Having just given up controlling this company less than a month ago, CATL has made another move to increase its investment, all because of high-end lithium iron phosphate.

On the evening of February 3rd, Fulin Precision (SZ300432) announced a related-party transaction. The company and CATL (SZ300750) plan to deepen their industrial chain cooperation and jointly increase capital and shares in the controlling subsidiary Jiangxi Shenghua New Materials Co., Ltd. (hereinafter referred to as Jiangxi Shenghua). After the completion, CATL’s shareholding in Jiangxi Shenghua will increase from approximately 18.74% to 33.00%, while Fulin Precision’s stake will decrease to about 64.37%. Jiangxi Shenghua remains a controlled subsidiary of Fulin Precision. Previously, CATL had planned to acquire a controlling stake in this subsidiary but announced the termination of the plan in January of this year.

From strategic control intentions to strategic capital increases, why does CATL remain so focused on Jiangxi Shenghua? The key lies in high-end lithium iron phosphate (LFP). On the evening of February 3rd, Li Pengcheng, Vice Chairman of Fulin Precision, told the “Daily Economic News” that the funds raised through Fulin Precision’s targeted issuance of shares to CATL have not yet been received. Both shareholders intend to first improve Jiangxi Shenghua’s capital strength and financing capacity by optimizing its capital structure and debt structure.

Further Capital Increase in Jiangxi Shenghua

On the evening of February 3rd, Fulin Precision announced that it plans to further deepen its industrial chain cooperation and strategic synergy with CATL, jointly increasing capital and shares in Jiangxi Shenghua. Fulin Precision intends to convert a debt of 500 million yuan it holds in Jiangxi Shenghua into equity, subscribing to an additional registered capital of 406.5 million yuan. CATL plans to invest 747 million yuan in cash, subscribing to an additional registered capital of 607 million yuan.

After this capital increase, Fulin Precision’s ownership in Jiangxi Shenghua will decrease from 79.57% to 64.37%, while CATL’s ownership will increase from 18.74% to 33.00%. Jiangxi Shenghua remains a controlled subsidiary of Fulin Precision.

Since CATL aims to become a strategic investor in Fulin Precision, this transaction also constitutes a related-party transaction.

Reviewing announcements from the past year reveals that CATL has been determined to acquire Jiangxi Shenghua.

In March last year, CATL announced its first strategic investment in Jiangxi Shenghua, subscribing to 339 million yuan of newly issued registered capital for 400 million yuan, resulting in an 18.74% stake after the transaction.

By September, Fulin Precision disclosed that CATL was preparing to acquire a further stake in Jiangxi Shenghua. If the transaction is completed, CATL’s ownership could reach 51%. This is also a rare indication of CATL’s intent to control a listed company’s subsidiary. For Fulin Precision, CATL’s controlling actions also constitute a major asset restructuring.

This year, the plans between the two parties changed again, with CATL no longer planning to acquire a controlling stake in the subsidiary.

Fulin Precision disclosed that it plans to issue shares to raise 3.175 billion yuan, with CATL as a strategic investor subscribing to the company’s additional shares, potentially becoming a shareholder with more than 5%. Meanwhile, Fulin Precision terminated the Jiangxi Shenghua capital increase and major asset restructuring plan.

Just as the outside world thought CATL was no longer interested in acquiring Jiangxi Shenghua’s equity, “Ning Wang” plans to once again increase its stake through capital injection.

Accelerating the Construction of Lithium Iron Phosphate (LFP) Capacity

What makes Jiangxi Shenghua so attractive that CATL remains so “obsessed”?

The answer is that Jiangxi Shenghua is one of the few domestic companies capable of expanding high-pressure dense lithium iron phosphate (LFP) production.

Earlier this year, Fulin Precision disclosed plans to invest 6 billion yuan in Ordos City, Yijinhuoluo Banner, Mengsu Economic Development Zone, to build an annual 500,000-ton high-end energy storage lithium iron phosphate project.

“Daily Economic News” previously learned that Fulin Precision’s overall LFP capacity is expected to reach 1.2 million tons in the second half of this year.

In January, Fulin Precision disclosed that CATL would purchase no less than 3 million tons of LFP products from the company over the next three years.

Financial data from Jiangxi Shenghua shows impressive performance in the first three quarters of last year.

As of September 30, 2025, Jiangxi Shenghua’s total assets were 8.566 billion yuan, compared to 5.168 billion yuan as of December 31, 2024. In the first three quarters of 2025, Jiangxi Shenghua’s operating revenue was 6.166 billion yuan, with a net profit of 130 million yuan. In 2024, the company’s annual revenue was 4.829 billion yuan, with a net loss.

On the same day, Fulin Precision also disclosed that Jiangxi Shenghua plans to sign a “Project Investment Cooperation Agreement” with Guizhou Dalong Huicheng New Materials Co., Ltd. (hereinafter referred to as Dalong Huicheng). The two parties plan to jointly invest in establishing a joint venture (hereinafter referred to as the target company) to build an annual 500,000-ton ferrous oxalate project. Notably, the target company’s 500,000-ton ferrous oxalate project is scheduled to be completed and put into production before September 30, 2026, reaching an annual capacity of 500,000 tons. Ferrous oxalate is an upstream raw material for producing high-pressure dense lithium iron phosphate.

On the evening of February 3rd, Li Pengcheng, Vice Chairman of Fulin Precision, told the “Daily Economic News” that the joint capital increase and share expansion in Jiangxi Shenghua by Fulin Precision and CATL is due to the fact that the funds from Fulin Precision’s targeted share issuance to CATL have not yet been received. Both shareholders plan to first enhance Jiangxi Shenghua’s capital strength and financing ability by optimizing its capital and debt structures. This will help accelerate Jiangxi Shenghua’s capacity construction for lithium iron phosphate and supply chain investment layout, and further improve its profitability and overall competitiveness.

(Source: Daily Economic News)