Good News on Listing | Frost & Sullivan Assists China Innovative Aviation Technology Co., Ltd. to Successfully Go Public in Hong Kong (3931.HK)

China New Energy Technology Co., Ltd. (hereinafter referred to as "China New Energy") successfully listed on October 6, 2022. The company plans to issue 2.658453 billion H shares, of which 95% will be international offerings and 5% public offerings, with an additional 14% in excess rights. The issue price per share is HK$38.00, raising a net amount of approximately HK$9.864 billion.

During the process of listing in Hong Kong this time, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the issuer's competitive advantages, assisting the issuer, sponsor, and other professional intermediary institutions in completing the writing of relevant parts of the prospectus (such as overview, competitive advantages and strategy, industry overview, business, and other important chapters), assisting the issuer in communicating with the Hong Kong Stock Exchange and investors, helping investors quickly understand the market ecosystem and competitive landscape, and assisting the issuer in completing feedback on industry-related issues from the Hong Kong Stock Exchange.

China expects to reach carbon peak before 2030, and the Chinese government plans to achieve carbon neutrality by 2060. The Chinese government has introduced a number of policies to support the development of new energy vehicles, including pure electric vehicles and plug-in hybrid vehicles. According to a Frost & Sullivan report, China is currently the world's largest new energy vehicle market, with the sales volume of new energy passenger vehicles reaching 3,334,000 units in 2021 and will continue to account for nearly half of global new energy passenger vehicle sales.

According to a Frost & Sullivan report, the total sales volume of passenger vehicles in China in 2021 was 2.15 million units, and it is expected to reach 2.55 million units by 2026, with a compound annual growth rate of 3.3% from 2022 to 2026. With further policy support and technological development, consumers' preference for new energy vehicles is expected to increase, so the penetration rate of new energy passenger vehicles is expected to rise from 15.5% in 2021 to 37.7% in 2026, with the Chinese market being the largest market, providing long-term market opportunities for stakeholders in the global new energy vehicle industry.

Power batteries refer to rechargeable battery systems used in new energy vehicles to provide power. As one of the most critical components of new energy vehicles, power batteries directly affect the vehicle's range, safety, service life, charging time, and temperature adaptability.

According to different cathode materials, power batteries can be classified into lithium titanate batteries, lithium manganese oxide batteries, lithium iron phosphate batteries, and ternary lithium batteries. Lithium iron phosphate batteries and ternary lithium batteries dominate the power battery market, with a market share exceeding 99%. Generally speaking, ternary batteries have higher energy density, higher charging efficiency, and better low-temperature adaptability, while lithium iron phosphate batteries have relatively better safety performance and lower material costs.

According to a Frost & Sullivan report, benefiting from the growth of the global new energy vehicle market, the power battery market has achieved steady growth, with installed capacity increasing from 64.3 GWh in 2017 to 293.7 GWh in 2021, with a compound annual growth rate of 46.2%. During the forecast period, with the continuous growth of the global new energy vehicle market, the global power battery installed capacity is expected to grow at a compound annual growth rate of 33.8% from 2022 to 2026 and reach 1,386.7 GWh by 2026.

According to a Frost & Sullivan report, by installed capacity, China is the largest power battery market. From 2017 to 2021, China's power battery installed capacity grew at a compound annual growth rate of 43.5%, reaching 154.5 GWh in 2021. With the rapid growth of the new energy vehicle penetration rate, the healthy development of the industrial chain, and effective control of the epidemic, China's power battery market will continue to grow. It is expected that by 2026, the power battery installed capacity will reach 762.0 GWh, with a compound annual growth rate of 34.9% from 2022 to 2026.

The power battery industry in China is highly concentrated, according to a Frost & Sullivan report, and in 2021, the top 10 power battery manufacturers in China accounted for 92.4% of the total national installed capacity.

A cell consists of an electrode, an electrolyte, and a separator. According to a Frost & Sullivan report, the electrode material is the most costly part, accounting for about 30% to 55% of the total cost of the cell (depending on the type of battery). Lithium carbonate (Li2CO3), lithium hydroxide (LiOH), and cobalt sulfate (CoSO4) are the main raw materials for synthesizing power battery electrodes.

According to a Frost & Sullivan report, from the first half of 2017 to the first half of 2018, driven by the rapid growth in power battery installed capacity, the price of electrode raw materials rose. From the first half of 2018 to the second half of 2020, due to the slowdown in power battery installed capacity growth and the release of raw material production capacity during this period, the price of electrode raw materials continued to fall. In 2021, with the rapid development of power battery installed capacity, the market had a huge demand for raw materials, so since 2021, the prices of major electrode raw materials have risen. The historical price trend is shown in the following figure:

Energy storage batteries (mostly lithium-ion batteries) are the core part of energy storage systems. An energy storage system refers to equipment that can store electrical energy and output it when needed for use. Unlike power batteries, energy storage batteries are widely used in power system links such as power generation, transmission and distribution, and electricity consumption due to their functions such as peak shaving and valley filling, system frequency regulation, and smoothing new energy power output.

According to a Frost & Sullivan report, benefiting from the continuous decline in battery costs and government policy incentives, the global installed capacity of energy storage batteries reached 30.5 GWh in 2021. Based on the newly installed capacity of 0.3 GWh in China's energy storage batteries in 2017, new installed capacity reached 5.8 GWh in 2021.

Against the backdrop of the national energy transformation strategy and global carbon neutrality, energy storage batteries are an important part of power system reform and new energy power construction. It is expected that the global new installed capacity will reach 250.1 GWh by 2026, with China being the largest market, with an installed capacity of 110.7 GWh.

