Yangtze River Business Daily News ● Yangtze River Business Daily reporter Wang Jing

Although capital and technology are grasped with both hands, Rongbai Technology (688005. SH), which also seems to be trembling in the cold winter of the industry.

Bai Houshan's entrepreneurial history can be called the "living fossil" of China's lithium battery cathode material industry. In 2001, he led the establishment of Dangsheng Technology (300073. SZ), with lithium cobalt oxide products to cut into the lithium battery track, it took only ten years to push this company onto the GEM, and its market share once topped the second in the world and the first in China. However, in 2013, due to the "change of face" in performance, Bai Houshan's first venture ended in a dramatic turn.

In 2014, Bai Houshan started a second business and founded Ronbay Technology, and in just five years, Ronbay Technology integrated global resources and achieved listing through mergers and acquisitions of overseas targets such as South Korea's JS Co., Ltd. and EMT Co., Ltd. In this process, Bai Houshan's capital skills were fully revealed: the six rounds of financing were introduced to NIO Capital, GSR Capital and other institutions, and even CATL was introduced to deeply bind customers.

However, under the adjustment of the industry cycle, Rongbai Technology has also suffered severe challenges. Following the decline in 2023, the company's performance will continue to decline in 2024. According to the performance express report disclosed on February 14, the company will achieve operating income of 15.083 billion yuan in 2024, a year-on-year decrease of 33.43%; net profit was 292 million yuan, down 49.69% year-on-year.

As a "veteran" of the capital market, how will Bai Houshan lead Rongbai Technology to break the game? It's worth the wait.

Two ventures, two peaks

In the lithium battery industry, Dangsheng Technology and Rongbai Technology are often compared, not only because the two companies are industry leaders, but also because of their co-founder Bai Houshan.

Wearing gold-rimmed glasses, always buttoning his shirt to the top, and having a rigorous and decent appearance, Bai Houshan, a man born in Xiantao, Hubei Province, is a "double head" who has sent two companies to the Science and Technology Innovation Board. He was born in 1964 and was admitted to Central South University in 1980 majoring in non-ferrous metallurgy, and interestingly, in 1983, Wang Chuanfu, the founder of BYD, also entered the same college to study metallurgical physical chemistry, and the two studied together on the same campus for a year.

After graduating from university, Bai Houshan was assigned to work in the metallurgical department of the Shenyang Institute of Mining and Metallurgy, and three years later, he was admitted to the graduate school of Northeastern University, and after graduation, he entered the Beijing General Research Institute of Mining and Metallurgy.

Paik's entrepreneurial journey began in 1992. In this year, Beijing General Research Institute of Mining and Metallurgy set up a research group, headed by Bai Houshan, mainly engaged in the development of electronic ceramic additive products, which is the predecessor of Dangsheng Technology.

In 2001, Beikuang Electronics Center restructured and established Dangsheng Co., Ltd., began to develop lithium cobalt oxide products on the basis of electronic grade cobalt oxide products, and in 2002, the first generation of lithium cobalt oxide products was mass-produced, and successfully entered the lithium battery cathode material industry.

In 2010, the market share of Dangsheng Technology has reached the second in the world and the first in China, becoming a veritable industry leader. In April of the same year, Dangsheng Technology was listed on the Growth Enterprise Market of the Shenzhen Stock Exchange, becoming the first listed company in the lithium battery cathode material industry.

However, in 2011, Dangsheng Technology's performance suddenly changed and it lost more than 70 yuan. Subsequently, under the pressure of several major shareholders, Bai Houshan had to withdraw gloomily and left Dangsheng Technology.

The performance change incident also exposed the fatal flaw of the pure technical route: Dangsheng Technology over-relied on the 3C consumer battery market and missed the transformation window on the eve of the rise of power batteries.

But the "hardcore gamer" with a technical background didn't stop there. In 2014, Bai Houshan reorganized Ningbo Jinhe Lithium Battery through capital operation and founded Rongbai Technology, using high-nickel ternary materials as a spear to point to the commanding heights of industry technology.

