Shanghai Xiba Further Controls Investment in Special Chemicals and Solid-State Battery Businesses

On July 22, Shanghai Xiba (603200) announced plans to increase its investment in its affiliate, Hainan Shenneng New Energy Co., Ltd. (referred to as Hainan Shenneng), to address its operating capital shortfall. After the capital increase, Hainan Shenneng's registered capital will rise from 200 million yuan to 2.946 billion yuan, while shareholder ownership ratios will remain unchanged. Importantly, Shanghai Xiba does not plan to contribute actual funds during this increase. Hainan Shenneng, established in April 2022, is a project company jointly formed by three publicly listed firms: Sheneng Co., Ltd. (600642), Shanghai Xiba, and Electric Wind Power (688660), aimed at investing in the development, manufacturing, construction, and operation of offshore wind farms and associated low-carbon industrial parks in Hainan Province. In recent years, Shanghai Xiba has refined its business development strategy, focusing on its core business in water treatment specialty chemicals while also expanding into advanced materials for lithium-ion solid-state batteries. Accordingly, Shanghai Xiba is further controlling investments in businesses that have a weaker direct correlation with its specialty chemicals and solid-state battery operations, while specifically strengthening the allocation of funds, teams, and other resources towards R&D, production line construction, and business expansion in the fields of water treatment specialty chemicals and advanced materials for solid-state batteries. To reinforce strategic focus and improve its business layout, as well as alleviate financial pressure, Shanghai Xiba, along with Electric Wind Power, plans to exit Hainan Shenneng through a targeted capital reduction with 'zero consideration' after completing the aforementioned capital increase. Following this reduction, Hainan Shenneng's registered capital will decrease from 294.6186 million yuan to 250.42581 million yuan. Additionally, on July 7, Shanghai Xiba announced its intention to participate in the auction for related assets of the lithium sulfide business being publicly transferred by Yuyuan Rare Earth New Materials Co., Ltd. (Yuyuan Rare Earth), which is a subsidiary of Yuyuan New Materials (600206). This auction is intended to strengthen Shanghai Xiba's development in the new energy sector, aligning with the company's strategic development plan.