On the evening of August 2, Rongbai Technology (688005. SH) released its semi-annual performance report, with operating income of about 6.888 billion yuan in the first half of 2024, a year-on-year decrease of 46.58%; net profit attributable to shareholders of listed companies was about 10.2779 million yuan, a year-on-year decrease of 97.29%; net profit after deducting non-attributable to the parent company -3.809 million yuan, a year-on-year decrease of 101.17%; Basic earnings per share was 0.02 yuan, a year-on-year decrease of 97.62%.

(Figure: Main financial data of Ronbay Technology's 2024 semi-annual report).

It is worth noting that the gross profit margin of Rongbai Technology during the reporting period was 7.79%, a year-on-year decrease of 1.32%; net profit margin was 0.34%, down 89.07% year-on-year; The return on equity (weighted) was 0.12%, down 97.75% year-on-year, and profitability continued to decline.

According to the interim report of Rongbai Technology, the company's main financial indicators such as net profit, earnings per share and return on net assets during the reporting period decreased year-on-year, mainly due to the intensification of market competition, fluctuations in raw material prices, and a year-on-year increase in R&D investment.

Rongbai Technology explained in the interim report that in the first quarter, affected by the Spring Festival holiday, the capacity utilization rate of Rongbai Technology was low, and the net profit attributable to the parent company in the first quarter was -37.2416 million yuan, and the net profit attributable to the parent company was 47.5195 million yuan in the second quarter. Although according to SNE Research data, the global market demand for the new energy vehicle industry grew steadily during the reporting period, and the global power battery usage from January to May 2024 reached 285.4GWh, a year-on-year increase of 23%, and benefited from the increase in terminal market demand, the sales volume of Rongbai Technology's main products in the first half of 2024 reached 54,900 tons, a year-on-year increase of 18.17%, but due to the company's active market competition strategy, the gross profit margin level was low.

In terms of R&D investment, Ronbay Technology's interim report shows that the company made strategic investments in global layout, sodium electricity and lithium manganese iron phosphate during the reporting period to resist the possible adverse effects of macroeconomy, raw material prices and market competition. Its R&D investment in the first half of 2024 will be about 179 million yuan, an increase of 49.07% year-on-year, and the R&D will mainly focus on the frontier of lithium/sodium battery materials.

In terms of global layout, the first phase of the 20,000 tons/year production line of JS Co., Ltd., a wholly-owned subsidiary of Ronbay Technology Korea, completed technical transformation during the reporting period, and passed the factory audit of a number of Japanese and Korean customers, entered the supply white list, and is expected to start supplying in the third quarter; The construction of the second phase of 40,000 tons/year ternary material production capacity is still advancing; The North American office has basically completed the site selection demonstration in the whole region of North America; The layout of the European plant has completed the final work and will start construction soon.

(Figure: R&D investment of Ronbay Technology in the first half of 2024).

What

is intriguing is that at the same time as the release of the above-mentioned interim report, Rongbai Technology adjusted its core technical personnel and completed the general election of its board of directors and board of supervisors. According to the relevant announcement, Chen Mingfeng, the original core technical personnel, no longer participates in the company's specific research and development projects due to the adjustment of job responsibilities, and the company no longer identifies him as the core technical personnel, and adds Mo Jiguo, Wang Zunzhi and Yuan Yong as the company's core technical personnel.

At the same time, a number of senior executives and technical personnel reduced their holdings of their shares due to restricted share repurchase and cancellation during the reporting period. Among them, Yuan Xujun, the core technical personnel of Rongbai Technology, cancelled his 124698 shares through secondary market trading and restricted stock repurchase, and zeroed his shares.

(Figure: Changes in executive shareholdings of Rongbai Technology in the first half of 2024).

According to the official website of the Shanghai Stock Exchange, Chen Mingfeng has also reduced his holdings of Rongbai Technology shares many times in recent years. On January 25, 2024, Chen Mingfeng reduced his holdings of 22,000 shares of Rongbai Technology through secondary market trading, with an average transaction price of 33.33 yuan per share, or 733,300 yuan, and on July 18, 2022, Chen Mingfeng reduced his holdings of 27,900 shares of the company through secondary market trading, with an average transaction price of 144.95 yuan per share, and reduced his holdings by 4.0419 million yuan. As of the end of the reporting period, Chen Mingfeng held 88 shares of Rongbai Technology, which was due to secondary market trading and restricted share repurchase and cancellation.

It is worth noting that Rongbai Technology released its first equity incentive plan after listing in October 2020, granting 15 million restricted shares to 200 incentive recipients. These shares are planned to be released from the restriction/vesting in batches according to the three ratios of 40%, 30% and 30%, for a total of 3 release periods/vesting periods. Among them, 5 million shares of Class I restricted stock will only take 48 months to complete the full cycle, and the lock-up period is 12 months. During the reporting period, the concentrated reduction of senior executives is likely to be the purchase and sale and repurchase cancellation of restricted shares after the release of restricted shares in batches.

Some analysts said that Rongbai Technology originally hoped to further consolidate the relationship between the company and employees and accelerate technological innovation through the equity incentive plan. However, the share price of Rongbai Technology has been falling since it hit a record high of 168.39 yuan per share in July 2022, becoming a loss-making asset, so this may not be a successful equity incentive plan.

As of the close of trading on August 2, the closing price of Rongbai Technology was 22.25 yuan per share, with a total market value of 10.747 billion yuan.