In just five years, Ronbay Technology has integrated global resources through mergers and acquisitions of overseas targets such as South Korea's JS Co., Ltd. and EMT Co., Ltd., and successfully landed on the Science and Technology Innovation Board in 2019, with a market value of more than 60 billion yuan, surpassing the old owner Dangsheng Technology.

Technology capital is both hands-on

Although he is a technical background, Bai Houshan also attaches great importance to the capital operation of the enterprise. In the introduction of Bai Houshan on the official website of Rongbai Technology, it is written at the front: "Technology + Industry + Investment".

It

is said that Bai Houshan began looking for venture capital for Dangsheng Technology as early as 2002, but did not actually obtain financing until around 2006. However, in the entrepreneurship of Rongbai Technology, Bai Houshan's capital skills were fully revealed, and he set three iron laws for the new company: technology must be ahead of the industry for three years, capital must be bound to the industry leader, and production capacity must be ahead of market demand.

Since then, Bai Houshan has promoted six rounds of financing to introduce NIO Capital, GSR Capital and other institutions to build a triangular structure of "technology + industry + investment"; Among the strategic investors in 2021, CATL will even appear. This binding strategy of "customers are shareholders" has enabled Ronbay Technology to form a capital alliance covering battery giants, car companies, and resource parties when it landed on the Science and Technology Innovation Board in 2019.

From 2019 to 2021, the operating income of Ronbay Technology soared from 4.19 billion yuan to 10.26 billion yuan, and the net profit jumped from 87 million yuan to 911 million yuan.

However, the cost of rapid expansion will be evident after 2022: due to the soaring price of lithium carbonate, the inventory turnover days of Rongbai Technology have been extended from 58 days to 89 days, and the proportion of accounts receivable in revenue has exceeded 35%. As lithium iron phosphate counterattacks the power battery market with its cost advantage, Ronbay Technology must follow the market demand by increasing research and development. This also compressed its gross margin from 15.34% in 2021 to 9.11% in the first three quarters of 2024.

In such a situation, Bai Houshan chose to respond aggressively. He launched a fixed increase of 5.43 billion yuan, expanded the production capacity of the South Korean base from 20,000 tons to 80,000 tons, and spent 1.2 billion yuan to acquire Skoland, incorporating lithium manganese iron phosphate into the technology map.

However, in 2023, the cold winter of power batteries is coming, and the performance of Rongbai Technology will still decline in stages, with an operating income of 22.657 billion yuan, a year-on-year decrease of 24.78%; net profit was 581 million yuan, a year-on-year decrease of 57.07%.

On February 14, Ronbay Technology released its 2024 annual performance report. Affected by factors such as intensified market competition and falling prices of major raw materials, after preliminary accounting, the company will achieve operating income of 15.083 billion yuan in 2024, a year-on-year decrease of 33.43%; net profit was 292 million yuan, down 49.69% year-on-year. The performance has declined sharply for two consecutive years.

Under the involution of the industry, Bai Houshan has already chosen to break the situation through global layout.

At present, the first phase of 20,000 tons of high nickel cathode production capacity of Rongbai Technology will be fully profitable in the fourth quarter of 2024, the second phase of the 40,000-ton project will be put into trial production in 2025, the 20,000-ton project in Europe and Poland will be demonstrated, and the North American subsidiary will be registered to form a four-pole production capacity network of "China-South Korea-Europe-America".

However, the secondary market does not seem to be buying it. In mid-2022, the share price of Rongbai Technology reached as high as 167.4 yuan per share, and by February 14 this year, its share price fell to 34.07 yuan per share, and its market value evaporated by 64.4 billion yuan.

From the "forced out" of Dangsheng Technology to the "return of the king" of Rongbai Technology, Bai Houshan has always danced on the tightrope of industry and capital. In 2025, with the release of the second phase of production capacity in South Korea and the start of mass production of sodium electricity, Rongbai Technology may usher in a performance inflection point, but the differentiation of technical routes and the game in overseas markets will still test the judgment of this 60-year-old entrepreneur.

Editor-in-charge: ZB