Core Viewpoint - The credit rating of Xiangtan Electric Chemical Co., Ltd. is maintained at AA/stable, reflecting its leading position in the electrolytic manganese dioxide industry and stable financial performance despite market challenges [4][6][12]. Company Overview - Xiangtan Electric Chemical is a leading enterprise in the electrolytic manganese dioxide industry, maintaining a significant market share in manganese battery business [4][6][15]. - The company has a total production capacity of 162,000 tons per year for manganese-based cathode materials as of March 2025 [15][17]. Financial Performance - Total assets for the company were reported at 4.924 billion as of March 2025, with total liabilities at 1.814 billion [8]. - The company’s net profit for the first quarter of 2025 was 470 million, showing a slight increase compared to previous periods [8]. - The operating revenue for 2024 was 2.112 billion, with a gross profit margin of 26.48% [10][8]. Market Position - The company has maintained its leading market share in the manganese battery sector, with a slight increase in operating profit during the tracking period [4][6][15]. - The competitive landscape remains challenging due to price fluctuations in raw materials and an oversupply in the industry [5][15]. Investment and Projects - The company is currently investing in a project to produce 30,000 tons of spinel-type lithium manganese battery materials, with a total planned investment of 485 million [25]. - The company has also invested in the Jingxi Aitun Manganese Mine project, which is expected to provide raw material support for production [25]. Research and Development - The company has increased its R&D investment, with a total of 1.02 billion in 2024, representing 5.33% of its operating revenue [25][24]. - The company holds 68 authorized patents, including 17 invention patents, indicating a strong commitment to innovation [24][25]. Risk Factors - The company faces risks related to the volatility of raw material prices and the overall market demand for its products, which could impact profitability [5][20]. - The industry is characterized by intense competition and potential oversupply, which may affect future growth prospects [5][15].

Core Viewpoint - Xiangtan Electrochemical Technology Co., Ltd. is issuing convertible bonds totaling 487 million yuan, with a focus on raising funds for its battery materials and wastewater treatment business [2][4][10]. Overview - The convertible bond is named "Dianhua Convertible Bond" with the code 127109, and it will be listed on the Shenzhen Stock Exchange on July 4, 2025 [2][6]. - The total issuance amount is 487 million yuan, with a net amount of 479.6371 million yuan after deducting issuance costs [4][16]. - The bonds will have a face value of 100 yuan each and a maturity period from June 16, 2025, to June 15, 2031 [2][17]. Financial Details - The first-year coupon rate is set at 0.20%, increasing to 2.00% by the sixth year [3][17]. - The total issuance costs amount to 7.3629 million yuan [12][13]. Company Profile - Xiangtan Electrochemical Technology Co., Ltd. has a registered capital of 629.481713 million yuan and is primarily engaged in the production and sale of manganese dioxide and battery materials [8][10]. - The company is controlled by Xiangtan Electrochemical Group, which holds 29.54% of the shares, while the actual controller is the Xiangtan State-owned Assets Supervision and Administration Commission [9][10]. Shareholder Structure - As of March 31, 2025, the top ten shareholders hold a total of 46.13% of the company's shares, with the largest shareholder being Xiangtan Electrochemical Group [8][9]. Business Operations - The company generates over 90% of its revenue from battery materials, including various types of manganese dioxide used in primary and secondary batteries [10]. - The wastewater treatment business operates under a model of government authorization and procurement [10].

1. Report Industry Investment Rating - No industry investment rating is provided in the report. 2. Core Viewpoints of the Report - The initial price of Dianhua Convertible Bonds on the listing day is expected to be between RMB 131.46 and RMB 145.94, with an estimated winning rate of 0.0022%. Considering the good bond - bottom protection, attractive rating, and scale of the bonds, it is recommended to actively subscribe [2][13][15][17]. 3. Summary According to the Directory 3.1. Convertible Bond Basic Information - Dianhua Convertible Bonds (127109.SZ) started online subscription on June 16, 2025, with a total issuance scale of RMB 487 million. After deducting issuance fees, the net proceeds will be used for the project of an annual output of 30,000 tons of spinel - type lithium manganate battery materials [2][8]. - The current bond - bottom valuation is RMB 99.57, and the YTM is 2.35%. The bond has a 6 - year term, with a credit rating of AA/AA. The coupon rates from the first to the sixth year are 0.20%, 0.40%, 0.80%, 1.50%, 1.80%, and 2.00% respectively. The company's redemption price at maturity is 110% of the par value (including the last - period interest) [2][11][12]. - The current conversion parity is RMB 102.6, and the parity premium rate is - 2.60%. The conversion period is from December 22, 2025, to June 15, 2031. The initial conversion price is RMB 10.1 per share. The closing price of the underlying stock, Xiangtan Electrochemical, on June 13 was RMB 10.37 [2][12]. - The convertible bond terms are standard. The down - revision clause is "15/30, 80%", the conditional redemption clause is "15/30, 130%", and the conditional put - back clause is "30, 70%". The dilution rate of the total share capital is 7.11%, and the dilution pressure on the equity is small [2][12]. 3.2. Investment Subscription Suggestion - Based on comparable targets and empirical results, considering the good bond - bottom protection, attractive rating, and scale of Dianhua Convertible Bonds, the expected conversion premium rate on the listing day is around 35%, and the corresponding listing price is between RMB 131.46 and RMB 145.94 [2][13][15]. - The expected priority subscription ratio of original shareholders is 63.84%. The expected winning rate is 0.0022%, and it is recommended to actively subscribe [16][17]. 3.3. Underlying Stock Fundamental Analysis 3.3.1. Financial Data Analysis - Since 2019, the company's revenue has steadily increased, with a compound growth rate of 15.63% from 2019 - 2024. In 2024, the company achieved an operating income of RMB 1.912 billion, a year - on - year increase of 3.01%. Meanwhile, the net profit attributable to the parent company showed a downward trend, with a compound growth rate of - 50.88% from 2019 - 2024. In 2024, it achieved a net profit attributable to the parent company of RMB 315 million, a year - on - year decrease of 10.60% [2][18]. - The company's main businesses are battery materials and sewage treatment. From 2022 - 2024, the proportion of main - business income in total operating income was 91.81%, 98.38%, and 98.41% respectively [2]. - The company's net sales margin and gross profit margin fluctuated, the sales expense ratio remained low, the financial expense ratio declined slowly, and the management expense ratio increased in recent years. From 2019 - 2024, the net sales margins were 5.81%, 1.99%, 13.60%, 19.21%, 15.73%, and 15.95% respectively, and the gross profit margins were 24.93%, 20.39%, 19.69%, 26.48%, 21.56%, and 27.49% respectively [2]. 3.3.2. Company Highlights - The company has been focusing on the manganese - based battery cathode material industry. Its production process technology for deep - processing of manganese - based materials is at the leading level in China. It has a good reputation in the industry and maintains long - term stable cooperative relationships with many well - known battery enterprises at home and abroad [27].

