Overseas Business Surges 233%, Guoxuan Hi-Tech Opens New Innings Overseas

On April 28, Guoxuan High-Tech announced its 2021 annual report: revenue in 2021 was 10.356 billion yuan, an increase of 54.01% year-on-year; of which, overseas revenue was 530 million yuan, which was 3.3 times of the same period in 2020, achieving a high growth of 233% year-on-year.

During the same period, the company considered and passed the "Proposal on the Company's Planning for Overseas Issuance of Global Depository Receipts (GDR) and Listing on the Swiss Stock Exchange", marking the countdown of the first domestic power battery company to issue GDRs overseas.

According to Guoxuan Hi-Tech, the funds raised will be mainly used for the company's international industrial layout and to accelerate the pace of the company's internationalization strategy and global competitiveness.

The explosive growth of overseas performance of Guoxuan Hi-Tech and the company's ability to continuously introduce overseas high-quality capital is the result of years of accumulation of global market development, customer cooperation, R&D layout and brand influence of Guoxuan Hi-Tech. With the entry and assistance of more global industries and social capital in the future, Guoxuan Hi-Tech will usher in a new "metamorphosis" in terms of globalization.

Market Orientation: Globalization of Customers

According to GaoGong Lithium Electric's global new energy vehicle sales statistics, the installed power battery capacity of Guoxuan GaoKe in Q1 2022 is 2.7 GWh, ranking seventh in the world, up one position from 2021; correspondingly, the installed vehicles exceed 100,000 units, ranking sixth in the world.

In July 2021, Guoxuan reached an agreement with Volkswagen to develop the first generation of standard cells for Volkswagen's regular mass-production models; as of now, the company has received a letter of order for Volkswagen's standard cells, including ternary and lithium iron phosphate standard cells, which will be used for Volkswagen's newest platform new energy models. The company has received a letter of order from VW, which includes ternary and lithium iron phosphate standard cells, and will be used in VW's newest platform new energy models.

In fact, from the beginning of the company's establishment, Guoxuan Hi-Tech has determined the strategy of globalization, actively exploring foreign customers and building a global market system. 2019, Guoxuan Hi-Tech and India's largest automotive enterprise Tata Motors established a strategic cooperation and set up a joint venture company in Tata Motors' headquarters in Pune, India. At that time, Guoxuan High-Tech became the earliest domestic power battery enterprise to go to the international market.

In the same year, the company's products were supplied in bulk and put into operation in EBUSCO bus project in the Netherlands and two 72MW/72MWh LiFePO4 energy storage projects deployed with PJM in Illinois and West Virginia, USA.

In 2021, the company's international customer development to achieve "reflecting the sun lotus flower is not red", in addition to maintain and deepen the cooperation of the original customers. The company also signed supply agreement and joint venture agreement with Vinfast, the largest car company in Vietnam and a large listed car company in the United States. The increase in overseas power battery and energy storage orders has boosted the company's rapid growth in corporate performance.

According to Guoxuan High-tech 2021 annual report data last year overseas revenue of 530 million yuan, the data 2020 3.3 times the same period, achieving a 233% year-on-year high growth.

In order to support and serve global customers, Guoxuan High-tech has actively planned to build factories around the world. 2021, Guoxuan High-tech has announced plans to invest in factories in Europe and the United States. It has also discussed with Vinfast the possibility of establishing a power battery factory in Vietnam. From overseas market development and base construction, Guoxuan Hi-Tech walks in the first echelon of Chinese power batteries.

As the heart of electric vehicles, power batteries have become the focus of attention of governments and mainstream car companies around the world, and all countries hope to introduce high-quality power battery factories. At the same time, the power battery industry is capital, technology and talent-intensive industry. Relying on the accumulation in overseas markets and the demands of cooperative customers over the years, Guoxuan High-tech urgently needs to accelerate the landing and release of high-quality production capacity. This IPO will attract more excellent overseas investors, provide more capital and resources to support the internationalization of Guoxuan Hi-Tech, and lay the foundation for future performance explosion.

Innovation is the root: the fund raising is intended to build a global R&D system

In addition to the global capacity layout to meet the global customer capacity demand. The fund raising for establishing a global R&D team system is also mentioned to the same height.

Since 2014, Guoxuan Hi-Tech has radiated its R&D tentacles to Europe, North America and other Asian countries, and has set up R&D centers in Silicon Valley, Cleveland, Tsukuba, Singapore, Germany (preparation) and Pune, India (preparation). At present, CXG has established eight global R&D centers around the world, providing a boost to the company's internationalization.

It is worth mentioning that in terms of global R&D team building, in 2019, Guoxuan High Tech launched the "Global Talent Program", which is jointly cultivated by Guoxuan High Tech and top overseas universities (MIT, Stanford University, Columbia University, Nanyang Technological University, San Diego State University, etc.). The training methods include overseas academic education, overseas visiting scholars, overseas research institute work dispatch, etc. It is a major talent project launched by the company to further realize the internationalization strategy.

As of the end of December 2021, Guoxuan High-tech has 3598 R&D technicians of all kinds, including more than 150 doctors, more than 80 foreign talents, and more than 100 returnees, as well as a large number of international talents cultivated internally through overseas cooperation institutions and international projects of the company. For example, Mr. Frank Engel and Ms. Andrea Nahmer, two non-independent directors nominated by Volkswagen China, were nominated by the Strategy Committee of the Board of Directors and have played a significant role in the development of international customers and the realization of the company's strategy.

The global headquarters of Guoxuan High-tech in Shanghai Jiading is expected to be completed and put into operation in May 2022, which will attract and recruit more global talents and help the company to go international and embrace the world better and faster.

As a part of the international strategy, Guoxuan Hi-Tech also plans to attract excellent overseas R&D technicians and management teams to build an excellent localization team, improve the company's global industrial chain R&D system, accelerate the pace of R&D industrialization, and strive to be among the global first-class R&D teams.

Capital assistance: globalization of capital

In May 2020, Volkswagen spent 1.1 billion euros to acquire 26% shares of Guoxuan Hi-Tech, and became the largest shareholder of Guoxuan Hi-Tech. For Guoxuan High-Tech, the introduction of VW not only greatly enhances the product power and market capability, but also the capital cooperation makes Guoxuan High-Tech deeply bound to VW Group.

VW's ownership will also provide the company with financing backing, which will make it easier for the company to obtain bank loans and other financing advantages at lower prices, reduce financial costs, and lay the foundation for the company to achieve 300GWh production capacity by 2025.

For Guoxuan High-Tech, the planned overseas issuance of GDRs and listing on the Swiss Stock Exchange, the introduction of international high-quality industrial and social capital, on the one hand, will enhance its capital strength and optimize its shareholder structure and efficiency; on the other hand, the entry of international industrial capital can form industrial synergy for the company's upstream mineral resources and materials, downstream international host plant and international customer development. On the other hand, the entry of international industrial capital can form industrial synergy for the company's upstream mineral resources and materials, downstream international OEM end and international customer development, and realize capital empowerment for industrial development.

In the future, the industry and capital investors will focus on supporting Guoxuan High-tech to become a global enterprise and enter the "first echelon" of global power batteries.