(Yicai) Jan. 19 -- Shares of Ronbay New Energy Technology plunged after the battery materials supplier said it is being investigated by China's securities regulator for allegedly misleading investors about the value of a large contract with Contemporary Amperex Technology.

Ronbay’s shares [SHA: 688005] ended down 11.2 percent at CNY33.18 (USD4.76) each in Shanghai today, after earlier plunging by their 20 percent daily limit. Trading in the stock had been halted since Jan. 14 due to stock exchange questions over a CNY120 billion (USD17.2 billion) supply deal with CATL that Ronbay had revealed the day before.

Ronbay received notice of the investigation from the China Securities Regulatory Commission, the Yuyao-based firm said yesterday, after announcing the order to supply the Chinese battery giant with lithium-iron phosphate cathode materials from this quarter through 2030.

Ronbay said yesterday that the CNY120 billion value of the order was only an estimate and that its realization is highly uncertain. The company also acknowledged that its previous disclosure did not adequately highlight the potential risks associated with the deal, and that some wording in the prior announcement was non-standard and not sufficiently precise.

Later on Jan. 13, the Shanghai Stock Exchange sent Ronbay an inquiry letter, requesting additional details on how it intends to fulfill CATL’s large order. The bourse also asked whether Ronbay has other undisclosed new or under-construction production capacity, or related asset acquisition plans, and requested an explanation of how the transaction’s value was calculated.

Ronbay's lithium battery cathode materials business has historically focused on ternary lithium battery cathode materials and it only ventured into the LFP cathode materials business last year. In December, the company announced it had gained control of an LFP cathode material factory in Guizhou province that has an annual production capacity of 60,000 tons.

Concerns have arisen about how Ronbay plans to rapidly increase its LFP cathode materials capacity to meet CATL’s needs in such a short period of time. The firm did not address these concerns yesterday, saying only that it will go on expanding capacity through acquisitions and by building new facilities. Ronbay said it has enough cash for new project investments.

CATL only set commercial terms for this year's product supply, and those from next year will be agreed at a later stage, Ronbay noted yesterday, without revealing the specific figure for 2026.

On Jan. 13, the stock exchange also asked Ronbay to determine whether the CATL deal could have potentially led to insider trading or other violations.

In this regard, Ronbay said yesterday that the general managers of its LFP business and legal department conducted short-term trading of the company's shares last month and earlier this month, respectively. Both individuals had sold all their shares before the CATL deal was announced, it added.

The company said the GM’s short-term trades were motivated by optimism about Ronbay’s sodium-ion battery business, while the legal department head’s were due to “an operational error.”

Editors: Tang Shihua, Futura Costaglione