURE OF INTERESTS
Disclosure of Interests of Directors, Supervisors and Chief Executive of the Company
Immediately following the completion of the Global Offering, the interests and/or short
positions (as applicable) of the Directors, Supervisors and the chief executive of the Company
in the Shares, underlying Shares and debentures of the Company and any interests and/or short
positions (as applicable) in shares, underlying Shares or debentures of any of the Company’s
associated corporations (within the meaning of Part XV of the SFO) which (1) will have to be
notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of
Part XV of the SFO (including interests and/or short positions (as applicable) which they are
taken or deemed to have under such provisions of the SFO), (2) will be required, pursuant to
Section 352 of the SFO, to be entered in the register referred to therein or (3) will be required,
pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out
in Appendix 10 to the Listing Rules, to be notified to the Company and the Hong Kong Stock
Exchange, in each case once the Shares are listed on the Hong Kong Stock Exchange, will be
as follows:
Interests/Short Positions in the Shares
Name of
Shareholder
Nature of
Interest
Description
of Shares
Number of
Shares Held
or Interested
Approximate
Percentage of
Shareholding in
the Domestic
Unlisted Shares
Approximate
Percentage of
Shareholding
in the Total
Issued Share
Capital
(%) (%)
Dr. Cao Hui Interest in
controlled
corporations
(1)
Domestic
Unlisted
Shares
360,000,000 18.28% 15.81%
Note:
(1) As of the Latest Practicable Date, Dr. Cao Hui is the general partner of Wenzhou Ruili, and held approximately
41.1% limited partnership interests in Shanghai Fuqin, which held approximately 72.7% limited partnership
interests in Wenzhou Jingli. By virtue of the SFO, Dr. Cao Hui is deemed to be interested in the Shares held
by Wenzhou Ruili and Wenzhou Jingli.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-35 –


--- page 740 ---
Interests/Short Positions in associated corporations
Name of
Shareholder
Name of Associated
Corporation
Nature of
Interest
Amount of
Registered
Capital Held
Approximate
Percentage of
Interest as of
the Latest
Practicable
Date
Dr. Cao Hui Yongqing Technology Beneficial owner RMB5,800,000 1%
Dr. Wu Yanjun Qingtuo Group
Co., Ltd. (ණྠϞ
ʮ̡)(1)
Beneficial owner RMB4,400,000 0.5%
Mr. Hu Xiaodong Yongqing Technology Beneficial owner RMB8,700,000 1.5%
Mr. Wang Haijun Zhejiang Yongtuo New
Material Technology
Co., Ltd. (อ
ʮ̡)
(2)
Beneficial owner RMB1,600,000 2%
Notes:
(1) As of the Latest Practicable Date, Tsingshan Group is the largest shareholder of Qingtuo Group Co., Ltd. with
shareholding of 48.85% in Qingtuo Group Co., Ltd.
(2) As of the Latest Practicable Date, Zhejiang Yongtuo New Material Technology Co., Ltd. is a non-wholly owned
subsidiary of Yongqing Technology.
Save as disclosed above, none of the Directors, Supervisors or the chief executive of the
Company will, immediately following the completion of the Global Offering, have an interest
and/or short position (as applicable) in the Shares, underlying Shares or debentures of the
Company or any interests and/or short positions (as applicable) in the shares, underlying
Shares or debentures of the Company’s associated corporations (within the meaning of Part XV
of the SFO) which (i) will have to be notified to the Company and the Hong Kong Stock
Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short
positions which they are taken or deemed to have under such provisions of the SFO), (ii) will
be required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein
or (iii) will be required, pursuant to the Model Code for Securities Transactions by Directors
of Listed Issuers as set out in Appendix 10 to the Listing Rules, to be notified to the Company
and the Hong Kong Stock Exchange, in each case once the Shares are listed on the Hong Kong
Stock Exchange.
Disclosure of Interests of Substantial Shareholders
For information on the persons who will, immediately following the completion of the
Global Offering, have interests or short positions in our Shares or underlying Shares which
would be required to be disclosed to us and the Hong Kong Stock Exchange under the
provisions of Divisions 2 and 3 of Part XV of the SFO, or who will directly or indirectly, be
interested in 10% or more of the nominal value of any class of share capital carrying the rights
to vote in all circumstances at general meetings of the Company or of any member of the
Group, see “Substantial Shareholders” and “– Our Subsidiaries.”
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-36 –


