Keliyuan Addresses Regulatory Concerns Over Performance Goals, Plans to Invest in 10GWh Energy Storage and Achieve 2 Billion Yuan Revenue This Year

Performance targets have raised regulatory concerns. In response, Keli Yuan announced plans to invest in 10 GWh of energy storage capacity and aims to achieve revenues of 2 billion yuan within the year. On the evening of May 19, Keli Yuan released an announcement addressing the performance doubts and outlining its development plan for the next three years. The company stated it has obtained the necessary approvals for the construction of energy storage projects, with a total capacity exceeding 10 GWh expected to be built soon. It anticipates revenues from its energy storage systems to reach between 1.8 billion yuan and 2 billion yuan by 2025.

On April 21, Keli Yuan unveiled its 2025 stock option incentive plan, which includes performance assessment targets: revenues of no less than 5 billion yuan or a net profit of no less than 150 million yuan for 2025, revenues of no less than 7 billion yuan or a net profit of no less than 225 million yuan for 2026, and revenues of no less than 10 billion yuan or a net profit of no less than 350 million yuan for 2027. However, it is important to note that Keli Yuan has been experiencing losses for the past two years, with revenues of only 3.711 billion yuan and a net loss of 136 million yuan in 2023, and 2.464 billion yuan in revenue with a net loss of 10 million yuan in the first three quarters of 2024. This has led to skepticism regarding the ambitious performance targets set by the company.

Subsequently, on April 23, the Shanghai Stock Exchange issued a regulatory letter to Keli Yuan, requesting clarification on the basis, rationale, and feasibility of the performance assessment targets outlined in the incentive plan. In response to this, Keli Yuan stated in its May 19 announcement that the energy storage segment is regarded as a key driver for the company’s performance growth. The revenue estimates for the next three years are based on current macro policies, market conditions, and the company’s strategic planning.

Keli Yuan’s business segments include battery materials, batteries, and energy storage. The lithium battery materials business began development in 2023, and the company highlighted that the initial investment for expanding lithium mining and constructing lithium carbonate production lines is substantial. Additionally, the sharp decline in lithium carbonate prices has negatively impacted the gross profit of lithium battery materials, resulting in a decrease of 169 million yuan compared to the previous year, and impairments of 45 million yuan on lithium carbonate inventory and mining rights. Increased investments and financing have also contributed to an overall loss for the company in 2023. However, in 2024, Keli Yuan aims to achieve 481 million yuan in revenue from lithium battery materials, reflecting a year-on-year growth of 158.03%, with an increase in gross margin by 29.46 percentage points.

Moving forward, Keli Yuan is prioritizing its energy storage business, which made a significant breakthrough in 2024, successfully establishing a commercial model for the development, investment, construction, and operation of energy storage stations. However, investments in energy storage projects have yet to yield returns. Public records indicate that Keli Yuan, in collaboration with China Innovation Aviation, is building independent energy storage stations with capacities of 200 MW/400 MWh in Hebei and 100 MW/200 MWh in Wangdu, Hebei. The Hebei independent energy storage station project is expected to be connected to the grid in December 2024, enter formal operations in February 2025, and achieve half-capacity grid operation by March 2025, with plans to reach full capacity connection by the second half of 2025. The Wangdu independent station project has also been successfully connected to the grid in March 2025 and officially began operations at the end of April.

Keli Yuan stated that it will accelerate its strategic layout in 2025, fully promoting the implementation of its large-scale energy storage strategy, which is expected to become a critical engine for driving the company’s growth. The primary focus is on grid-side energy storage, with the company responsible for the production of energy storage cabinets and integrated systems during the construction phase, thereby generating revenue and profits from energy storage products. This segment is expected to become the main revenue source for Keli Yuan’s energy storage business over the next three years. The revenue model for energy storage stations includes capacity leasing, electricity market transactions, ancillary services (peak regulation, frequency regulation), and capacity compensation, with market-based electricity transactions being the primary income source.

Keli Yuan believes that in provinces targeted for investment, such as Hebei, Shandong, and Guangdong, the electricity price differentials typically exceed 0.5 yuan/kW, effectively ensuring profit margins from charging and discharging operations of the stations. The company has acquired the necessary approvals for constructing energy storage projects, with planned capacities exceeding 10 GWh across various locations: 3.2 GWh in Hebei, 1.4 GWh in Shandong, 1.2 GWh in Guangdong, 1.1 GWh in Jiangsu, 0.8 GWh in Zhejiang, and 3 GWh in Inner Mongolia. Additionally, there are over thirty reserve projects across various energy storage applications, of which more than 4 GWh meet investment criteria.

Keli Yuan projects that by 2025, the energy storage industrial fund it partners with will invest in energy storage projects with an estimated total capacity of 4.7 GWh. Based on market prices, the after-tax unit price for energy storage systems ranges between 0.4 yuan and 0.6 yuan/Wh, leading Keli Yuan to estimate that each GWh corresponds to approximately 400 million yuan in revenue, predicting total revenues between 1.8 billion yuan and 2 billion yuan. From 2026 to 2027, the scale of projects funded by the energy storage industrial fund is expected to grow at an annual rate of approximately 60%.

However, Keli Yuan also acknowledges that the energy storage industry faces multiple risks and challenges, including policy fluctuations, imperfect mechanisms, overcapacity and price wars, product technology iterations, and project yield and funding risks. In terms of lithium battery materials, Keli Yuan anticipates that carbon lithium production and sales will gradually increase over the next three years, projected to be 8,000 tons, 15,000 tons, and 20,000 tons respectively. With consideration for domestic market fluctuations in carbon lithium prices, the sales price is estimated to be between 70,000 and 80,000 yuan/ton, leading to projected revenues of 531 million yuan, 996 million yuan, and 1.416 billion yuan over three years.