This is part of the the full newsletter for Week 4 of October 2023, which you can find on LinkedIn here.

Many things are still up on the air for Sunwoda, China’s sixth-largest electric vehicle battery company. It plans to list itself but not much detail has been disclosed yet. It has recently engaged Citic Securities to advise and help it to list on the Shenzhen Stock Exchange.

To clarify, Sunwoda Electric Vehicle Battery Co. Ltd (Sunwoda) is the EV battery arm of Sunwoda Electronic Co. Ltd. Sunwoda Electronic is already listed in the market, and it is now planning to list its EV battery arm. Hence, here are the top 5 things to know about Sunwoda.

Firstly, Sunwoda makes and sells EV battery packs and consists of the block, soft package and cylindrical module. It has successfully provided batteries for car models such as JL-EV500, LQ-S50, and XP-G3.

Secondly, revenue for Sunwoda grew exponentially from RMB2.9 billion in 2021 to RMB12.7 billion in 2022 driven by increased demand for batteries amid the boom in EVs in China.

Thirdly, it is currently ranked as the sixth largest EV batter player in China, behind the likes of CATL (1st), BYD (2nd), CABL (3rd) and Gotion High-Tech (4th).

Fourthly, Sunwoda is profitable with a gross profit of RMB1.3 billion or margin of 10.3% in 2022.

Lastly, the company has introduced a new flash EV battery product that can charge from 20% to 80% in 10 minutes and support 1,000km mileage. This is important considering that most EV charging stations are looking for fast and efficient way of charging EVs.

Here’s my opinion on why the parent company wants to list Sunwoda Electric Vehicle Battery as a separately listed company. As shown above, revenue for its EV battery segment has grown by 4 times in just one year.

It’s clear that EV will be the key contributor to Sunwoda’s parent company revenue in the future, and some companies have tendencies to list their subsidiaries also to increase interest in specific segments of their business. This enables investors who are more bullish in the EV battery segment to have exposure to just the EV battery segment. Sometimes, it’s better for investors to have more visibility on the company to realize a higher valuation.