--- page 741 ---
FURTHER INFORMATION ABOUT DIRECTORS AND SUPERVISORS
Particulars of the Service Contracts
Pursuant to Rules 19A.54 and 19A.55 of the Hong Kong Listing Rules, we have entered
into or will enter into a contract with each of our Directors and Supervisors in respect of,
among other things (i) compliance of relevant laws and regulations, (ii) observance of the
Articles of Association, and (iii) provisions on arbitration.
Save as disclosed above, none of the Directors or Supervisors has entered into any service
contracts as a director or supervisor with any member of the Group (excluding contracts
expiring or determinable by the employer within one year without payment of compensation
(other than statutory compensation)).
Remuneration of Directors and Supervisors
For details of the remuneration of Directors and Supervisors, see “Directors, Supervisors
and Senior Management – Directors’ and Supervisors’ Remuneration and Remuneration of Five
Highest Paid Individuals” and Note 8 in “Appendix I – Accountants’ Report.”
Agency Fees or Commissions Received
The Underwriters will receive an underwriting commission in connection with the
Underwriting Agreements, as detailed in “Underwriting – Commission and Expenses.” Save in
connection with the Underwriting Agreements, no commissions, discounts, brokerages or other
special terms have been granted by the Group to any person (including the Directors, promoters
and experts referred to in “Other Information – Qualifications and Consents of Experts” below)
in connection with the issue or sale of any capital or security of the Company or any member
of the Group within the two years immediately preceding the date of this prospectus.
Within the two years immediately preceding the date of this prospectus, no commission
has been paid or is payable for subscription, agreeing to subscribe, procuring subscription or
agreeing to procure subscription for any share in or debentures of the Company.
Personal Guarantees
The Directors have not provided personal guarantees in favor of lenders in connection
with banking facilities granted to the Group.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-37 –


--- page 742 ---
Disclaimers
(a) Save as disclosed in the section headed “History and Development,” none of the
Directors, Supervisors nor any of the experts referred to in “Other Information –
Qualifications and Consents of Experts” below has any direct or indirect interest in
the promotion of, or in any assets which have been, within the two years
immediately preceding the date of this prospectus, acquired or disposed of by, or
leased to, any member of the Group, or are proposed to be acquired or disposed of
by, or leased to, any member of the Group.
(b) Save in connection with the Underwriting Agreements, none of the Directors,
Supervisors nor any of the experts referred to in “Other Information – Qualifications
and Consents of Experts” below, is materially interested in any contract or
arrangement subsisting at the date of this prospectus which is significant in relation
to the business of the Group.
(c) Neither the Controlling Shareholders nor the Directors are interested in any business
apart from the Group’s business which competes or is likely to compete, directly or
indirectly, with the business of the Group.
(d) No cash, securities or other benefit has been paid, allotted or given within the two
years preceding the date of this prospectus to any promoter of the Company nor is
any such cash, securities or benefit intended to be paid, allotted or given on the basis
of the Global Offering or related transactions as mentioned.
(e) So far as is known to the Directors, save as disclosed in the section headed
“Business,” none of the Directors or their associates or any Shareholders who are
expected to be interested in 5% or more of the issued share capital of the Company
has any interest in the five largest customers or the five largest suppliers of the
Group.
THE SHARE INCENTIVE SCHEMES
The Share Incentive Schemes of the Company
The Company has adopted two share incentive schemes, namely the 2021 Share Incentive
Scheme of the Company, which was approved and adopted in August 2021, and the 2022 Share
Incentive Scheme of the Company, which was approved and adopted in March 2022 (together,
the “ Share Incentive Schemes of the Company ”). The below is a summary of the principal
terms of the Share Incentive Schemes of the Company.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-38 –