Group 1: Report Industry Investment Rating - No information provided Group 2: Core Views of the Report - On June 12, Xiangtan Electrochemical issued an announcement to issue convertible bonds online on June 16, 2025, with a planned total issuance of no more than 487 million yuan. 485 million yuan is intended for the "Annual Production of 30,000 Tons of Spinel Lithium Manganese Oxide Battery Materials Project", and 2 million yuan is for supplementary working capital [1][12]. - The initial target price of the convertible bond on the first day is 134 - 139 yuan, and it is recommended to actively subscribe. The conversion premium rate on the first - day of listing is expected to be in the range of [32%, 37%] [3][18]. - The expected first - day new - bond lottery winning rate is around 0.0033% - 0.0036% [4][19]. Group 3: Summary by Directory 1. Electro - Chemical Convertible Bond New - Bond Analysis and Investment Recommendations 1.1 Convertible Bond Basic Terms Analysis - The issuance methods of Electro - Chemical Convertible Bond are priority placement and online issuance. The bond and entity ratings are AA. The issuance scale is 487 million yuan, the initial conversion price is 10.1 yuan, the convertible bond parity on June 12 is 101.39 yuan, the calculated pure bond value is 99.52 yuan. The downward revision clause is relatively strict, the redemption clause and the put - back clause are normal. The bond issuance scale is low, the liquidity is poor, the rating is acceptable, and the bond floor protection is good [2][14]. 1.2 New - Bond Initial Price Analysis after Listing - The company's main businesses are battery materials and sewage treatment. The main products and services include various types of EMD, lithium manganese oxide cathode materials, etc. The raised funds are mainly used for the "Annual Production of 30,000 Tons of Spinel Lithium Manganese Oxide Battery Materials Project", which can optimize the company's capital structure and enhance its competitiveness [3][17]. 1.3 Convertible Bond New - Bond Lottery Winning Rate Analysis - Assuming the old shareholders' placement ratio is 42% - 46%, the scale left for the market is 263 million - 282 million yuan. Assuming the online effective subscription number is 7.91 million households, the lottery winning rate is around 0.0033% - 0.0036% [4][19]. 2. Underlying Stock Fundamental Analysis 2.1 Company's Main Business and Industry Up - and Downstream Situations - The company's main businesses are battery materials and sewage treatment. The main upstream industries are manganese ore, sulfuric acid, etc. The supply of upstream manganese ore restricts the supply of electrolytic manganese dioxide, and the price of lithium carbonate affects the price of lithium manganese oxide. The main downstream industries are primary and secondary battery industries. The demand of the downstream battery industry is crucial for the development of the electrolytic manganese dioxide industry [20][21]. 2.2 Company's Operating Conditions - The company's recent operating income has shown small fluctuations. From 2022 to Q1 2025, the operating income was 2.1 billion yuan, 2.163 billion yuan, 1.912 billion yuan, and 418 million yuan respectively. The comprehensive gross profit margin has also shown small fluctuations. The recent period expenses have shown small fluctuations, and the R & D expenses have gradually increased. The accounts receivable have shown small fluctuations, and the accounts receivable turnover rate has been generally stable. The recent net profit attributable to the parent company has shown a downward trend [24][28][38]. 2.3 Company's Equity Structure and Main Subsidiaries - As of March 31, 2025, the company's equity structure is relatively concentrated. The top two shareholders hold 42.23% of the shares in total, and the top ten shareholders hold 46.13% of the shares in total. The company's direct controlling shareholder is Electro - Chemical Group, the indirect controlling shareholders are Zhenxiang State - owned Investment and Industrial Investment Group, and the actual controller is the State - owned Assets Supervision and Administration Commission of Xiangtan City. The company has 10 important wholly - owned subsidiaries and 3 affiliated companies [43]. 2.4 Company's Business Characteristics and Advantages - The company has scale operation advantages, continuous innovation advantages, industrial chain advantages, core team advantages, and franchise operation advantages [45]. 2.5 Allocation of Raised Funds - The company plans to issue convertible bonds to raise no more than 487 million yuan. 485 million yuan is for the "Annual Production of 30,000 Tons of Spinel Lithium Manganese Oxide Battery Materials Project", with a planned construction period of 24 months. Due to market volatility, no specific benefit calculation is made for this project [48].