• Policy Incentives

Against the backdrop of the national carbon neutrality goal, China's energy storage system market has seen a series of favorable policies. For example, the "Carbon Peaking Action Plan before 2030" issued by the State Council in 2021 disclosed a series of ambitious action plans to promote the development of the energy storage system industry. Stimulated by national and local policies, the energy storage system industry is expected to achieve explosive growth.

• Cost Reduction

Technological progress and expansion of production scale have driven down the cost of energy storage batteries. In addition, the rapid development of the power battery industry has driven the application of related technologies in energy storage batteries, promoting the cost reduction of energy storage batteries. The continuous decline in the cost of energy storage batteries has promoted the willingness of downstream users to adopt.

• Widespread Application Scenarios

Energy storage batteries can be widely used in power system links such as power generation, transmission and distribution, and electricity consumption. The rapid growth of renewable energy power system construction has laid a foundation for the deployment of large-scale energy storage systems. With the acceleration of energy transformation, the energy storage battery market will embrace new opportunities.

Frost & Sullivan has rich research experience in the automotive and transportation industries, assisting well-known enterprises to successfully list on the capital market. Successful listing cases include: Leapmotor (9863.HK), Didi Chuxing (2418.HK), Kuaidou Dache (2246.HK), NIO (NIO.SGX), NIO (9866.HK), Cangang Railway (2169.HK), Yanguang Mingzhu (YGMZ.NASDAQ), Asia Express (8620.HK), InfinityL&T (1442.HK), TOMOHOLDINGS (6928.HK), EVE Energy (EH.NASDAQ), Aodima (8418.HK), Xiangxing International (8157.HK), CIMC Vehicles (1839.HK), Xunlong (1930.HK), CSSC Leasing (3877.HK), Chengdu Expressway (1785.HK), Tianrui Automotive Interior (6162.HK), Perceive Holdings (2885.HK), Huazi International (2258.HK), PULIN Chengshan (1809.HK), NIO (NIO.NYSE), Wanli Da (8482.HK), Qilu Expressway (1576.HK), Yingheng Technology (1760.HK), Asia Industry (1737.HK), Ruifeng Power (2025.HK), Gaomeng Technology (8065.HK), Hebei Yichen (1596.HK), Zhengli Holdings (8283.HK), Junao Holdings (8035.HK), Yade Group (1585.HK), Yihai Car Rental (EHIC.NYSE), Xincheng Power (1148.HK), Zhengxing Wheels (ZX.NYSE), Shuanghua Holdings (1241.HK), Changfeng Axle (1039.HK).

01. Frost & Sullivan helps Leapmotor successfully list in Hong Kong (9863.HK)

02. Frost & Sullivan helps Didi Chuxing successfully list in Hong Kong (2418.HK)

03. Frost & Sullivan helps Kuaidou Dache successfully list in Hong Kong (2246.HK)

04. Frost & Sullivan helps NIO successfully list in Singapore (SGX:NIO)

05. Frost & Sullivan helps NIO successfully list in Hong Kong (9866.HK)

06. Frost & Sullivan helps Cangang Railway successfully list in Hong Kong (2169.HK)

07. Frost & Sullivan helps Yanguang Mingzhu successfully list in the US (YGMZ.NASDAQ)

08. Frost & Sullivan helps Asia Express successfully list in Hong Kong (8620.HK)

09. Frost & Sullivan helps Infinity successfully list in Hong Kong (1442.HK)

10. Frost & Sullivan helps TOMO Holdings successfully list in Hong Kong (6928.HK)

11. Frost & Sullivan helps EVE Energy successfully list in the US (EH.NASDAQ)

12. Frost & Sullivan helps Aodima successfully list in Hong Kong (8418.HK)

13. Frost & Sullivan helps Xiangxing International successfully list in Hong Kong (1732.HK)

14. Frost & Sullivan helps CIMC Vehicles successfully list in Hong Kong (1839.HK))

15. Frost & Sullivan helps Xunlong successfully list in Hong Kong (1930.HK)

16. Frost & Sullivan helps CSSC Leasing successfully list in Hong Kong (3877.HK)

17. Frost & Sullivan helps Tianrui Automotive Interior successfully list in Hong Kong (6162.HK)

18. Frost & Sullivan helps Chengdu Expressway successfully list in Hong Kong (1785.HK)

19. Frost & Sullivan helps Perceive Holdings successfully list in Hong Kong (2885.HK)

20. Frost & Sullivan helps Huazi International successfully list in Hong Kong (2258.HK)

21. Frost & Sullivan helps PULIN Chengshan successfully list in Hong Kong (1809.HK)

22. Frost & Sullivan helps NIO successfully list in the US (NIO.NYSE)

23. Frost & Sullivan helps Wanli Da successfully list in Hong Kong (8482.HK)

24. Frost & Sullivan helps Qilu Expressway successfully list in Hong Kong (1576.HK)

25. Frost & Sullivan helps Yingheng Technology successfully list in Hong Kong (1760.HK)

26. Frost & Sullivan helps Asia Industry successfully list in Hong Kong (1737.HK)

27. Frost & Sullivan helps Ruifeng Power successfully list in Hong Kong (2025.HK)

28. Frost & Sullivan helps Gaomeng Technology successfully list in Hong Kong (8065.HK)

29. Frost & Sullivan helps Hebei Yichen successfully list in Hong Kong (1596.HK)

30. Frost & Sullivan helps Zhengli Holdings successfully list in Hong Kong (8283.HK)

31. Frost & Sullivan helps Junao Holdings successfully list in Hong Kong (8035.HK)

32. Frost & Sullivan helps Yade Group successfully list in Hong Kong (1585.HK)