--- page 743 ---
Purposes
The purposes of the Share Incentive Schemes of the Company are, among other things,
(i) to establish an effective incentive mechanism to fully mobilize the enthusiasm of the
Company’s senior management and core employees, (ii) to further enhance cohesion and sense
of belonging of the Company, and (iii) to attract and retain outstanding employees needed to
achieve the long-term objectives of the Company, and ensure the long-term development of the
Company.
Participants
The participants under the Share Incentive Schemes of the Company (the “ Share
Incentive Scheme Participants of the Company ”) include the following personnel of the
Company and its subsidiaries: (i) senior management, (ii) middle-level management, (iii) core
technical personnel, (iv) business backbone employees, and (v) other employees and
consultants deemed entitled to interests under the Share Incentive Scheme of the Company by
the Board.
The list of the Share Incentive Scheme Participants of the Company shall be proposed by
the management of the Company and its eligible subsidiaries, respectively, and approved by the
Board. Key criteria for determining the Share Incentive Scheme Participants of the Company
are, among other things, their performance, capabilities, title, work attitude, teamwork spirit,
length of service and level of acceptance of the culture of the Company.
Scheme Limit
Interests that correspond to a total of 360,600,000 Shares may be granted under the Share
Incentive Schemes of the Company. As of the Latest Practicable date, interests that correspond
to 340,975,500 Shares have been granted to 15 participants of the 2021 Share Incentive Scheme
of the Company (the “ 2021 Share Incentive Scheme Participants of the Company ”),
interests that correspond to 18,130,761 Shares have been granted to 254 participants of the
2022 Share Incentive Scheme of the Company (the “ 2022 Share Incentive Scheme
Participants of the Company ,” together with the 2021 Share Incentive Scheme Participants
of the Company, the “ Share Incentive Scheme Participants of the Company ”), and the
remaining interests that correspond to 1,493,739 Shares have been transferred to Ruitu Energy
and Ruizhou Energy in accordance with the terms of the Share Incentive Schemes of the
Company due to cessation of employment of relevant participants. For details of the Share
Incentive Scheme Participants of the Company, see “– Details of the Interests Granted under
the Share Incentive Schemes of the Company.”
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-39 –


--- page 744 ---
Grants of Interests
In accordance with the procedures and principles stipulated in the management measures
for the Share Incentive Schemes of the Company, the Share Incentive Scheme Participants of
the Company will be granted with the partnership interests in the employee shareholding
platforms, namely Wenzhou Ruili, Wenzhou Qingshan, Wenzhou Fuchen or Shanghai Fuqin, so
that the Share Incentive Scheme Participants of the Company could hold the indirect interests
of the Company to achieve the purpose of incentives.
Subject to the terms and conditions of the Share Incentive Schemes of the Company, the
amount of the interests to be granted to each Share Incentive Scheme Participant of the
Company shall be proposed by the management of the Company and its eligible subsidiaries,
respectively, and approved by the Board.
Each Share Incentive Scheme Participant of the Company shall enter into partnership
agreement with the applicable platforms and execute other necessary documents (the “ Share
Incentive Scheme Relevant Agreements of the Company ”) with respect to grants of interests
under the Share Incentive Schemes of the Company. The Share Incentive Scheme Participant
shall make contribution to the relevant platform based on the total amount of contribution of
the platform and his/her proportion of partnership interests granted under the Share Incentive
Schemes of the Company.
Lock-up Period and Entitlement to Dividends
In order to achieve long-term incentive effect, the Board may stipulate appropriate
lock-up period with respect to the limited partnership interests in the platforms. The Share
Incentive Scheme Participants of the Company may be entitled to dispose of the partnership
interests after the expiration of lock-up period and in accordance with the terms of the
partnership agreement or the Share Incentive Schemes of the Company.
Dividends declared in respect of the partnership interests in the platforms shall belong to
the Share Incentive Scheme Participants of the Company in accordance with their proportion
of partnership interests granted under the Share Incentive Schemes of the Company.
Administration of the Share Incentive Schemes of the Company
The Board shall approve the list of the Share Incentive Scheme Participants of the
Company and the amount of interests to be granted. The Board is responsible for the execution
of the grants of interests. After the Share Incentive Scheme Participant of the Company
becomes a holder of interests, he/she shall also be subject to the terms and conditions as
specified in the Share Incentive Scheme Relevant Agreements of the Company.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-40 –


--- page 745 ---
Limited Transferability
Unless otherwise permitted by the partnership agreement or the Share Incentive Schemes
of the Company, the Share Incentive Scheme Participants of the Company may not withdraw
or dispose of interests granted, including but not limited to transfer, sale, pledge, or mortgage
such interests within the period specified in the Share Incentive Schemes of the Company.
Cessation of Employment, Breach of Obligations to the Company or Death
If a Share Incentive Scheme Participant of the Company ceases to be employed by the
Group or his/her consultancy relationship with the Group is terminated, subject to conditions
set out in the Share Incentive Schemes of the Company, the Company has the right to request
the Share Incentive Scheme Participants of the Company to transfer all the interests, or all the
interests granted but unlocked then held by him/her to Yongqing Technology or other
designated entities (including but not limited to Ruitu Energy and Ruizhou Energy).
If a Share Incentive Scheme Participant of the Company breached his/her fiduciary duties,
non-competition agreement, non-disclosure agreement, or other obligations to the Company as
listed in the Share Incentive Schemes of the Company, the Company has the right to request
the Share Incentive Scheme Participant of the Company to transfer all the interests then held
by him/her to Yongqing Technology or other designated entities (including but not limited to
Ruitu Energy and Ruizhou Energy).
If a Share Incentive Scheme Participant of the Company dies or is declared to be dead
according to applicable laws, Yongqing Technology or other designated entities (including but
not limited to Ruitu Energy and Ruizhou Energy) shall repurchase all partnership interests then
held by such Share Incentive Scheme Participant of the Company.
Divorce
In the case of divorce, the interests granted or granted but unlocked shall not be
transferred to third parties by property division. The consequent financial issues shall be
handled by the parties involved according to law, and no claim may be made to the Company.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-41 –


