On the evening of June 3rd, Hunan Yuneng New Energy Battery Material Co.,Ltd. (Hunan Yuneng) issued a pre-disclosure announcement regarding a shareholder reduction. Its second-largest shareholder, Shanghai Jinsheng New Material Technology Co., Ltd., and its third-largest shareholder, Contemporary Amperex Technology Co.,Ltd. (CATL), plan to simultaneously reduce their holdings in the company, with planned reductions not exceeding 2.5% and 3% respectively.

It is noteworthy that Hunan Yuneng had just completed a time-consuming two-and-a-half-year A-share private placement raising 4.788 billion yuan in early April, and announced an H-share financing plan just one week ago.

In fact, from 2018 to the present, with the exception of 2023, Hunan Yuneng's operating cash flow has been negative every year. Coupled with substantial annual capital expenditures, the company's interest-bearing debt, particularly short-term debt, has surged sharply. The debt ratio remains at a high level, making the company's strained financial situation evident.

As a major shareholder and a key customer, CATL has recently signed significant lithium iron phosphate supply agreements with companies like Ronbay Technology and Fulin Precision, leading to a substantial diversion of orders away from Hunan Yuneng.

Due to its heavy reliance on CATL and BYD, Hunan Yuneng's cash collection ratio has previously been significantly lower than that of peers like Wanrun Xinneng and DFD Nanometer. Following consecutive rounds of fundraising, the simultaneous announcement of share reductions by CATL and the second-largest shareholder has heightened market concerns about Hunan Yuneng's future prospects.

Persistent Operating Cash Flow Shortfall Versus Capital Expenditure Leads to Soaring Debt

On June 3rd, Hunan Yuneng announced that its third-largest shareholder, CATL, holding 7.10%, plans to reduce its stake by up to 3%. Concurrently, the second-largest shareholder, Shanghai Jinsheng New Material Technology Co., Ltd., plans to reduce its holding by up to 2.5%. The maximum potential减持 amount for these two major shareholders could exceed 3.8 billion yuan.

On April 3rd, Hunan Yuneng had just completed a private placement of 82.5375 million A-shares, raising 4.788 billion yuan. The funds are intended for projects including an annual 320,000-ton lithium iron manganese phosphate project, an annual 75,000-ton ultra-long cycle lithium iron phosphate project, an annual 100,000-ton lithium iron phosphate project, and to supplement working capital.

On May 21st, Hunan Yuneng announced again that it is planning an H-share issuance and listing on the Hong Kong Stock Exchange.

It is important to note that from 2018 to the present, except for a small inflow of 501 million yuan in 2023, Hunan Yuneng's operating cash flow has been negative every year, with a cumulative net outflow of 5.75 billion yuan over the past eight years. Furthermore, from 2018 to 2025, Hunan Yuneng's total capital expenditures reached 9.55 billion yuan.

The company provided a partial explanation for the persistent "cash outflow" in its annual report, attributing it to payments for fixed assets and other long-term asset purchases via bill endorsement, which simultaneously reduced cash inflow from operating activities and cash outflow from investing activities. Excluding the impact of this factor, the net cash flow from operating activities for 2024 and 2025 would have been 1.482 billion yuan and 1.468 billion yuan, respectively. However, even under this adjusted calculation, the company's accumulated cash collection ratio over the years remains significantly low.

Under the heavy pressure of long-term cash outflow exceeding inflow, Hunan Yuneng's interest-bearing debt, especially short-term debt, has risen sharply. At the end of 2025, the company's short-term borrowings reached 4.730 billion yuan, a significant increase of 92.71% from 2.455 billion yuan at the beginning of the period. The debt ratio stood at 66.9%, remaining at a high level, clearly indicating a tight financial situation.

Low Cash Collection Ratio and Order Diversion Compound Market Worries

Hunan Yuneng's heavy reliance on a few top-tier customers is one of its most prominent risks. Sales to its top five customers have long accounted for over 90% of total revenue, with CATL and BYD together contributing more than 80%. In an environment of intensifying industry competition, this overly concentrated customer structure implies relatively limited bargaining power and collection capabilities.

Wind data shows that in recent years, Hunan Yuneng's cash collection ratio has consistently been below 50%, dropping as low as 12% at one point, which is significantly lower than comparable companies like DFD Nanometer and Wanrun Xinneng.

What is even more concerning for the market is that CATL, Hunan Yuneng's largest customer, has recently accelerated the diversification of its orders to other suppliers. On January 13, 2026, CATL signed a "Lithium Iron Phosphate Cathode Material Procurement Cooperation Agreement" with Ronbay Technology. The agreement stipulates that, from the first quarter of 2026 to 2031, Ronbay Technology will supply CATL with an estimated total of 3.05 million tons of lithium iron phosphate cathode materials for the domestic market, with total sales value exceeding 120 billion yuan.

On the same day, CATL also made a strategic investment of 3.175 billion yuan in Fulin Precision, acquiring a 12% stake, and agreed to purchase no less than 3 million tons of lithium iron phosphate products from Fulin Precision over the next three years.

Against the backdrop of severe overcapacity in low-end lithium iron phosphate production and prominent structural supply-demand imbalances, competition for high-end capacity is intensifying. By placing large orders with and forming deep ties to Ronbay Technology and Fulin Precision, CATL has suddenly increased the pressure of order diversion facing Hunan Yuneng, and is undermining Hunan Yuneng's position as a core supplier.

Following the completion of its A-share private placement and the announcement of its Hong Kong financing plan, the simultaneous announcement of share reductions by CATL and the company's second-largest shareholder has undoubtedly further intensified market concerns about Hunan Yuneng's operational outlook.