New IPO | China Graphite starts IPO today, expected to be listed on July 18.

Futu News, June 30th: Thursday of this week.$CHINA GRAPHITE (02237.HK)$Announcement: the company will launch an IPO from June 30th to July 8th, issuing 0.4 billion shares, including 40 million shares for public offering and 0.36 billion shares for international offering. The expected price range per share is HK$0.325-HK$0.375, with a trading unit of 0.01 million shares. It is anticipated to be listed on July 18th.

The company is engaged in the production and sale of flake graphite and spherical graphite in China. The company's history can be traced back to 2006 when it operated in flake graphite mining (carbon content mainly 94% to 96.8%) and sales under the name of Yuxiang Graphite. The company expanded its business in 2012 under the name Yuxiang New Energy to process and sell spherical graphite (carbon content mainly over 99%).

Due to the high carbon content of the company's flake graphite, it is used as anode material for heat-resistant materials, spherical graphite production, and as a negative electrode material for lithium-ion batteries in electronic devices and new energy vehicles. As a by-product of its spherical graphite production, the company also sells micro graphite powder and high-purity graphite powder.

In terms of finance, for the years ended December 31, 2019, 2020, and 2021, the company's revenues were RMB 0.124 billion, 0.169 billion, and 0.198 billion respectively, with net income for the same period of 24.549 million yuan, 37.859 million yuan, and 53.325 million yuan respectively.

In the industry sector, due to the increasing use of new energy vehicles and energy storage systems, it is expected that the lithium-ion battery market in China will rapidly expand. Consequently, the demand for flake graphite ore will further increase. Since 2017, the sales volume and revenue of Chinese flake graphite ore have steadily increased. In 2021, the sales volume and revenue of flake graphite ore were 542 kilotons and 2.239 billion RMB respectively.

Driven by industry bullish policies, advances in graphite manufacturing technology, and increased demand in downstream industries, it is expected that the sales volume of flake graphite ore will increase from 604 kilotons in 2022 to 827 kilotons in 2026 at a compound annual growth rate of 8.2%. Sales revenue is projected to increase from 2.525 billion RMB in 2022 to 3.465 billion RMB in 2026 at a compound annual growth rate of 8.2%.

In terms of fundraising purposes, the net proceeds received from the global offering amount to approximately 93 million Hong Kong dollars (assuming the exercise of the oversubscription rights at a sale price of 0.35 Hong Kong dollars per share). According to the prospectus, the company intends to use the net proceeds from the share offering as follows: approximately 32.4% for land acquisition, around 31.6% for construction; and about 36.0% for the purchase and installation of machinery and equipment.

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