--- page 746 ---
Details of the Interests Granted under the Share Incentive Schemes of the Company
The below sets out the details of the interests granted under the Share Incentive Schemes
of the Company:
Name of the Participant
Percentage of
capital contribution
in Wenzhou Ruili
Percentage of
capital contribution
in Wenzhou
Qingshan
Percentage of
capital contribution
in Shanghai Fuqin
Percentage of
capital contribution
in Wenzhou Fuchen
Percentage of
capital contribution
in Jinli No.1
Directors
Dr. Cao Hui 40.4776% 41.09%
Ms. Huang Jiehua
Supervisor
Ms. Jin Shanyan 2.1939%
Senior Management of the Company
Dr. Hou Min 12.5000% 12.49%
Mr. Yu Zhaoyu 12.5000% 12.49%
Mr. Cao Kai 6.6677% 6.67%
Other Participants
Employees and a consultant of
the Group 21.4583% 99.9999% 20.82% 99.9999% 97.8050%
Total 93.6036% 99.9999% 93.56% 99.9999% 99.9989%
Name of the Participant
Percentage of
capital contribution
in Jinli No.2
Percentage of
capital contribution
in Jinli No.3
Percentage of
capital contribution
in Jinli No.4
Percentage of
capital contribution
in Jinli No.5
Percentage of
capital contribution
in Jinli No.6
Directors
Dr. Cao Hui 45.8254%
Ms. Huang Jiehua 26.9518%
Supervisor
Ms. Jin Shanyan
Senior Management of the Company
Dr. Hou Min
Mr. Yu Zhaoyu
Mr. Cao Kai
Other Participants
Employees of the Group 94.5094% 94.4791% 93.2528% 70.6682% 53.4617%
Total 94.5094% 94.4791% 93.2528% 97.6200% 99.2871%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-42 –


--- page 747 ---
Structure of the Employee Shareholding Platforms
The structure of the employee shareholding platforms of the Share Incentive Schemes of
the Company as at the Latest Practicable Date is set out below:
Jinli No. 1(1)
1.76%*
Jinli No. 2(1)
1.46%*
Jinli No. 3(1)
0.76%*
Jinli No. 4(1)
0.53%*
Jinli No. 5(1)
0.75%*
Jinli No. 6(1)
1.14%*
Shanghai
Fuqin
72.73%*
Wenzhou Fuchen
18.18%*
Wenzhou Jingli
12.22%
Wenzhou Ruili
4.44%
Wenzhou
Qingshan
1.11%
The Company
* representing limited partnership interests
Note:
(1) Jinli No. 1, Jinli No. 2, Jinli No. 3, Jinli No. 4, Jinli No. 5 and Jinli No. 6 are limited partners of Shanghai
Fuqin and Wenzhou Ruili. The number of employees, including former employees, who participates in each
of these employee shareholding platforms are 48, 44, 43, 42, 44 and 33, respectively.
The below sets out the details of the partnership structures of each of the employee
shareholding platforms of the Share Incentive Schemes of the Company:
Partner of Wenzhou Ruili General/Limited partnership
Percentage of
capital
contribution in
Wenzhou Ruili
Dr. Cao Hui (as a Share Incentive
Scheme Participant of the
Company)
General partner 40.48%
Other Share Incentive Scheme
Participants of the Company
Limited partner 53.13%
Ruitu Energy Limited partner 0.0001%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-43 –


