Lithium Battery Industry Wins National Support Again Smarter Energy (600869) Grows in Popularity

    Recently, Development Planning of Emerging Sectors of Strategic Importance During the 13th Five-Year Plan Period, issued by the State Council, reiterated the goal for new energy vehicles that to achieve production and sales of over 2 million in the year of 2020, and the cumulative production and sales of more than 5 million, showing a persistent determination for new energy vehicles’ development. Lithium battery industry, as the key part of new energy vehicles, once again becomes a rising concern among investors. Yesterday, concept stock of lithium battery ushered in a long-lost collective outbreak, let along the limit up reached by the leading stock. As the leading domestic 18650 battery, Smarter Energy (600869) is highly sought after by investors again.

    Due to the Notice on the Financial Subsidy Policy Adjustment of the Popularization and Application of New Energy Vehicles, co-issued by Ministry of Finance, Ministry of Science and Technology, Ministry of Industry and Information Technology, and National Development and Reform Commission on December 30, 2016, subsidy standards have been well adjusted and perfected. The access threshold for financial subsidies will be improved in parallel with the increased technical requirements of new energy vehicles, covering the vehicle energy consumption, driving mileage, battery performance, safety requirements and other aspects combined with industrial development and technological progress. The uncertain impact of policies in 2017 has been eliminated, said by China International Capital Corporation Limited (CICC), when industrial chain entering a stage of substantiality and market development, an up-going inflection point to sales volume of lithium battery and policy anticipation will help investors to rebuild confidence, sticking to be the leading company.

    The implementation of new energy vehicles related policies will undoubtedly benefits upstream lithium battery industry first. Far East First New Energy Co., Ltd. (hereinafter referred to as “Far East First”), the subsidiary company of Far East Smarter Energy Co., Ltd. (hereinafter referred to as “Smarter Energy”, stock code: 600869), however, will be the best benefited. As early as the first half of 2016, 600869 Smarter Energy has seized the opportunity of integration, increasing RMB 250 million for lithium battery business and expanding the existing production capacity of lithium battery. When the second half of this year, RMB 3.1 billion from fund-raising will be used to the R&D and industrialization of energy storage lithium batteries of high energy, density and power at annual 3GWh; RMB 5 billion will be invested into the construction of “Smart Energy Industrial Park”, the development of 6GWh high-performance and energy storage lithium batteries and other industrial chain projects. After the settlement, Smarter Energy lithium battery productivity will reach 11GWh every year, far exceeding the standard required in the Specifications for Automotive Power Battery Industry (2017) (Exposure Draft) issued by Ministry of Industry and Information Technology that the annual power output of lithium-ion battery companies shall not less than 8 billion watt-hours. It will promote the industry chain extension for Smarter Energy, and achieve the goal for emerging industry's strategic layout.

    It is noteworthy that Far East First has achieved supply agreements with Jiangling Motors Co., Ltd., Dongfeng Motor Company, Zotye Auto, Chery, and Shaanxi Tongjia Automobile among which Zotye new energy vehicles hold a large domestic scale after BYD, ranking the second of domestic independent brands; Jiangling reached 6.83% market share of national commercial vehicles, ranking the 5th of national commercial vehicle enterprises.