--- page 748 ---
Partner of Wenzhou Ruili General/Limited partnership
Percentage of
capital
contribution in
Wenzhou Ruili
Jinli No. 1 Limited partner 1.76%
Jinli No. 2 Limited partner 1.46%
Jinli No. 3 Limited partner 0.76%
Jinli No. 4 Limited partner 0.53%
Jinli No. 5 Limited partner 0.75%
Jinli No. 6 Limited partner 1.14%
Partner of Wenzhou Qingshan General/Limited partnership
Percentage
of capital
contribution
in Wenzhou
Qingshan
Mr. Zhang Wutang (as a Share
Incentive Scheme Participant of
the Company)
General partner 70.42%
Ruitu Energy Limited partner 0.0001%
Other Share Incentive Scheme
Participants of the Company
Limited partner 29.58%
Partner of Shanghai Fuqin General/Limited partnership
Percentage of
capital
contribution in
Shanghai Fuqin
Ruitu Energy General partner 0.0001%
Share Incentive Scheme
Participants of the Company
Limited partner 93.60%
Jinli No. 1 Limited partner 1.76%
Jinli No. 2 Limited partner 1.46%
Jinli No. 3 Limited partner 0.76%
Jinli No. 4 Limited partner 0.53%
Jinli No. 5 Limited partner 0.75%
Jinli No. 6 Limited partner 1.14%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-44 –


--- page 749 ---
Partner of Wenzhou Fuchen General/Limited partnership
Percentage of
capital
contribution in
Wenzhou
Fuchen
Ruitu Energy General partner 0.0001%
Share Incentive Scheme
Participants of the Company
Limited partner 99.9999%
Partner of Jinli No. 1 General/Limited partnership
Percentage of
capital
contribution in
Jinli No. 1
Ruizhou Energy General partner 0.0011%
Share Incentive Scheme
Participants of the Company
Limited partner 99.9989%
Partner of Jinli No. 2 General/Limited partnership
Percentage of
capital
contribution in
Jinli No. 2
Ruizhou Energy General partner 5.4906%
Share Incentive Scheme
Participants of the Company
Limited partner 94.5094%
Partner of Jinli No. 3 General/Limited partnership
Percentage of
capital
contribution in
Jinli No. 3
Ruizhou Energy General partner 5.5209%
Share Incentive Scheme
Participants of the Company
Limited partner 94.4791%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-45 –


--- page 750 ---
Partner of Jinli No. 4 General/Limited partnership
Percentage of
capital
contribution in
Jinli No. 4
Ruizhou Energy General partner 6.7472%
Share Incentive Scheme
Participants of the Company
Limited partner 93.2528%
Partner of Jinli No. 5 General/Limited partnership
Percentage of
capital
contribution in
Jinli No. 5
Ruizhou Energy General partner 2.3800%
Share Incentive Scheme
Participants of the Company
Limited partner 97.6200%
Partner of Jinli No. 6 General/Limited partnership
Percentage of
capital
contribution in
Jinli No. 6
Ruizhou Energy General partner 0.71%
Share Incentive Scheme
Participants of the Company
Limited partner 99.29%
The Share Incentive Scheme of BatteroTech Shanghai
BatteroTech Shanghai has adopted a share incentive scheme, namely the 2022 Share
Incentive Scheme, which was approved and adopted in November 2022 (the “ Share Incentive
Scheme of BatteroTech Shanghai ”). The below is a summary of the principal terms of the
Share Incentive Scheme of BatteroTech Shanghai.
Purposes
The purposes of the Share Incentive Scheme of BatteroTech Shanghai are, among other
things, (i) to establish an effective incentive mechanism to fully mobilize the enthusiasm of
BatteroTech Shanghai’s senior management and core employees, (ii) to further enhance
cohesion and sense of belonging of BatteroTech Shanghai, and (iii) to attract and retain
outstanding employees needed to achieve the long-term objectives of BatteroTech Shanghai,
and ensure the long-term development of BatteroTech Shanghai.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-46 –


--- page 751 ---
Participants
The participants under the Share Incentive Scheme of BatteroTech Shanghai (the “ Share
Incentive Scheme Participants of BatteroTech Shanghai ”) include the following personnel
of BatteroTech Shanghai and its subsidiaries: (i) senior management, (ii) middle-level
management, (iii) core technical personnel, (iv) business backbone employees, and (v) other
employees and consultants deemed entitled to interests under the Share Incentive Scheme of
BatteroTech Shanghai by the board of directors of BatteroTech Shanghai (“ Board of
BatteroTech Shanghai ”).
The list of the Share Incentive Scheme Participants of BatteroTech Shanghai shall be
proposed by the management of BatteroTech Shanghai and approved by the Board of
BatteroTech Shanghai. Key criteria for determining the Share Incentive Scheme Participants of
BatteroTech Shanghai are, among other things, their performance, capabilities, title, work
attitude, teamwork spirit, length of service and level of acceptance of the culture of
BatteroTech Shanghai.
Scheme Limit
Interests that correspond to the capital contribution of RMB24,342,434 in Wenzhou
Chenshan may be granted under the Share Incentive Scheme of BatteroTech Shanghai. As of
the Latest Practicable Date, all such interests have been granted to 86 participants of the Share
Incentive Scheme of BatteroTech Shanghai. For details of the Share Incentive Scheme
Participants of BatteroTech Shanghai, see “– Details of the Interests Granted under the Share
Incentive Scheme of BatteroTech Shanghai.”
Grants of Interests
In accordance with the procedures and principles stipulated in the management measures
for the Share Incentive Scheme of BatteroTech Shanghai, the Share Incentive Scheme
Participants of BatteroTech Shanghai will be granted with the limited partnership interests in
the platforms so that the Share Incentive Scheme Participants of BatteroTech Shanghai could
hold the indirect interests of BatteroTech Shanghai to achieve the purpose of incentives.
Subject to the terms and conditions of the Share Incentive Scheme of BatteroTech
Shanghai, the amount of the interests to be granted to each Share Incentive Scheme Participant
of BatteroTech Shanghai shall be proposed by the management of BatteroTech Shanghai and
approved by the Board of BatteroTech Shanghai.
Each Share Incentive Scheme Participant of BatteroTech Shanghai shall enter into
partnership agreement with the platforms and execute other necessary documents (the “ Share
Incentive Scheme Relevant Agreements of BatteroTech Shanghai ”) with respect to grants of
interests under the Share Incentive Scheme of BatteroTech Shanghai. The Share Incentive
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-47 –


--- page 752 ---
Scheme Participants of BatteroTech Shanghai shall make contribution to the relevant platform
based on the total amount of contribution of the platform and his/her proportion of limited
partnership interests granted under the Share Incentive Scheme of BatteroTech Shanghai.
Entitlement to Dividends
Dividends declared in respect of the partnership interests in Wenzhou Chenshan shall
belong to the Share Incentive Scheme Participants of BatteroTech Shanghai in accordance with
agreed proportion determined by relevant partnership agreement.
Administration of the Share Incentive Schemes of BatteroTech Shanghai
The Board of BatteroTech Shanghai shall approve the list of the Share Incentive Scheme
Participants of BatteroTech Shanghai and the amount of interests to be granted. The Board of
BatteroTech Shanghai is responsible for the execution of the grants of interests. After the Share
Incentive Scheme Participant of BatteroTech Shanghai becomes a holder of interests, he/she
shall also be subject to the terms and conditions as specified in the Share Incentive Scheme
Relevant Agreements of BatteroTech Shanghai.
Limited Transferability
Unless otherwise permitted by the partnership agreement or the Share Incentive Scheme
of BatteroTech Shanghai, the Share Incentive Scheme Participants of BatteroTech Shanghai
may not withdraw or dispose of interests granted, including but not limited to transfer, sale,
pledge, or mortgage such interests.
Cessation of Employment, Breach of Obligations to BatteroTech Shanghai or Death
If a Share Incentive Scheme Participant of BatteroTech Shanghai ceases to be employed
by BatteroTech Shanghai or his/her consultancy relationship with BatteroTech Shanghai is
terminated, subject to conditions set out in the Share Incentive Schemes, BatteroTech Shanghai
has the right to request the Share Incentive Scheme Participants of BatteroTech Shanghai to
transfer all the interests then held by him/her to Mr. Zhang Wutang (“ Mr. Zhang ”) and/or other
Share Incentive Scheme Participants of BatteroTech Shanghai designated by Mr. Zhang. Mr.
Zhang is a director of BatteroTech Shanghai.
If a Share Incentive Scheme Participant of BatteroTech Shanghai breached his/her
fiduciary duties, non-competition agreement, non-disclosure agreement, or other obligations to
BatteroTech Shanghai as listed in the Share Incentive Scheme of BatteroTech Shanghai,
BatteroTech Shanghai has the right to request the Share Incentive Scheme Participant of
BatteroTech Shanghai to transfer all the interests then held by him/her to Mr. Zhang and/or
other Share Incentive Scheme Participants of BatteroTech Shanghai designated by Mr. Zhang.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-48 –


--- page 753 ---
If a Share Incentive Scheme Participant of BatteroTech Shanghai dies or is declared to be
dead according to applicable laws, Mr. Zhang and/or other Share Incentive Scheme Participants
of BatteroTech Shanghai designated by Mr. Zhang shall repurchase all partnership interests
then held by such Share Incentive Scheme Participant of BatteroTech Shanghai.
Divorce
In the case of divorce, the partnership interests then held by the Share Incentive Scheme
Participant of BatteroTech Shanghai shall not be transferred to third parties by property
division. The consequent financial issues shall be handled by the parties involved according to
law, and no claim may be made to BatteroTech Shanghai or the platforms.
Details of the Interests Granted under the Share Incentive Scheme of BatteroTech Shanghai
The structure of the employee shareholding platforms of the Share Incentive Scheme of
BatteroTech Shanghai is set out below:
Wenzhou
Lingteng
0.0022%*
Wenzhou
Zhongzhan
Wenzhou Chenshan
14.30%
BatteroTech
Shanghai
0.0009%*
* representing limited partnership interests
The Share Incentive Scheme Participants of BatteroTech Shanghai include current and
former employees of BatteroTech Shanghai.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-49 –


--- page 754 ---
The below sets out the details of the partnership structures of each of the employee
shareholding platforms of the Share Incentive Scheme of BatteroTech Shanghai:
Partner of Wenzhou
Lingteng
General/Limited
partnership
Percentage of
capital
contribution
in Wenzhou
Lingteng
Percentage of
entitlement to
dividends in
Wenzhou
Lingteng
Mr. Zhang (as a Share
Incentive Scheme
Participant of
BatteroTech Shanghai)
General partner 0.01% 0.01%
Other Share Incentive
Scheme Participants of
BatteroTech Shanghai
Limited partner 99.99% 99.99%
Partner of Wenzhou
Zhongzhan
General/Limited
partnership
Percentage of
capital
contribution
in Wenzhou
Zhongzhan
Percentage of
entitlement to
dividends in
Wenzhou
Zhongzhan
Mr. Zhang (as a Share
Incentive Scheme
Participant of
BatteroTech Shanghai)
General partner 0.01% 0.01%
Other Share Incentive
Scheme Participants of
BatteroTech Shanghai
Limited partner 99.99% 99.99%
OTHER INFORMATION
Estate Duty
The Directors have been advised that no material liability for estate duty is likely to fall
on the Group.
Litigation
As of the Latest Practicable Date, the Company was not engaged in any outstanding
litigation or arbitration which may have material adverse effect on the Global Offering and, so
far as the Directors are aware, no material litigation or claim was pending or threatened by or
against the Company.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-50 –


--- page 755 ---
The Joint Sponsors
The Joint Sponsors satisfies the independence criteria applicable to sponsors set out in
Rule 3A.07 of the Listing Rules.
Each of the Joint Sponsors will receive a fee of US$300,000 for acting as a sponsor for
the Listing.
Compliance Advisor
The Company has appointed Red Solar Capital Limited as the compliance advisor upon
Listing in compliance with Rules 3A.19 and 19A.05 of the Listing Rules.
Preliminary Expenses
The Company has not incurred any material preliminary expenses.
Promoters
The information of our promoters when we were established as a joint stock limited
company is as follows:
Name of Shareholder
Number of
Shares held
upon our
establishment
Shareholding
percentage
upon our
establishment
Yongqing Technology ............................................. 1,050,146,341 71.76%
Wenzhou Jingli ....................................................... 264,000,000 18.04%
Wenzhou Ruili ........................................................ 96,000,000 6.56%
Wenzhou Zhuorui.................................................... 29,268,293 2.00%
Wenzhou Qingshan ................................................. 24,000,000 1.64%
Total ....................................................................... 1,463,414,634 100.00%
Within the two years immediately preceding the date of this prospectus, no cash,
securities, amount or benefit has been paid, allotted or given, or has been proposed to be paid,
allotted or given, to any of the promoters named above in connection with the Global Offering
or the related transactions described in this prospectus.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-51 –


--- page 756 ---
Qualifications and Consents of Experts
The qualifications of the experts which have given opinions or advice which are contained
in, or referred to in, this prospectus are as follows:
Name of Expert Qualifications
Morgan Stanley Asia Limited A corporation licenced to conduct type 1
(dealing in securities), type 4 (advising on
securities), type 5 (advising on futures
contracts), type 6 (advising on corporate
finance) and type 9 (asset management)
regulated activities under the SFO
CITIC Securities (Hong Kong) Limited A corporation licenced to conduct type 4
(advising on securities) and type 6
(advising on corporate finance) regulated
activities under the SFO
Ernst & Young Certified Public Accountants and
Registered Public Interest Entity Auditor
Fangda Partners Company’s PRC legal advisor
Frost & Sullivan (Beijing) Inc. Industry consultant
Each of the experts listed above has given and has not withdrawn its written consent to
the issue of this prospectus with the inclusion of its report and/or letter and/or opinion and/or
references to its name included herein in the form and context in which they respectively
appear.
Binding Effect
This prospectus shall have the effect, if an application is made in pursuance hereof, of
rendering all persons concerned bound by all of the provisions (other than the penal provisions)
of Sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance so far as applicable.
Bilingual Prospectus
The English language and Chinese language versions of this prospectus are being
published separately, in reliance upon the exemption provided in Section 4 of the Companies
(Exemption of Companies and Prospectuses from Compliance with Provisions) Notice
(Chapter 32L of the Laws of Hong Kong).
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-52 –


--- page 757 ---
Miscellaneous
(a) Save as disclosed in the section headed “History and Development” and in this
section, within the two years preceding the date of this prospectus, no share or loan
capital of the Company or any of its subsidiary has been issued or has been agreed
to be issued fully or partly paid either for cash or for a consideration other than cash.
(b) No share or loan capital of the Company or any of its subsidiary is under option or
is agreed conditionally or unconditionally to be put under option.
(c) No founder, management or deferred shares of the Company or any of its subsidiary
have been issued or have been agreed to be issued.
(d) None of the equity and debt securities of the Company or its subsidiary is presently
listed or dealt in on any other stock exchange nor is any listing or permission to deal
being or proposed to be sought.
(e) The Company has no outstanding convertible debt securities or debentures.
(f) None of the experts listed under “– Qualifications and Consents of Experts”:
(i) is interested beneficially or non-beneficially in any shares in any member of
the Group; or
(ii) has any right or option (whether legally enforceable or not) to subscribe for or
to nominate persons to subscribe for securities in any member of the Group
save in connection with the Underwriting Agreements.
(g) The English text of this prospectus shall prevail over their respective Chinese text.
(h) There has not been any interruption in the business of the Group which may have
or has had a significant effect on the financial position of the Group in the 12 months
preceding the date of this prospectus.
(i) The Company currently is a sino-foreign investment joint stock limited liability
company.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-53 –


--- page 758 ---
DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES
The documents attached to the copy of this prospectus delivered to the Registrar of
Companies in Hong Kong for registration were:
(a) a copy of the material contract referred to in “Appendix VI – Statutory and General
Information”; and
(b) the written consents referred to in “Appendix VI – Statutory and General
Information.”
DOCUMENTS A V AILABLE ON DISPLAY
Copies of the following documents will be available on display on the website of the
Stock Exchange at www.hkexnews.hk and our website at www.chinarept.com during a period
of 14 days from the date of this prospectus:
(a) the Articles of Association;
(b) the Accountants’ Report and the report on the unaudited pro forma financial
information prepared by Ernst & Young, the texts of which are set out in “Appendix
I – Accountants’ Report” and “Appendix II – Unaudited Pro Forma Financial
Information,” respectively;
(c) the audited consolidated financial statements of the Group for the years ended
December 31, 2020, 2021 and 2022 and the six months ended June 30, 2023;
(d) the legal opinion from Fangda Partners, the Company’s PRC legal advisor, in respect
of certain aspects of the Company;
(e) the industry report prepared by Frost & Sullivan (Beijing) Inc.;
(f) the PRC Company Law, the Guidelines for the Articles of Association of Listed
Companies together with their unofficial English translations;
(g) the service contracts between each of the Directors and Supervisors and the
Company referred to in “Appendix VI – Statutory and General Information”;
(h) the material contract referred to in “Appendix VI – Statutory and General
Information”; and
(i) the written consents referred to in “Appendix VI – Statutory and General
Information.”
APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES IN HONG KONG AND A V AILABLE ON DISPLAY
– VII-1 –


--- page 759 ---
(A joint stock company incorporated in the People’s Republic of China with limited liability)
Stock Code: 0666
GLOBAL
OFFERING
瑞浦蘭鈞能源股份有限公司
REPT BATTERO Energy Co., Ltd.
瑞浦蘭鈞能源股份有限公司
REPT BATTERO Energy Co., Ltd.
Joint Sponsors, Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Joint Bookrunners and Joint Lead Managers
Joint Lead Managers
